1. Segmentation, Targeting, and Positioning
Product positioning strategy
Bases for segmentation
Positioning
Targeting
Repositioning

2. Definition
Segmentation: “Aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.”
Although not all these consumers are completely alike, they share relatively similar needs and wants
Marketing action: involves efforts, resources, and decisions--product, distribution, promotion,
and price

3. Approaches to Marketing
Undifferentiated Strategy (no intended difference from competitors; no specific consumer group sought out)
Concentrated Strategy (differentiation; one consumer segment sought)
Differentiated Strategy (same firm makes different versions for different segments)
Southwest
Airlines
Auto
makers

4. Segments--Examples (1)
Air Travel
Business/Executive: Inflexible; relatively price insensitive (Small number of people, but travel often)
Leisure Traveler/Student: Relatively flexible; very price sensitive (other methods of travel--e.g., bus, car, train--are feasible; travel may not be essential) (Very large segment)
Comfort Travelers: Comfort (e.g., space, food) important; willing to pay (Small segment)

5. Examples (2): Restaurant Diners
E.g.,
--speed
--location
Convenience
High
Low
Low
High-end
delivered food
Fancy Restaurants
--e.g., Ritz Carlton
Price Sensitivity
Denny’s
McDonald’s
Local, “unbranded”
fast food restaurants
Taco Bell
High

6. Notes on Segments
Boundaries between product categories are blurred--”soft drinks” or “non-alcoholic beverages?”
Any number of “dimensions” possible--but too many variables cut segment size
Segments must
differ meaningfully from others
large enough to be profitable
be serviceable (have need that can be met cost effectively)

7. Criteria in Selecting Segments
Potential for increased profit and ROI
Similarity of needs of consumers within
Differences of needs of members of different segments
Feasibility of serving each specific segments
Cost effectiveness of identifying members of each segment

8. Bases for Segmentation: Consumer Characteristics
Geographic
Regional
Area characteristics: The PRIZM system
Income ≠ willingness to spend!
Occupation
Demographics
Gender
Age
Ethnicity
Household size
Marital status
Single, never married
Married
Divorced
Presence of children

9. Bases for Segmentation: Behavior and Buying Situations
Benefits sought
Behavior
Involvement
Usage rates and status
“80/20” rule—20% of consumers may account for 80% of consumption
Media preferences
Preferred shopping outlets

10. Combining variables…
Soft drink preferences—some segmentation variables
Preferred taste: Cola, lime, no taste, natural juice, ice tea
Calorie/taste tradeoff: taste more important, some importance of both, will sacrifice taste for low calories
Usage occasion: Multi-pack for home; single can/bottle; fountain drink
Price sensitivity/brand loyalty: Willingness to pay more for name brand or specialty soda

11. Some combined segments…
Price sensitive, non-brand loyal cola-taste, full-flavor segment, multi-pack
Price insensitive, cola taste, brand loyal, low calorie, multi-pack
Price insensitive, natural juice, taste sensitive, single serving
Typical behaviors of these consumers. Circumstances may involve occasional variations.

12. Positioning Strategies
“Head-on” competition
Airlines (want to differentiate but have difficulty pulling it off in practice)
Beef products
Differentiation
Burger King: Grilled instead of McDonald’s fried burgers
Halmark: “When you care to send the very best…”
Hertz (vs. “Not exactly”)
Zachy Farms (chicken)

13. Targeting: Selecting Segment(s) and Specializing
“You can’t be all things to all people” ---> choose one or more groups
Focus narrows scope of competition, but demands are greater
Repositioning: Changing established position may be difficult -- e.g.,
Sears
McDonald
Good sales;
poor everyday
values
Lunch; not dinner
Good for children

14. Some Repositioning Campaigns
Cadillac: “It’s not your father’s car.”
Geritol: “Not too young for Geritol.”
Orange juice: “It isn’t just for breakfast anymore.”
Chocolate milk for adults
NOTE: Repositioning is difficult. It will take a great deal of advertising support. There is no guarantee that consumers will cooperate!

15. Some Brands That Were Dropped Rather Than Repositioned
ValueJet  AirTran
Packard Bell  e-Machines
German Communist Party  Party for Democratic Socialism

16. Evaluating Target Segments
Sales potential
Competitive presence/ potential
Cost of service
Feasibility of service
Impact on segments already served

17. Euphemisms in Positioning
“Loss Prevention Associate”
“Sales Counselor”
“Pre-Owned” or “Previously Loved” Vehicle
“Gaming”