Chapter 6
Segmentation,
Targeting, and
Positioning
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Chapter 6: Segmentation, Targeting,
and Positioning
LEARNING
OBJECTIVES
LO1 Describe the bases marketers use to segment a market
LO2 Identify the criteria for determining the attractiveness of a
segment & whether it is worth pursuing (targeting)
LO3 Explain the differences among targeting strategies:
undifferentiated, differentiated, concentrated, or
micromarketing
LO4 Describe positioning & how firms do it
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Segmentation, Targeting, & Positioning
Who is the target market for SoCIAL LITE Vodka?
Product location strategy
Multiple segmentation strategies were employed
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The segmentation-targeting-position process
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Step 1: Establish Overall
Strategy or Objectives
Consistent with
mission statement
Derived from
mission & current
state
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Step 2: Segmentation Bases
Segmentation
Sample Segments
Base
Geographic Continent (North America, Asia, Europe, Africa), country, region (West Coast,
Prairies, Central, Maritimes), province, city, urban, suburban, rural, climate
Demographic Age, gender, income, education, occupation, race, marital status, family size,
family life cycle, religion, ethnic background (white, black, Asian, Indian,
German, Irish, Arab), generational cohort (baby boomer, Generation X,
Generation Y), home ownership
Psychographic Lifestyle (Innovators, Thinkers, Achievers, Experiencers, Believers, Strivers,
Makers, Survivors), personality/self-concept (conservative, liberal,
adventuresome, outgoing, health- and fitness-conscious), social class (upper
class, middle class, working class)
Behavioural Benefits sought (convenience, economy, prestige, quality, speed, service,
environmental impact), usage (heavy, moderate, light, non-user, ex-user,
potential user, first-time user), loyalty (not loyal, somewhat loyal, completely
loyal)
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Geographic Segmentation
Divide market into separate geographic units
Countries, regions provinces, cities,
neighbourhoods, climate, etc.
Develop appropriate marketing programs
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Test Your Knowledge
Geographic segmentation is most useful for companies whose
products satisfy needs that vary by __________.
A) gender
B) region
C) age
D) nationality
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Test Your Knowledge
Geographic segmentation is most useful for companies whose
products satisfy needs that vary by __________.
A) gender
B) region
C) age
D) nationality
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Demographic Segmentation
Most common method
Divide market into groups based on:
– gender
– age
– ethnic group
– family lifecycle stage
– household type
– income
– Other, e.g. occupation, education, religion
Census excellent source of segmentation data
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Psychographic
Segmentation
How consumers describe themselves:
Self-values
Self-concept
Lifestyles
Marketers such as MEC want their ads to appeal to one’s self-concept. “I’m like
them, so I should buy their products.”
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DESCRIPTION OF VALS
Innovators
CATEGORIES
• Successful,
Thinkers
• Old guard, respect
Believers
• Hold conservative
Achievers
• Goal-oriented
sophisticated, take- authority belief systems, deep- professionals
charge people • Well-educated rooted moral codes • View money as source
• High-esteem • Mature, satisfied, • Value family, religion, of authority
• Change leaders, open to comfortable community • Deep commitment to
new ideas and • Carefully research and • Value stability career, family
technology plan before taking • Dislike ambiguity • Respect authority and
• Actively seek new action • Not looking to change the status quo
information • Appreciate historical society • Active consumers
• Experiment with perspective • Predictable, loyal • Favour prestige
confidence, future • Act in accordance with consumers products, conscious of
oriented what’s right • Choose familiar peers
• Problem-solvers • Not influenced by latest products, established • Embrace technology
• Active consumers, trends brands with productivity
cultivated tastes benefits
Strivers Experiencers Makers Survivors
• Live in the moment • Seek variety, • Practical people with • Oldest consumers
• Trendy, fun-loving excitement constructive skills • Cautious, risk averse,
• Money defines success • Enthusiastic, impulsive • Strong mechanical and feel world is changing
• Favour stylish products consumers automotive interests too fast
• Revolving rates of • Want it all mentality • Traditional views of • Concern for safety,
temporary • Active in sports and family, work, gender security
unemployment social activities roles • Comfortable with
• Looking for a better • Heightened sense of • Protect what they see as routine and the familiar
life, not easily achieved visual stimulation theirs • Loyal to favourite
• Active yet impulsive • Keep up with latest • Value self-sufficiency brands
consumers fashions • Suspicious of new ideas • Laggards in technology
• Want to look good, • Unimpressed with • Focus on needs vs.
