1. Market Segmentation, Targeting, and Positioning
Chapter 5
Market Segmentation, Targeting, and Positioning

2. Market Segmentation
Involves the division of a diverse market into a number of smaller submarkets that have common features.
The objective is to identify groups of potential customers with similar requirements.
Market segmentation provides a a commercially viable method of serving customer needs.
Segmentation is at the heart of strategic marketing.

3. The Benefits of Market Segmentation
Enhanced Profitability
More effective targeting of communications
Enhanced Opportunities for Growth
Better matching of customer needs
Improved Customer Retention
Opportunities of segment dominance

4. © The McGraw-Hill Companies, 2009
Garmin
Garmin
Unashamedly
targets female
buyers
Note: Replace Maltesers ad with Exhibit 5.2 (Nokia 7270)
© The McGraw-Hill Companies, 2009

5. Segmenting Consumer Markets
Consumer segmentation
Psychographic
Behavioural
Profile
Demographic
Benefits sought
Lifestyle
Purchase occasion
Personality
Socio-economic
Purchase behaviour
Geographic
Usage
Perceptions and beliefs

6. Consumer Segmentation Methods
Variables
Examples
Behavioural
Benefits sought
Convenience, status, performance
Purchase occasion
Self-bay, gift, special occasions
Purchase Behaviour
Brand loyal, brand switching, innovators
Usage
Heavy, light
Media Behaviour
Primarily online, primarily offline
Psychographic
Lifestyle
Trendsetters, conservatives, sophisticates
Personality
Conscientious, agreeable, extrovert
Profile
Age
Under 12, 12-18, 19-25, 26-35, 36-49, 50-64, 65 and over
Gender
Female, male
Life Cycle
Young single, young couples, young parents, middle-aged empty-nesters, retired
Social class
Upper middle, middle, skilled working
Terminal education age
16, 18, 21 years
Income
Income breakdown according to study objectives and income levels per country
Geographic
North vs south, urban vs rural, country
Geodemographic
Upwardly mobile young families living larger owner-occupied houses, older people living in small houses, European regions based on language, income, age, profile and location.

7. Benefits Sought of a luxury watch
Patek Philippe uses powerful emotional appeal to convey the benefits of ownership
of a luxury watch .
Note: Replace Maltesers ad with Exhibit 5.2 (Nokia 7270)

8. The ACORN Targeting Classification

9. Segmenting Organisational Markets
Organisational segmentation
Organisational
size
Industry
Geographic
location
Choice
Criteria
Purchasing
organisation

10. Five Criteria for Successful Segmentation
1. Effective
2. Measurable
3. Accessible
4. Actionable
5. Profitable
Note: New Slide

11. Target Marketing Strategies
Undifferentiated
Marketing
Target Marketing
Strategies
Focused
Marketing
Differentiated
Marketing
Customised
Marketing

12. Target Marketing Strategies
Undifferentiated marketing
Marketing mix
Whole market

13. Example of Undifferentiated Strategy
ORGANISATION
MARKETING MIX
TARGET MARKET
Price
Promotion
Product
Distribution
Post
Office
Everybody
© The McGraw-Hill Companies, 2009 8 8 7 8 8 8

14. Target Marketing Strategies
Differentiated marketing
Marketing mix 1
Segment 1
Marketing mix 2
Segment 2
Marketing mix 3
Segment 3

15. Example of Differentiated Strategy
Marketing Mix 1
Miss
Selfridges
age group
Marketing
Mix 2
Dorothy
Perkins
20s & 30s
Arcadia Group
Marketing
Mix 3
Evans
Size 16+
Outfit
Out of town convenience
Marketing
Mix 4
Wallis
30 plus
age group
Marketing
Mix 5

16. Target Marketing Strategies
Focused marketing
Segment 1
Segment 2
Marketing mix
Segment 3

17. Example of Focused Strategy
Price conscious consumers
MARKETING
MIX
ORGANISATION
Unserved
Price
Promotion
Product
Distribution
Bang & Olufsen
Music systems
Upmarket consumers
Unserved
Value seekers 10 10 10 10 9 9

18. Target Marketing Strategies
Customised marketing
Marketing mix 1
Customer 1
Marketing mix 2
Customer 2
Marketing mix 3
Customer 3

19. Example of Customised Strategy
ORGANISATION
INDIVIDUAL
MIXES
INDIVIDUAL CUSTOMERS
Marketing
Mix 1
Nissan
Industrial
Electronic
Systems
Supplier
Marketing
Mix 2
Birdseye
Marketing
Mix 3
Heinz
Marketing
Mix 4
Mercedes 14 14 14 14 13 11

20. Positioning….
‘....is the act of designing the company’s offering so that is occupies a meaningful and distinct position in the target consumers mind’
Effective positioning is the act of linking
products and services to the solutions
that customers seek.
Note: New Slide

21. Panasonic Lumix Camera
This advertisement
for Lumix digital
cameras powerfully
illustrates its core
value proposition

22. Coke Zero Diet Coke and Coke Zero: virtually identical drinks that
are positioned
very differently

23. Keys to Successful Positioning
Clarity
Consistency
Successful positioning
Credibility
Competitiveness

24. A Perceptual Map of Supermarkets
High price A B C D
Wide product range
Narrow product range G X F E
Low price

25. Repositioning Strategies
Product
Same
Different
Image repositioning
Product repositioning
Same
Target market
Intangible repositioning
Tangible repositioning
Different

26. Chapter Summary
The process of market segmentation is based on the principle that not all customers have the same needs.
They are many different variables which can be used for segmenting consumer and industrial markets.
The 5 criteria for successful segmentation are: effective, measurable, accessible, actionable and profitable.
There are 4 generic target marketing strategies: undifferentiated, differentiated, focus and customised marketing.
Positioning is the key tool for conveying how companies meet customer needs with products and services.
There are 4 repositioning strategies: image, product, intangible and tangible repositioning .