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CHAPTER 6
Segmentation, Targeting,
and Positioning:
Building the Right
Relationships with the
Right Customers
Roadmap: Previewing the Concepts
 Define the three steps of target marketing:



market segmentation, market targeting, and
market positioning.
List and discuss the major bases for
segmenting consumer and business markets.
Explain how companies identify attractive
market segments and choose a target
marketing strategy.
Discuss how companies position their products
for maximum competitive advantage in the
marketplace.
Copyright 2007, Prentice-Hall Inc.
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P&G – Segments the Market
Strategy
 Sells multiple brands


within the same product
category for detergents,
soaps, and other goods.
Each brand features a
different mix of benefits
and appeals to a different
segment.
Product modifications
appeal to different niches
within certain segments.
Copyright 2007, Prentice-Hall Inc.
The Payoff
 P&G generates revenues


of $4+ billion in U.S.
laundry detergent market.
Tide has 34% share of
powder and 24% share of
liquid market segments.
Combined, all P&G brands
account for 75% share of
powder and 55% share of
liquid detergent markets.
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Figure 6-1
Steps in Segmentation, Targeting,
and Positioning
Copyright 2007, Prentice-Hall Inc.
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Market Segmentation
 Geographic, demographic,
psychographic, and behavioral
variables are used in segmentation.
 There is no single way to segment a
market.
 Often best to combine more than one
variable in order to identify smaller,
better-defined target groups.
Copyright 2007, Prentice-Hall Inc.
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Geographic Variables
 Geographic segmentation divides a
market into different geographic units.
 Variables and breakdowns include:
– World Region or Country: North America,
Western Europe, Pacific Rim, Mexico, etc.
– Country Region: Pacific, Mountain, etc.
– City or Metro Size: defined numerically
– Density: rural, suburban, urban
– Climate: northern, southern
Copyright 2007, Prentice-Hall Inc.
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Demographic Variables
 Differences in age, gender, family size,
family life cycle, income, occupation,
education, race, and religion can be
used to segment markets.
– Frequently used in segmentation.
– Easier to measure than most other types
of variables.
Copyright 2007, Prentice-Hall Inc.
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Marketing in Action
Demographic Targeting by Age
Crest targets adults with the ad and product on the
left, and children with the ad and product on right.
Copyright 2007, Prentice-Hall Inc.
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Psychographic Variables
Psychographic segmentation
divides a market into
different groups based on
social class, lifestyle, or
personality characteristics.
People in the same demographic classification
often have very different lifestyles.
Copyright 2007, Prentice-Hall Inc.
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Marketing in Action
Lifestyle Market Analyst
Using the Lifestyle Market
Analyst, marketers can
identify other interests that
appeal to those consumers
who enjoy a particular
lifestyle, as well as the
demographics of those
consumers.
Market profiles of each
DMA provide lifestyle
information as well.
http://www.srds.com/frontMatt
er/ips/lifestyle/sample.html
Copyright 2007, Prentice-Hall Inc.
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Behavioral Variables
 Segmentation
by Occasion
– Special promotions
& labels for holidays.
– Special products for
special occasions.
 Benefits Sought
– Different segments
desire different
benefits from
products.
Copyright 2007, Prentice-Hall Inc.
 User Status
– Nonusers, ex-users,
potential users, firsttime users, regular
users.
 Usage Rate
– Light, medium,
heavy.
 Loyalty Status
– Brands, stores,
companies.
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Let’s Talk!
Nestle has implemented an
occasion segmentation
strategy during the Christmas
season by marketing special
flavors of Coffeemate that
complement the holidays.
What other brands COULD
develop their own special
products or packaging for
holidays or other occasions?
Copyright 2007, Prentice-Hall Inc.
6-12
Marketing in Action
Segmenting by Benefits Sought
Citicards’ various
products offer
different benefits:
– rewards
– establishing
credit
– small business
benefits
– no frills value
https://www.citib
ank.com/us/card
s/index.jsp
Copyright 2007, Prentice-Hall Inc.
6-13
Geodemographic Segmentation
 Geodemographic:
– Claritas, Inc.
– Potential Rating Index for Zip Markets
(PRIZM)
– Based on U.S. Census data
– Profiles on 260,000 U.S. neighborhoods
– 62 clusters or types
Copyright 2007, Prentice-Hall Inc.
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Marketing in Action
PRYSM Interactive Tutorial
1. Click the link below:
http://www.usatoday.com/news/nation/2003-12-16-who-we-are-examples_x.htm
2. Select, “Who we
are. Redefining
our demographics”
underneath the
“Beyond Words”
heading.
3. Screen at left will
appear and tutorial
will load and run
automatically.
Copyright 2007, Prentice-Hall Inc.
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Marketing in Action
PRYSM Zip Code Lookup
Lookup your zip
code and learn
more about the
PRYSM clusters
describing people
where you live!
http://www.claritas.com/My
BestSegments/Default.jsp
Copyright 2007, Prentice-Hall Inc.
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Segmenting Business Markets
 Consumer and business

