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CHAPTER

SEGMENTATION, TARGETING, AND POSITIONING

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L E A R N I N G O B J E C T I V E S

Outline the different methods of segmenting a market.

Describe how firms determine whether a segment is attractive and therefore worth pursuing.

Articulate the difference among targeting strategies: undifferentiated, differentiated, concentrated, or micromarketing.

Determine the value proposition.

Define positioning, and describe how firms do it.

Segmentation, Targeting, and Positioning

LO1

LO2

LO3

LO4

LO5

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Segmentation, Targeting, Positioning Process

Step 1 • Strategy or Objectives

Step 2 • Segmentation Methods

Step 3 • Evaluate Segment Attractiveness

Step 4 • Select Target Market

Step 5 • Identify and Develop Positioning Strategy

Segmentation

Targeting

Positioning

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Step 1: Establish Overall Strategy or Objectives

Check YourselfDerived from mission

and current state

©M. Hruby.

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Step 2: Segmentation Methods

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CHECK YOURSELF

1. What are the various segmentation methods?

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Step 3: Evaluate Segment Attractiveness

SEGMENT ATTRACTIVENESS

Substantial

Reachable

ResponsiveProfitable

Identifiable

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Identifiable

Who is in their market?

Are the segments unique?

Does each segment require a unique marketing mix?

Liquidlibrary/Dynamic Graphics/Jupiterimages

Liquidlibrary/Dynamic Graphics/Jupiterimages

Comstock Images/JupiterImages

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Substantial

Too small and it is insignificant

Too big and it might need it’s own store

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Arc

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/Co

rbis

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Reachable

Know the product exists

Understand what it can do

Recognize how to buy

©Digital Vision/PunchStock

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Responsive

React positively to firm’s offering

Move toward the firms products/services

Accept the firm’s value proposition

Customers must:

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Profitable Segments

Segment size = 60 million (<15 yrs)

Segmentation Adoption Percentage = 35%

Purchase Behavior = $500 x 1 time purchase

Profit margin % = 10%

Fixed Cost = $50MIs this segment profitable?

©Comstock/PunchStock

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Step 4: Selecting a Target Market

Conde Nast has more than 20 niche magazines focused on different aspects of life.

©M Hruby

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Segmentation Strategy

Targeting Strategies

Differentiated

Concentrated

Micromarketingor

one-to-one

Undifferentiated or

mass marketing

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Step 5: Develop Positioning Strategy

• Value• Salient Attributes• Symbol• Competition

Positioning Methods

Photo by Tiffany Rose/WireImage/Getty Images

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Positioning Steps

1. Determine consumers’ perceptions and evaluations in relation to competitors’.

2. Identify the market’s ideal points and size.

3. Identify competitors’ positions.

4. Determine consumer preferences.

5. Select the position.

6. Monitor the positioning strategy.

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Perceptual Maps

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CHECK YOURSELF

1. What is a perceptual map?

2. Identify the six positioning steps.