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Chapter Six
Segmentation, Targeting,
and Positioning:
Building the Right Relationships
with the Right Customers
Steps in Target Marketing
 Market segmentation
– Dividing a market into smaller groups of buyers
with distinct needs, characteristics, or behaviors
requiring separate products or marketing mixes.
 Target marketing
– Evaluating each segment’s attractiveness and
selecting one or more to enter.
 Market positioning
– Setting the competitive positioning for the
product and creating a detailed marketing mix.
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Market Segmentation
Segmenting Consumer Markets
(Table 6.1, page 166)
 Key variables:
– Geographic
– Demographic
– Psychographic
– Behavioral
 No single way to segment a market.
 May combine more than one variable to
better define segments.
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Market Segmentation
 Geographic:
– World region or country
– Region of country
– City or metro size
– Density or climate
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Market Segmentation
 Demographic:
– Age, gender, family size, family life cycle,
income, occupation, education, race,
religion, etc.
– The most popular bases for segmenting
customer groups.
– Easier to measure than most other types
of variables.
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Market Segmentation
 Psychographic:
– Social class
– Lifestyle
– Personality
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Market Segmentation
 Behavioral:
– Occasion segmentation
• Special promotions and labels for
holidays.
• Special products for special occasions.
– (e.g., Kodak disposable cameras)
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Market Segmentation
 Behavioral:
– Benefits Sought
• Different segments desire different
benefits from products.
– (e.g., P&G’s multiple brands of laundry
detergents to satisfy different needs in the
product category)
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Market Segmentation
 Behavioral:
– User Status
• Nonusers, ex-users, potential users,
first-time users, regular users
– Usage Rate
• Light, medium, heavy
– Loyalty Status
• Brands, stores, companies
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Market Segmentation
 Best to use multiple approaches in
order to identify smaller, better-defined
target groups.
– Start with a single base and then expand
to other bases.
– Geodemographic segmentation is
becoming more common.
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Market Segmentation
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
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Market Segmentation
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.
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Requirements for Effective
Segmentation





Measurable
Accessible
Substantial
Differentiable
Actionable
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Target Marketing
1. Evaluating Market Segments:

Segment Size and Growth
–

Segment Structural Attractiveness
–

Analyze current segment sales, growth rates, and
expected profitability.
Consider competition, existence of substitute products,
and the power of buyers and suppliers.
Company Objectives and Resources
–
–
Examine company skills & resources needed to succeed
in that segment.
Offer superior value and gain advantages over
competitors.
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Target Marketing
2. Selecting Target Market Segments:
 Undifferentiated (mass) marketing
– Ignores segmentation opportunities
 Differentiated (segmented) marketing
– Targets several segments and designs separate
offers for each
 Concentrated (niche) marketing
– Targets one or a couple small segments
 Micromarketing (local or individual marketing)
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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.
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Target Marketing
3. Choosing a Market Coverage Strategy
 Factors to consider:
– Company resources
– Product variability
– Product’s life-cycle stage
– Market variability
– Competitors’ marketing strategies
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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, and fast-food marketers have
received criticism.
– Internet has raised fresh concerns about
potential targeting abuses.
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Positioning for Competitive
Advantage
 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.
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