have cool stuff material possessions wants
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VALS TYPES
It is just as easy to identify Thinkers (left) as it is Makers (right). A person is given the VALS™ questionnaire, and the VALS™ program at
SRIC-BI runs the answers through the computer for scoring to determine the VALS™ type.
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Behavioural Segmentation
Benefits
Behavioural
Usage
Occasion Segmentatio Rate
n
Loyalty
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Geodemographic
Segmentation
How consumers describe themselves using a
combination of geographic, demographic, and
lifestyle characteristics to segment a market.
“Birds of a feather flock together.”
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Geodemographic
Cluster
Segmentation PSYTE clusters
Urban Lower Middle (U4): Suburban Affluent (S1): Suburban Affluent (S1):
Name Urban Bohemia Suburban Affluence Asian Heights
Description From body piercing to This cluster with a flair for fine Asian ancestries combined with
tattoos, Urban Bohemia living represents both old and hard work and growing wealth
includes a diverse population new wealth. Because wealth create and mould these upscale
by design. A neighbourhood accumulates throughout life neighbourhoods. Asian Heights
with a youthful skew, this stages, this cluster exhibits an represents the affirmation of
cluster occupies itself in older skew with many empty dreams cultivated through
a variety of artistic, retail, nests. Suburban Affluence generations of immigrants and
and generally creative indexes high on managerial often through hardship. These
employment. Men and and technical employment families boost local economies
women employed in cultural, and are married with children. as well as family prospects.
artistic, and entertainment Asian Heights indexes high
related on Chinese, Korean, and
jobs abound. Japanese immigration as well
Household maintainers under as households of six or more
age 25, many with college persons.
degrees, are also
Average $46,000 $166,000 $96,000
Household
Income
Source: Used by permission of Pitney Bowes Software.
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Test Your Knowledge
Which of the following tools is widely used for geodemographic
segmentation?
A) PSYTE
B) LSAT
C) GNP
D) LIMRA
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Test Your Knowledge
Which of the following tools is widely used for geodemographic
segmentation?
A) PSYTE
B) LSAT
C) GNP
D) LIMRA
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Step 3: Evaluate Segment
Attractiveness
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Identifiable
Who is in their The Gap has identified several
distinct segments to pursue.
market? Two of its brands: Gap (left)
and Gap Kids (below) appeal
to different target markets.
Are the segments
unique?
Does each segment
require
a unique marketing
mix?
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Reachable
Know the
product exists
Understand
what it can do
Recognize how
to buy
La Senza must ensure that any new segment it
considers is identifiable, reachable, responsive,
substantial, and profitable.
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Responsive
Customers must:
React positively to firm’s offering
Move toward the firm’s products/services
Accept the firm’s value proposition
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Substantial &
Profitable
Size matters
Too small & the segment is insignificant, & will not be
profitable
Growth potential equally important
Which segment will be more profitable to Mark’s: its traditional
market for industrial workwear (above), or the top-line casual
apparel segment (right)?
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Segment Profitability – How to
Determine?
• Segment size (# of people in segment) = 60 million (<15 yrs)
• Segmentation Adoption Percentage = 35%
• Purchase Behavior = $500 x 1 time purchase
• Profit margin % = 10%
• Fixed Cost = $50M
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Test Your Knowledge
Which of the following factors is NOT a key factor when
considering
profitability of a market segment?
