1. Segmentation/Positioning
Develop profiles of
resulting segments
Market
Segmentation
Develop measures of
segment attractiveness
Select the
target segment(s)
Develop positioning
for each segment
Develop marketing mix
Identify bases for
segmenting market
Targeting
Positioning
Chapter 7, page

2. Market Segmentation Market segmentation
Dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviours, who might require separate products or marketing mixes
The key is their response to a different marketing mix
If all consumers respond the same way, then there should be no need to segment a market

3. Click the picture above to play video
Market Segmentation
Marriott offers various brands of lodging in order to meet the needs of particular customer segments.
Chapter 7, page
Click the picture above to play video

4. Levels of Market Segmentation
Micromarketing includes:
Local marketing: tailoring brands and promotions to the needs and wants of local customer groups-cities, neighbourhoods, and even specific stores
Individual marketing: tailoring products and marketing programs to the needs and preferences of individual customers
Mass customization: the process of creating customer-unique value by designing products and services tailor-made to individual needs, on a large scale

5. Segmentation Variables
Geographic
Area, population density, climate etc.
Demographic
Age, sex, lifecycle, income, job, etc.
Psychographic
Lifestyle, personality.
Behavioural
Benefits sought, status, usage rate, loyalty, attitudes, etc.
Chapter 7, page 251

6. Geographic Segmentation
World region or country.
Region of country.
City or metro size.
Density or climate.
Chapter 7, page

7. Demographic Segmentation
Age, life-cycle, gender, family size, income, occupation, etc.
The most popular bases for segmenting customer groups.
Easier to measure than most other types of variables.
Chapter 7, page

8. Demographic Segmentation
Age and life-cycle.
Do not necessarily match.
Middle aged people starting new families.
Seniors going back to university or college .
Products targeted at age or life-cycle stages.
P&G has different toothpastes for different age groups.
Avoid stereotypes in promotions.
Promote positive messages.
Chapter 7, page

9. Age and Life-Cycle
P&G targets kids with Crest Kid’s Cavity Protection toothpaste. It’s gentle on tooth enamel and has “fun- filled sparkles and sparkle fun flavor just for kids.”
Chapter 7, page

10. Gender and Income Gender. Income.
Women make 90% of home improvement decisions.
Women influence 80% of all household consumer purchases.
Income.
Identifies and targets the affluent for luxury goods.
People with low annual incomes can be a lucrative market.
Some manufacturers have different grades of products for different markets.
Chapter 7, page 253

11. Psychographic Segmentation
Social Class
Lifestyle
Personality
Chapter 7, page 254
Targeting whitening toothpaste at psychographic segment who are active and concerned about sexual attractiveness.

12. Psychographic Segmentation
When Honda markets its Reflex and Elite scooters, it appeals to the rebellious, independent kid in all of us.
Chapter 7, page 255

13. Behavioural Segmentation
Occasions.
Special promotions and labels for holidays.
(e.g. Hershey Kisses)
Special products for special occasions.
(e.g. Kodak disposable cameras)
Chapter 7, page 255

14. Behavioural Segmentation
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)
Chapter 7, page 256

15. Behavioural Segmentation
Loyalty status.
Brands.
Stores.
Companies.
User status.
Nonusers, ex-users.
Potential users.
First-time users.
Regular users.
Usage rate.
Light.
Medium.
Heavy.
Chapter 7, page

16. Multiple 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.
Chapter 7, page

17. Geodemographic Segmentation
Claritas, Inc.
Based on Canadian Census data.
Profiles on 5300 Canadian neighbourhoods.
66 clusters or types based on social values.
Chapter 7, page 259

18. PRIZM Application
In marketing its Suave shampoo, Helene Curtis uses PRIZM to identify neighborhoods with high concentrations of working women. Such women respond best to advertising messages that with Suave, “looking great doesn’t have to cost a fortune.”
Chapter 7, page 259

19. 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
Chapter 7, page

20. Segmenting International Markets
Geographic Location
Economic Factors
Political and Legal Factors
Cultural Factors
Chapter 7, page

21. Intermarket Segmentation
Teens show surprising similarity no matter where in the world they live. For instance, this teen could live almost anywhere. Thus, many companies target teenagers with worldwide marketing campaigns.
Chapter 7, page 261

22. Evaluating Market Segments
Segment size and growth.
Analyze current segment sales, growth rates and expected profitability.
Segment structural attractiveness.
Consider effects of competitors, existence of substitute products, the power of buyers/suppliers.
Company objectives and resources.
Examine company skills and resources needed to succeed in that segment.
Offer superior value/gain competitive advantage.
Chapter 7, page 263

23. Segment Success Criteria
Measurable – Ability to measure numerically.
Accessible – Ability to reach segment.
Substantial – Ability to support the business.
Differentiable – Ability to find unique position in segment.
Actionable – Ability to pursue and capture the segment.
Chapter 7, page