markets use many of the
same variables for
segmentation.
Business marketers can
also use:
–
–
–
–
Operating Characteristics
Purchasing Approaches
Situational Factors
Personal Characteristics
Copyright 2007, Prentice-Hall Inc.
This American Express ad
targets small businesses.
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Segmenting International Markets
 Factors used:
– Geographic location
– Economic factors
– Political and legal
factors
– Cultural factors
 Intermarket segmentation:
– Segments of consumers who have similar needs
and buying behavior even though they are
located in different countries.
Copyright 2007, Prentice-Hall Inc.
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Marketing in Action
Intermarket Segmentation
Teens show surprising
similarity no matter
where in the world they
live. For instance, this
teen could live almost
anywhere. Thus, many
companies target
teenagers with
worldwide marketing
campaigns.
Copyright 2007, Prentice-Hall Inc.
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Requirements for Effective
Segmentation





Measurable
Accessible
Substantial
Differentiable
Actionable
“Lefties” are hard to identify and
measure, thus few firms tailor their
offers to this group. “Anything Left
Handed” is an exception.
Copyright 2007, Prentice-Hall Inc.
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Evaluating Market Segments
 Segment Size and Growth
– Analyze current segment sales, growth rates,
and expected profitability.
 Segment Structural Attractiveness
– Consider competition, existence of substitute
products, and the power of buyers & suppliers.
 Company Objectives and Resources
– Examine company skills & resources needed to
succeed in that segment.
– Offer superior value & gain advantages over
competitors.
Copyright 2007, Prentice-Hall Inc.
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Figure 6-2
Target Marketing Strategies
Copyright 2007, Prentice-Hall Inc.
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Target Marketing Strategies
 Undifferentiated (mass) marketing
– Ignores segmentation opportunities
 Such products rarely succeed for long in the
American marketplace.
 Differentiated (segmented) marketing
– Targets several segments and designs
separate offers for each.
 Coca-Cola, Procter & Gamble (soaps and
detergents), and Toyota are a few examples.
Copyright 2007, Prentice-Hall Inc.
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Target Marketing Strategies
 Concentrated
(niche) marketing
– Targets one or a
couple small
segments
– Niches have very
specialized interests
Copyright 2007, Prentice-Hall Inc.
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Marketing in Action
Concentrated Marketing
Small businesses
can reap large
returns from niche
marketing. This
profitable Web site
offers access to
artistic e-cards on a
subscription basis.
www.jacquielawson.com/
Copyright 2007, Prentice-Hall Inc.
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Micromarketing
 Tailoring products and marketing programs
to suit the tastes of specific individuals and
locations.
– Local Marketing: Tailoring brands and
promotions to the needs and wants of local
customer groups—cities, neighborhoods,
specific stores.
– Individual Marketing: Tailoring products and
marketing programs to the needs and
preferences of individual customers.
Copyright 2007, Prentice-Hall Inc.
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Choosing a Targeting Strategy
 Factors to consider:
– Company resources
– Product variability
– Product’s life-cycle
stage
– Market variability
– Competitors’
marketing strategies
Copyright 2007, Prentice-Hall Inc.
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Socially Responsible Targeting
 Smart targeting helps both companies and

