1. business and industrial
2. advertising and marketing
3. marketing

Segmentation, Targeting,
and Positioning
Building the Right Relationships
with the Right Customers
Suhel Khan
Oxford College ofLondon
Learning Goals
1. Learn the three steps of target marketing,
market segmentation, target marketing, and
market positioning
2. Understand the major bases for segmenting
consumer and business marketing strategy
3. Know how companies identify attractive
market segments and choose target
marketing strategy
4. Realize how companies position their
products for maximum competitive
advantage in the marketplace
7-1
Case Study
Procter & Gamble
• Sells multiple brands
within the same product
category for a variety of
products
• Brands feature a
different mix of benefits
and appeal to different
segments
• Has also identified
different niches within
certain segments
• Product modifications
are useful: Tide offers
seven different product
formulations to serve
different niches’ needs
7-2
Steps in market segmentation,
targeting and positioning
Market Segmentation
 Identify bases for segmenting the market
 Develop segment profiles
Target Marketing
 Develop measure of segment
attractiveness
 Select target segments
Market Positioning
 Develop positioning for target segments
 Develop a marketing mix for each segment
7-3
Goal 1: Learn the three steps of target marketing
Definition
Market Segmentation:
 Dividing a market into distinct
groups with distinct needs,
characteristics, or behavior who
might require separate products or
marketing mixes.
7-4
Goal 2: Understand the major bases for segmentation
Segmenting Consumer
Markets
Geographical segmentation
Demographic segmentation
 Most popular segmentation
Psychographic segmentation
 Lifestyle, social class, and
personality-based segmentation
Behavioral segmentation
7-5
Goal 2: Understand the major bases for segmentation
Geographic Segmentation
Variables
• World region
or country
• U.S. region
• State
• City
• Neighborhood
• City or
metro size
• Density
• Climate
7-6
Goal 2: Understand the major bases for segmentation
Demographic Segmentation
Variables
•
•
•
•
•
Age
Gender
Family size
Family life cycle
Income
•
•
•
•
•
•
Occupation
Education
Religion
Race
Generation
Nationality
7-7
Goal 2: Understand the major bases for segmentation
Behavioral Segmentation
Variables
•
•
•
•
Occasions
Benefits
User Status
Attitude Toward
the Product
• User Rates
• Loyalty Status
• Readiness Stage
7-8
Goal 2: Understand the major bases for segmentation
Readiness Stages
Before a customer makes a
purchase, he or she first goes
through a series of stages called
“buyer readiness.” According to
Marc Mancini, these stages are:
7-9
• Awareness. Before you can sell, you must
make contact with those who want to
purchase. Your agency should create
advertising and promotional programs that’ll
make your name conspicuous and will attract
serious buyers.
• Knowledge. Once rospective clients know
your name, they begin the process of
acquiring knowledge about what you can
offer. Therefore, your advertising efforts
should establish you as an expert — perhaps
even a specialist in one or more niche areas.
7 - 10
• Liking. We all tend to buy from people or
companies we feel positive about.
Entertaining ads, for example, will convey
warmth and the “humanity” of your agency.
Direct your creative efforts toward making
your agency seem joyful, inviting and
approachable.
• Preference. Benefits statements are the key
to making prospective clients prefer your
agency over another. Provide target
customers with reasons to do business with
you.
7 - 11
 Conviction. Your advertising should
build the customers’ certainty that
you’re the agency to call first. Client
testimonials, for example, provide
just the right reinforcement for the
preference you’ve created.
 Purchase. Once prospective clients
have decided to seek you out, expert
sales skills are critical to helping
them make the right purchase.
7 - 12
Segmenting Business
Markets
Demographic segmentation
 Industry, company size, location
Operating variables
 Technology, usage status, customer capabilities
Purchasing approaches
Situational factors
 Urgency, specific application, size of order
Personal characteristics
 Buyer-seller similarity, attitudes toward risk, loyalty
7 - 13
Goal 2: Understand the major bases for segmentation
Segmenting International
Markets
Geographic segmentation
 Location or region
Economic factors
 Population income or level of economic
development
Political and legal factors
 Type / stability of government, monetary
regulations, amount of bureaucracy, etc.
Cultural factors
 Language, religion, values, attitudes, customs,
behavioral patterns
7 - 14
Goal 2: Understand the major bases for segmentation
Requirements for Effective
Segmentation
Measurable
 Size, purchasing power, and profile of segment
Accessible
 Can be reached and served
Substantial
 Large and profitable enough to serve
Differentiable
 Respond differently
Actionable
 Effective programs can be developed
7 - 15
Goal 2: Understand the major bases for segmentation
Target Marketing
Target Market
 Consists of a set of buyers who share
common needs or characteristics
that the company decides to serve
7 - 16
Goal 3: Know how companies identify and target attractive segments
Target Marketing
Evaluating Market Segments
 Segment size and growth
 Segment structural attractiveness
•
•
•
•
Level of competition
Substitute products
Power of buyers
Powerful suppliers
 Company objectives and resources
7 - 17
Goal 3: Know how companies identify and target attractive segments
Target Marketing
Selecting Target Market Segments
 Undifferentiated (mass) marketing
 Differentiated (segmented)
marketing
 Concentrated (niche) marketing
 Micromarketing (local or individual)
7 - 18
Goal 3: Know how companies identify and target attractive segments
Choosing a Target
Marketing Strategy
Considerations include:





Company resources
The degree of product variability
Product’s life-cycle stage
Market variability
Competitors’ marketing strategies
7 - 19
Goal 3: Know how companies identify and target attractive segments
Target Marketing
Socially Responsible Targeting
 Some segments, especially children,
are at special risk
 Many potential abuses on the
Internet, including fraud Internet
shoppers
 Controversy occurs when the
methods used are questionable
7 - 20
Goal 3: Know how companies identify and target attractive segments
Positioning
Positioning:
 The place the product occupies in
consumers’ minds relative to competing
products.
 Typically defined by consumers on the
basis of important attributes.
 Involves implanting the brand’s unique
benefits and differentiation in the
customer’s mind.
 Positioning maps that plot perceptions of
brands are commonly used.
7 - 21
Goal 4: Realize how companies position their products
Choosing a Positioning
Strategy
Topics
Identifying possible
competitive advantages
Choosing the right
competitive advantage
Choosing a positioning
strategy
Differentiation can be based
on





Products
Services
Channels
People
Image
7 - 22
Goal 4: Realize how companies position their products
Market Segmentation
Topics
• How many differences to
promote?
 Unique selling
Identifying possible
proposition
competitive advantages
 Several benefits
Choosing the right
• Which differences to
promote? Criteria include:
competitive advantage
 Important
Choosing a positioning
 Distinctive
strategy
 Superior
 Communicable
 Preemptive
 Affordable
 Profitable
7 - 23
Goal 4: Realize how companies position their products
Market Segmentation
Topics
Identifying possible
competitive advantages
Choosing the right
competitive advantage
Choosing a positioning
strategy
• Value propositions
represent the full
positioning of the brand
• Possible value propositions:
 More for More
 More for the Same
 More for Less
 The Same for Less
 Less for Much Less
7 - 24
Goal 4: Realize how companies position their products
Developing a
Positioning Statement
Positioning statements summarize
the company or brand positioning
 EXAMPLE: To (target segment and
need) our (brand) is (concept) that
(point-of-difference)
7 - 25
Goal 4: Realize how companies position their products
Communicating the
Positioning
Companies must be certain to
DELIVER their value propositions.
Positions must be monitored and
adapted over time.
7 - 26
Goal 4: Realize how companies position their products