24. Levels of Segmentation
Mass marketing
No segments and single marketing mix.
Differentiated marketing
Large segments with specific marketing mixes.
Concentrated (niche) marketing
Small segments with specialized marketing mixes.
Micromarketing
Customized marketing to individuals.
Chapter 7, page 264

25. Levels of Segmentation
Mass marketing
Segment marketing
Niche marketing
Micromarketing
Chapter 7, page 264

26. Undifferentiated Marketing
Focus is on common (not different) needs of consumers.
Product and marketing program are geared to the largest number of buyers.
Uses mass advertising and distribution
Henry Ford’s Model T excellent example of undifferentiated or mass marketing.
Chapter 7, page 264

27. Differentiated Marketing
Firm targets several market segments and designs separate offers for each.
The goal is to have higher sales and a stronger position with each market segment.
This approach increases the costs of doing business.
General Motors claims to make a car for every segment.
Chapter 7, page 264

28. Niche Marketing
The focus is acquiring a large share of one or a few segments of niches.
Generally, there are fewer competitors.
The Internet is ideal for targeting small niche markets.
There is some risk in focusing on only one market.
Chapter 7, page

29. 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, neighbourhoods, specific stores.
Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers.
Chapter 7, page

30. Mass Customization
The process of creating customer-unique value by designing products and services tailor-made to individual needs, on a large scale.
Having your next car or sneakers built to order?
Chapter 7, page

31. Market Coverage Strategy
Company Resources
Product Variability
Product’s Life-Cycle Stage
Market Variability
Competitors’ Marketing Strategies
Chapter 7, page 268
Company Resources: Limited resources – stick with concentrated strategy; lots of resources – use a differentiated strategy.
Product Variability: Milk, citrus, aluminum, etc. use undifferentiated strategy.
Product Life-Cycle: New product with no competition use undifferentiated strategy; mature stage with competition use differentiated strategy
Market Variability: If most buyers have the same tastes, buy the same amounts and react the same way to marketing efforts, undifferentiated approach is OK.
Competitors’ Marketing Strategies: If competition is using differentiated or concentrated you have to match that strategy. If competition is using undifferentiated, go with differentiated or concentrated.

32. Socially Responsible Target Marketing
Smart targeting helps both companies and consumers.
Target marketing sometimes generates controversy and concern.
Vulnerable and disadvantaged can be targeted.
Cereal, cigarette, beer and fast-food marketers have received criticism.
Internet has raised fresh concerns about potential targeting abuses.
Chapter 7, page 268
Smart targeting helps companies to be more efficient and effective by focusing on the segments that they can satisfy best and most profitably.
1). Target marketing sometimes generates controversy and concern (e.g., cereal with premiums/prizes targeted at children).
2). Industries that have generated controversy include cigarettes, beer, and fast-food.
3). The meteoric growth of the Internet and other carefully targeted direct media has raised fresh concerns about potential targeting abuses.
4). In market targeting, the issue is not really who is targeted but rather how and for what (i.e., when vulnerable segments are targeted with questionable products or tactics).

33. Global Marketing Mix
Decision to adapt marketing mix to local conditions.
Standardized marketing mix uses same product, price, promotion, place elements in all international markets.
Adapted marketing adjusts each marketing mix element to the local environment.
More costly but potential for larger market share and more financial return.
Chapter 7, page

34. Market Positioning Market positioning
Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products,
In the minds of target consumers,
formulating competitive positioning for a product, and creating a detailed marketing mix
Product position: the way the product is defined by consumers on important attributes, relative to competing products
The “quicker-picker-upper?”
The “uncola?”
“Great taste, less filling?”

35. Successful Positioning
Product position
How a product is viewed by consumers relative to competing products.
Three positioning steps
Identify competitive advantages on which to build a differentiated position.
Choose the right competitive differentiation.
Select an overall positioning strategy.
Chapter 7, page 271

36. Choosing a Positioning Strategy
#2 Choose the right
competitive advantages
#1 Identify a
set of possible
competitive advantages on
which to build a position
#3 Select an overall
positioning strategy
Chapter 7, page 271
Must effectively communicate and deliver position to the segment.

37. Positioning map for large luxury SUVs.
Chapter 7, page 272
Positioning map for large luxury SUVs.

38. Gaining Competitive Advantage
Key to winning target customers is to understand their needs better than competitors do and to deliver more value.
Competitive advantage – extent to which a company can position itself as providing superior value.
Chapter 7, page 273

39. Identifying Competitive Advantages
Services
Differentiation
(e.g., speed, convenience, careful delivery)
Product
(e.g., consistency, durability, reliability, reparability)
People
(e.g., hiring, training better people than competitors)
Image
(e.g., convey benefits and positioning)
Channel
Chapter 7, page

40. Successful Differentiation
Important
Profitable
Distinctive
Communicable
Affordable
Unique Selling
Proposition
Superior
Preemptive
Chapter 7, page
Important – of value to consumers.
Distinctive – obvious and clear.
Superior – better value than competitors.
Communicable – explainable.
Pre-emptive – defendable and unique.
Affordable – delivers value for cost.
Profitable – company can make money.
1]. Important: The difference delivers a highly valued benefit to target buyers.
2]. Distinctive: Competitors do not offer the difference or the company can offer it in a more distinctive way.
3]. Superior: The difference is superior to other ways that customers might obtain the same benefit.
4]. Communicable: The difference is communicable and visible to buyers.
5]. Preemptive: Competitors cannot easily copy the difference.
6]. Affordable: Buyers can afford to pay for the difference.
7]. Profitable: The company can introduce the difference profitably.