consumers.
Target marketing sometimes generates
controversy and concern.
– Vulnerable and disadvantaged can be targeted.
– Cereal, cigarette, beer, and fast-food marketers
have received criticism.
– Internet has raised fresh concerns about
potential targeting abuses.
Copyright 2007, Prentice-Hall Inc.
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Product Positioning
 A product’s position is the way the
product is defined by consumers on
important attributes, or as the place the
product occupies in consumers’ minds
relative to competing products.
– Perceptual position maps can help define
a brand’s position relative to competitors.
Copyright 2007, Prentice-Hall Inc.
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Marketing in Action
Positioning
eBay’s positioning is
simple: No matter what
“it” is, you can find “it”
on eBay!
The “it” print and TV ads
reflect different types
and categories of goods,
reinforcing this position.
www.ebay.com
Copyright 2007, Prentice-Hall Inc.
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Figure 6-3
Positioning Map: Large Luxury SUVs
Copyright 2007, Prentice-Hall Inc.
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Choosing a Positioning Strategy
 Identify a set of possible competitive
advantages on which to build a
position.
 Choose the right competitive
advantages.
 Select an overall positioning strategy.
Copyright 2007, Prentice-Hall Inc.
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Identifying Possible Competitive
Advantages
 Key to winning target customers is to
understand their needs better than
competitors do and to deliver more
value.
 Competitive advantage – extent to
which a company can position itself as
providing superior value.
– Achieved via differentiation.
Copyright 2007, Prentice-Hall Inc.
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Sources of Competitive Advantages
 Differentiation can
be achieved by
means of:
– Products
– Services
– Image
– People
Which form of differentiation
is promoted in the ad at right?
Copyright 2007, Prentice-Hall Inc.
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Positioning Errors
 Underpositioning:
– Failing to really position the company at
all.
 Overpositioning:
– Giving buyers too narrow a picture of the
company.
 Confused Positioning:
– Leaving buyers with a confused image of
a company.
Copyright 2007, Prentice-Hall Inc.
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Choosing the Right Competitive
Advantages
 Not all brand
differences are
meaningful and
worthwhile, nor do
all differences make
a good differentiator.
 Each difference has
the potential to
create company
COSTS as well as
consumer value.
Copyright 2007, Prentice-Hall Inc.
 The best competitive
advantages are those
that meet seven key
criteria.
– Important
– Distinctive
– Superior
– Communicable
– Preemptive
– Affordable
– Profitable
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Marketing in Action
Positioning and Pampers
Video Snippet
Procter & Gamble markets
Pampers and hundreds of
other brands. Review this
video snippet to learn more
about the P&G method
of positioning.
www.pg.com
Copyright 2007, Prentice-Hall Inc.
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Figure 6-4
Possible Value Propositions
Copyright 2007, Prentice-Hall Inc.
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Marketing in Action
Value Propositions
Diaka Vodka is positioned as the world's
most expensive vodka, due to its unique
diamond filtration process.
Nearly one hundred diamonds of up to
one carat in size are used to filter the
spirit, resulting in a Vodka with
unsurpassed clarity and smoothness.
What value proposition would you
expect Diaka’s advertising to promote?
Copyright 2007, Prentice-Hall Inc.
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Marketing in Action
Positioning Statements
To (target segment and need) our (brand) is a
(concept) that (point-of-difference).
“To busy mobile professionals who
need to always be in the loop,
Blackberry is a wireless connectivity
solution that allows you to stay
connected to day, people, and resources
while on the go, more easily and reliably
than the competing technologies.”
Copyright 2007, Prentice-Hall Inc.
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Communicating and Delivering the
Chosen Position
 Company must take strong steps to
deliver and communicate the desired
position to target consumers.
 The marketing mix efforts must
support the positioning strategy.
 Must monitor and adapt the position
over time to match changes in
consumer needs and competitors’
strategies.
Copyright 2007, Prentice-Hall Inc.
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Let’s Talk!
Take a look at the
ad shown at right.
How is the brand
being positioned?
What is its value
proposition?
Copyright 2007, Prentice-Hall Inc.
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Rest Area: Reviewing the Concepts
 Define the three steps of target marketing:



market segmentation, market targeting, and
market positioning.
List and discuss the major bases for
segmenting consumer and business markets.
Explain how companies identify attractive
market segments and choose a target
marketing strategy.
Discuss how companies position their products
for maximum competitive advantage in the
marketplace.
Copyright 2007, Prentice-Hall Inc.
6-43