Copyright © 2012 McGraw-Hill Ryerson Limited

Ajax Persaud Shirley Lichti

Dhruv Grewal Michael Levy

Week Five

SegmentationTargeting and Positioning

7-2

Chapter Objectives

LO1 Describe the STP process

LO2 Describe the bases marketers use to segment a market

LO3 Discuss the criteria for determining the attractiveness of a segment and whether it is worth pursuing (targeting)

LO4 Explain how a firm decides what type of segmentation strategy to use: undifferentiated, differentiated, concentrated, or micromarketing

LO5 Explain what positioning is and describe how do firms do it

LEARNING OBJECTIVES

7-3

Chapter Roadmap

7-4

Coke Zero

“Real Men” didn’t want diet drinks Segment of men who wanted a lower

calorie beverage Very successful new product launch

7-5

Segmentation Targeting Positioning Process

LO1

7-6

Step 1: Establish Overall Strategy or Objectives

Consistent with mission statement

Derived from mission and current state

LO1

7-7

Step 2: Profile Segments

Segmentation Base

Sample Segments

Geographic Country, province, city, urban, rural, climate

Continent: North America, Asia, Europe, Africa

Region: Atlantic, Central, Western Canada

Demographic Age, gender, income, education, occupation, ethnic background, religion, family life cycle, etc.

Psychographic Lifestyles, Values, Personality, Self Concept

Behavioural Benefits sought, Usage rates, User status, Loyalty

LO2

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Geographic Segmentation

Divide market into separate geographic units

Countries, regions provinces, cities, neighbourhoods, climate, etc.

Develop appropriate marketing programs

LO2

7-9

Geographic segmentation is most useful for companies whose products satisfy needs that vary by __________.

A) genderB) regionC) age D) nationality

Test Your Knowledge

7-10

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 Statistics Canada Census data

LO2

7-11

Psychographic Segmentation

How consumers

describe themselves

Self-values

Self-concept

Lifestyles

LO2

7-12

VALS Framework

VALS Website

LO2

7-13

Behavioural Segmentation

LO2

7-14

Using Multiple Segmentation Methods

LO2

7-15

Which of the following tools is widely used for geodemographic segmentation?

A) PRISMB) LSAT C) GNP D) LIMRA

Test Your Knowledge

7-16

How can geodemographic segmentation be used to help consumers find the perfect place to live?

Finding a Place to Live

LO2

7-17

Case in Point: Neighborhood Scout

Challenge

Answer

Results

To help homebuyers find the perfect neighborhood for their needs.

Use geodemographic segmentation to identify the neighborhoods that most closely match their needs and wants.

A patented neighborhood search engine with 70,000 subscribers and more than 1 million people who have used the service.

LO2

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LO2

7-19

Step 3: Evaluate Segment Attractiveness

LO3

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Identifiable

Who is in their market? Are the segments unique? Does each segment require a unique marketing mix?

Discussion question

When would these women all be in the same segment? When would they be in different segments?

LO3

7-21

Reachable

LO3

7-22

Responsive

React positively to firm’s offering

Move toward the firm’s products/services

Accept the firm’s value proposition

Customers must:

LO3

7-23

Substantial and Profitable

Size matters

Too small and segment is insignificant, not profitable

Growth potential equally important

LO3

7-24

• Segment size = 60 million (<15 yrs)

• Segmentation Adoption Percentage = 35%

• Purchase Behavior = $500 x 1 time purchase

• Profit margin % = 10%• Fixed Cost = $50M

Profitable Segments

Is this segment profitable?Is this segment profitable?

LO3

7-25

Which of the following factors would be most useful in determining whether or not a product will be profitable?

A) the region where the consumer lives B) the inflation rate C) the defection rateD) the speed of the distribution factors

Test Your Knowledge

7-26

Step 4: Selecting a Target Market

You are a marketing manager for a denim company and need to choose a target market for a new line of jeans.

Both the consumers pictured wear jeans.

How do you choose?

LO4

7-27

Segmentation Strategy

LO4

7-28

Which of the following products is most likely to use an undifferentiated segmentation strategy?

A) shoes B) jewellery C) cereal D) flour

Test Your Knowledge

7-29

Step 5: Identify and Develop Positioning Strategy

LO5

7-30

Positioning strategies generally focus on either how the product or service affects the consumer or how it is _______________.

A) better than the previous year’s product line B) advertised on the InternetC) better than competitors’ products and services D) positioned relative to the company mission

statement

Test Your Knowledge

7-31

Value

• The relationship of price to quality• Different consumers = different value

Meet Grandpa Tony, now retired: He knows the price of everything he has

ever bought. He clips the newspaper coupons. He goes to multiple stores to get the best

price. He is willing to pay more for quality. He trusts brand names.

LO5

7-32

Product Attributes

Focus on the attributes that are most important

Vary by target market

Meet Selia, first year student.

Reasons for her college choice: Close to home. Good academic reputation. Good financial aid package. Did we mention cute guys?

LO5

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Benefits and Symbolism

LO5

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Competition

Position against an

entire product classification

Position against a specific

competitor

LO5

7-35

Market Leadership

May emphasize their leadership position within their industry.

7-36

Positioning by Using Perceptual Mapping

When developing a positioning strategy, firms go through 5 important steps

Perceptual Map : Displays, in two or more dimensions, the position of products or brands in the consumer’s mind.

The position of each brand is denoted by a small circle, and the numbered asterisks denote consumers’ Ideal points (Where a particular market segment’s ideal product would lie on the map

7-37

Positioning Steps

LO5

7-38

Perceptual Maps

LO5

7-39

Repositioning

Whirlpool: New design Surf detergent: New message Elizabeth Arden: New faces YM: New audience Gallo: New image Aqua Velva: New packaging Arm & Hammer: New uses

LO5