A) market growth
B) market competitiveness
C) purchase behaviour
D) market access
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Test Your Knowledge
Which of the following factors is NOT a key factor when
considering
profitability of a market segment?
A) market growth
B) market competitiveness
C) purchase behaviour
D) market access
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Step 4: Select Target Market
How do you choose your target
market?
Based on competing a SWOT analysis
Assess the attractiveness of the opportunity
Considers the organization’s competencies
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Targeting Strategies
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Types of Targeting Strategies
Undifferentiated Targeting Strategy, or Mass Marketing
Differentiated Targeting Strategy
Concentrated (Niche) Targeting Strategy
Micromarketing
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Undifferentiated Targeting Strategy, or Mass Marketing
Undifferentiated/Mass
the product or service is
perceived to provide the same
benefits to everyone, there
simply is no need to develop
separate strategies for different
groups.
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Differentiated Targeting Strategy
Differentiated
Targeting target several
market segments with a
different offering for
each
Condé Nast has 26 niche magazines focused on different aspects of life—from The
New Yorker for literature lovers to GQ for fashion-conscious men to Vogue for
fashionistas to Wired for techies.
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Concentrated (Niche)
Targeting Strategy
Concentrated (Niche)
Targeting Strategy
when an organization
selects a single, primary
target market and focuses
all its energies on
providing a product to fit
that market’s needs
3 © 2023 McGraw Hill Limited
Newton Running uses a concentrated
segmentation strategy—not all runners,
but those who want to improve their
running form.
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Micromarketing
Micromarketing
(one-to-one)a form of
segmentation that
tailors a product or
service to suit an
individual customer’s
wants or needs.
Build-A-Bear lets customers design their own stuffed furry friend with
unique clothes, accessories, sounds, and the name printed on its birth
certificate.
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Test Your Knowledge
Which of the following products is most likely to use an
undifferentiated segmentation strategy?
A) shoes
B) jewellery
C) cereal
D) sugar
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Test Your Knowledge
Which of the following products is most likely to use an
undifferentiated segmentation strategy?
A) shoes
B) jewellery
C) cereal
D) sugar
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Step 5: Identify & Develop
Positioning Strategy
Positioning Methods
Value
Product attributes
Benefits & symbolism
Competition
Market leadership
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Value
The relationship of price to quality…..
Different consumers = different value
KIND and PowerBar both offer their respective target markets a good value. KIND bars (left) are made with
natural ingredients, all of which are pronounceable, thus supporting a healthy lifestyle. PowerBars (right)
are protein bars designed to improve the performance of athletes.
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Product Attributes
Focus on the attributes that are most important and varies by
target market.
Audi features the all-wheel-drive Quattro, which is positioned to appeal to those wanting
great performance and handling, particularly on snowy and icy roads.
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Benefits & Symbolism
Emphasizes the
benefits of the brand
as well as the
psychological
meaning of the
brand to consumers.
SoCIAL LITE Vodka targets Gen Z men and women and is positioned on
functional benefits: great taste, all natural, 80 calories, and no sugar.
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Competition
Has two options:
Position against a specific competitor
Position against an entire product
classification
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Test Your Knowledge
When positioning a product based on the relationship of price to
quality the positioning method being used is _______________.
A) product attributes
B) benefits and symbolism
C) value
D) competition
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Test Your Knowledge
When positioning a product based on the relationship of price to
quality the positioning method being used is _______________.
A) product attributes
B) benefits and symbolism
C) value
D) competition
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Positioning By Using Perceptual
Mapping
1. Determine consumers’ perceptions &
evaluations in relation to competitors
2. Identify the market’s ideal points & size
3. Identify competitors’ positions
4. Determine consumer preferences
5. Select the position
6. Monitor the positioning strategy
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Perceptual Maps
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Repositioning
Refers to a strategy in which marketers change a
brand’s focus to target new markets or realign the
brand’s core emphasis with changing market
preferences
Powerade (left) and Gatorade (right) are positioned similarly and compete with each other
for customers who seek healthy, sweet drinks.
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