1. Segmentation, Targeting, and Positioning
Professor Lawrence Feick
University of Pittsburgh

2. Outline Definitions Segmentation and Targeting Positioning Summary
segmentation bases
criteria
Positioning
definition and uses
perceptual maps
Summary

3. Definitions: markets Market Target market Segmentation
people or organizations with the willingness, ability, and authority to buy a product
Target market
people or organizations to whom a particular marketing mix is aimed
Segmentation
dividing a heterogeneous market into homogeneous submarkets

4. Definitions: targeting approaches
Mass market (undifferentiated marketing)
Segmentation
focus (concentrated marketing, niche marketing)
multi-segment (differentiated marketing)

5. Segmentation questions
dividing a heterogeneous market into homogeneous submarkets
Questions:
heterogeneous on what?
on what basis to divide?
how finely to divide?

6. Segmentation bases
Segmentation base: the variable or variables on which the market is divided
A good segmentation base should:
yield differences in product behavior
give insight into why consumers buy
help guide marketing mix decisions

7. Types of segmentation bases
Independent of product category
demographic characteristics
geographic characteristics
psychographic/AIO characteristics
Product category related
benefits sought/needs met
product usage, brand loyalty, price sensitivity

8. Examples of demo/geo-graphics
Age
Income
Education
Marital status
Family lifecycle
Region of country

9. Ebony, June 1998

10. Family Circle, June 1998

11. Proprietary geodemographic segmentation solutions
Census data updated and augmented with purchases, subscriptions, auto registrations
Group (cluster) geographic regions that are similar: often zip code-based
Uses: direct mail, media buys, site location
Eg: PRIZM from Claritas. Check it out:

12. Examples of psychographics
Activities
work, hobbies, social events, vacation, clubs
Interests
family, home, job, community, fashion, food
Opinions
self, politics, social issues, business, culture
Lifestyle
VALS2 groups

14. What is your VALS 2 type? Typical questions: Check it out at:
I follow the latest trends in fashion
I would rather make something than buy it
I would like to spend a year or more in a foreign country
Check it out at:

15. Examples of benefits sought
Toothpaste
cavity prevention, whiteness, fresh breath
Cake mix
ease of preparation, cost, taste, uniqueness
Cameras
ease of use, technical features, compactness

16. Redbook, July 1998

17. Examples of product-related segmentation
Product usage: nonusers, light users, heavy users
e.g., beer, soft drinks, movie renters
Brand loyalty: loyals and switchers
e.g., laundry detergent, coffee
Price sensitive v. price insensitive

18. Selecting segments Segment size Segment growth and growth potential
Present and future competition
Consumer purchase ability and likelihood
Reachability

19. Positioning
Usage is sloppy- often combining a brand’s position with the marketers actions to create the position
Position: brand meaning perceived by the target market in terms of
other, competing products
perceived product characteristics, features

20. How the manufacturer sees the product

21. Manufacturer’s view It is made from a durable alloy
It is sold through independent dealers
It has a three year warranty
It is the best we have ever produced

22. How the customer sees the product

23. Target market’s view
It looks really good and seems sturdier than brand x or y
Can it fit in my apartment?
Would people like me buy one?

24. Positioning matters!
Virginia Slims
Acura, Lexus, Infiniti
Vodka

25. What affects a product’s position?
Product: design, features, style, packaging, warranty
Price: price level, discounts
Promotion: message, media, sales promotion, publicity
Distribution: exclusivity of coverage, types of retailer

26. Issues in positioning
What/how many characteristics do consumers use to distinguish products?
Where are existing products located with respect to these characteristics?
Where is an ideal product located?

27. Perceptual mapping
Statistical tools used to locate products in terms of perceived characteristics
Interpretation:
Products closer together are perceived as similar
Similarity relates to competitiveness
Can also plot “ideal points”

28. Perceptual maps: examples
Pain reliever map (text page 251)
US auto industry circa 1985

29. Perceptual map of the US auto market circa 1985
Classy, prestigious, distinctive
Mercedes-Benz
Cadillac
Porsche
BMW
Chrysler
Buick
Conservative,
older appeal
Oldsmobile
Pontiac
Sporty, youth oriented, performance
Chevrolet
Datsun
Toyota
Dodge
Volkswagen
Practical, inexpensive to own and operate

30. Questions What is the most likely competitor for Cadillac?
Would a GM manager be happy about Buick and Oldsmobile?
How is VW perceived in the US in 1998 compared to the mid 1980s?

31. Reprise: segmentation, targeting, and positioning
Benefits:
focus on meeting customer needs, wards off competition, and helps anticipate changes
increases focus on longer term relationship
Costs
segments foregone
Issues
Colt 45, Joe Camel