41. Positioning Errors Under-positioning. Over-positioning.
Failing to really position the company at all.
Over-positioning.
Giving buyers too narrow a picture of the company.
Confused positioning.
Leaving buyers with a confused image of a company.
Chapter 7, page

42. Which Differences to Promote?
Unilever positioned its bestselling Lever 2000 soap on three benefits in one: cleansing, deodorizing and moisturizing benefits. It’s good “for all of your 2000 parts.”
Chapter 7, page

43. Value Propositions Price Benefits More for more for the same less
Less for
much
Less
Benefits
Chapter 7, page 276-9

44. Value Proposition
“Much more for much more” value proposition: Häagen-Dazs offers its super-premium ice cream at a price never before charged.
Chapter 7, page 279

45. Positioning Statement
Summarizes company or brand positioning.
Take the form of:
To (target segment and need) our (brand) is (concept) that (point-of-difference).
Chapter 7, page 279

46. Positioning Statement
At Olive Garden Restaurants, “When You’re Here, You’re Family.”
Chapter 7, page 279

47. Communicating and Delivering the Chosen Position
Take strong steps to deliver and communicate the desired position to target consumers.
Support positioning strategy with marketing mix efforts.
Monitor and adapt the position over time to match changes in consumer needs and competitors’ strategies.
Chapter 7, page 280

48. Discussion Question #1
Describe how the Ford Motor Company has moved from mass marketing to segment marketing. Do you think the company will be able to move toward niche marketing or micromarketing? If so, how? How is the company using the Internet (see to change its marketing segmentation approach?
Ford Motor Company is a good example of a company that has evolved from a mass-marketer to a market-targeter. Ford originally made one car for the entire market—customers didn’t even have a choice of colors. Over time, Ford added other cars to its line, and eventually developed cars for nearly every market segment (target marketing).
Though mass produced cars are still the norm in the market (such as Ford’s Taurus—one of the top selling cars in the North American market), niche marketing (such as four wheel drive and sport utility vehicles) are gaining in popularity and profitability. Some companies are pursuing micromarketing. For example, Plymouth’ Prowler (a purple “street rod”) only produced 3000 cars in the initial offering. This dynamic “hot rod” now comes in red, yellow, black, and silver. The new Copperhead (another stylish hot car) is even more specialized.
Students should be asked to investigate Ford’s Internet page and determine how the company’s marketing effort has changed. The Internet address is The students will observe a variety of promotional and direct contact possibilities within the structure of the site. Ask students about the profile of the typical visitor of this site. How could it be determined?

49. Discussion Question #3
There are many ways to segment a market. Using the four segmentation variables shown in Table 7-1, discuss which variables would be most important for segmenting (a) Internet users, (b) drivers of a proposed new sports car, and (c) the adult student who returns to college to get an undergraduate degree. Explain your choices. What assumptions did you make? In each case, where would you find the information needed to segment the markets? Be creative with your research thoughts.
The text indicates that to be useful market segments must be: measurable, accessible, substantial, differentiable, and actionable. Students should evaluate each of the examples using the above criteria.
Example (a): Internet users. This segment can be approached from a variety of directions. It is somewhat difficult to measure how many there actually are, however, there are many estimates floating around. Data from the Internet itself might be the most useful in determining the number (approximations). The number of subscribers to American Online might be a useful starting place. The users are accessible through . The number would have to classed as substantial (and growing on a daily basis). The ability to differentiate between them is more difficult. Many marketing companies do believe that these consumers will take action. Therefore, there should be an increase in advertising on the Internet directed toward this segment.
Example (b): Drivers for a new proposed sports car. This segment is somewhat similar to the Internet users in that measurement would be general in nature and could be approximated from secondary sources (such as from car clubs, automobile companies, interests—such as auto shows, or prior ownership of vehicles). Exact measurement would be difficult. The accessibility of these consumers would be difficult except through their service providers or interest areas. However, promotions (such as magazine, outdoor advertisements, or auto shows) can be constructed. The number is thought be substantial among youth and the affluent; however, this segment would have to be tied to desires for automobiles in general to be useful. An interesting side question would be whether these consumers are gender or geographically concentrated. What role would life style play?
Example (c): Adult students that return to a college to get an undergraduate degree. This example is designed to encourage the student to explore this segment at their own college or university. After their exploration, results should be shared with the class. What determined if the segment was viable or not?

50. Example of Benefit Segmentation