Market Segmentation,

Targeting, and Positioning

Market Needs vs. Segmentation…
Identify Market Needs
Benefits
Benefits in
in terms
terms of:
of:
•Product
•Product Features
Features
•Expense
•Expense
•Quality
•Quality
•Savings
•Savings in
in time
time and
and
convenience
convenience Process of Market
Segmentation,
Targeting, & Marketing Program
Positioning A
A marketing
marketing mix
mix
in
in terms
terms of:
of:
Product
Product
Price
Price
Promotion
Promotion
Place
Place
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BA-3365 Marketing Management
Process of Market Segmentation, Targeting
& Positioning
Market Segmentation
1.
1. Identify
Identify bases
bases for
for
segmenting
segmenting the
the
market
market
2.
2. Develop
Develop segment
segment
profiles
profiles Market Targeting
3.
3. Develop
Develop measure
measure
of
of segment
segment
attractiveness
attractiveness
4.
4. Select
Select target
target
segments
segments Market Positioning
5.
5. Develop
Develop positioning
positioning
for
for target
target segments
segments
6.
6. Develop
Develop aa
marketing
marketing mix
mix for
for
each
each segment
segment
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BA-3365 Marketing Management
Market Segmentation
Market Segmentation:

It involves aggregating prospective buyers into
groups that:
1. Have common needs and
2. Will respond similarly to the marketing action.

The groups that result from the market
segmentation process are called market segments,
a relatively homogeneous collection of prospective
buyers.
Time to Market Segmentation:

One Product & Multiple Market Segments

Multiple Products & Multiple Market Segments

Segments of One: Mass Customization
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BA-3365 Marketing Management
Criteria for Market Segmentation
Criteria for Market Segmentation:
1. Potential for increased profit and ROI.
2. Similarity of needs of potential buyers within a
segment.
3. Difference of needs of buyers among/across
segments.
4. Feasibility of marketing action to reach a segment.
5. Simplicity and cost of assigning potential buyers to
segments.

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BA-3365 Marketing Management
Market Segmentation: Variables
Consumer Characteristics:

Geographic: Region, city size, metropolitan area, density,
etc.

Demographic: Gender, age, race, life stage, birth era, HHD
size, residence tenure, marital status, etc.

Socioeconomic: Income, education, etc.

Psychographic: Personality, values, lifestyle, etc.

Buying Situations:

Outlet type: Instore, direct, etc.

Benefits sought: Product feature, needs, etc.

Usage: Usage rate, user status, etc.

Awareness & intentions: Product knowledge, etc.

Behavior: Involvement

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BA-3365 Marketing Management
Level of Marketing Segmentation

No Mass Marketing
Segmentation

Segment Marketing

Niche Marketing

Micro Marketing
Complete
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BA-3365 Marketing Management
Market Segmentation: Product
Differentiation
Product Differentiation:

In a broad sense, it involves a firm’s using different
marketing mix activities, such as product features
and advertising, to help consumers perceive the
product as being different and better than
competing products. The perceived differences
may involve physical or nonphysical features, such
as image or price.

In a narrower sense, it involves a firm’s selling two

or more products with different features targeted
to different market segments.
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BA-3365 Marketing Management
Criteria for Target Market
Criteria for Target Market:
1. Size: The estimated size of the market to determine
whether or not it is worth going after.
2. Expected Growth: The size of the market may be
small, but if it is growing significantly it may be worth
going after.
3. Competitive position: The less competition the more
attractive the market.
4. Cost of reaching the market: Is the market accessible to
a firm’s marketing actions? If not it should not be
pursued.
5. Compatibility with the organization’s objectives and
resources.
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BA-3365 Marketing Management
 Market Segmentation: Reebok
Market-Product Grid
Market Segment Product
GROUP Running Aerobic Tennis Basketball Children’s Walking Cross Step Athletic Golf
WITH Shoes Shoes Shoes Shoes Shoes Shoes Train’g Train’g clothing shoes
General NEED 1981 1982 1984 1984 1984 1986 1988 1991 1993 1997
Runners P P
Performance- Aerobic P p
conscious Dancers
consumers Tennis P P
(athletes) players
Basketball P P
players
Step S P
exercisers
Golfers P P
Fashion- Comfort & S S S S S S S
conscious style
consumers Conscious
(nonathletes) walkers S S S S P P
Children P
KEY: P=Primary Market S=Secondary Market

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BA-3365 Marketing Management
Market Segmentation: Hudson’s
Example

Markets Soft Pillow Medium Pillow Firm Pillow

Stomach Sleepers L M S

Back Sleepers M L M

Side Sleepers S M L

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BA-3365 Marketing Management
 Market Segmentation: Apple’s
Segmentation Strategy
MARKETS PRODUCTS (PERSONAL COMPUTERS)

POWER POWER
MACINTOSH POWERBOOK MACINTOSH
SECTOR SEGMENT G4 G4 IMAC G4 SERVER

Consumer/ Family/
household Games √

EDUCATION Kindergarten Students √

thru 12th grade Faculty/
administration √ √ √
College and Students √ √ √
University Faculty
administration √ √ √

COMMERICAL Small business Owners/

Large business employees √ √ √
Design and Administration/
Publishing technical √ √ √
Media/graphics/
Internet √ √ √
Desktop publishing √ √ √

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BA-3365 Marketing Management
Market Segmentation: Impact of
Decision Variables I
Econometric Model

McCANN (1974, JMR)

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BA-3365 Marketing Management
Market Segmentation: Impact of
Decision Variables II

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BA-3365 Marketing Management
Market Segmentation: Impact of
Decision Variables III

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BA-3365 Marketing Management
Market Segmentation: Cross
Tabulation
Cross Tabulation:

A method of presenting and relating data having two or more
variables. Cross tabs are used to analyze and discover
relationships in the data.

An important aspect of cross tabulations is deciding which
two variables should be paired together for analysis.

Examples:
FREQUENCY
AGE OF
HEAD OF ONCE 2 OR 3 ONCE
HOUSEHOLD A WEEK TIMES A MONTH
(YEARS) OR MORE A MONTH OR LESS TOTAL
24 or less 144 52 19 215
25 to 39 46 58 29 133
40 or over 82 69 87 238
Total 272 179 135 586

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BA-3365 Marketing Management
Positioning: Product Positioning
Product Positioning:

It refers to the place an offering occupies in
consumers’ minds on important attributes relative
to competitive offerings.

Approaches:

Head-to-Head Positioning

It involves competing directly with competitors on similar
attributes in the same target market

Differentiation Positioning

It involves seeking a less competitive, smaller market
niche in which to locate a brand.

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BA-3365 Marketing Management
Positioning: Perceptual Map I
Rationale (or Assumptions):

Consumers generally use a small number (2~4)
of product attributes when they think about a
particular product or product class.

In determining a brand’s position and the
preferences of consumers, companies obtain
three types of data from consumers:

Evaluations of the important attributes for a
product class.

Judgments of the existing brands with the
important attributes.

Ratings of an “ideal” brand’s attributes.
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BA-3365 Marketing Management
Positioning: Perceptual Map
Objectives:

It is to identify the relevant dimensions & to
locate the positions of existing & potential new
products along these dimensions

Products are represented by locations in a space
of several dimensions that distinguish among
the products

Approaches:

Attribute-based procedures: Factor analysis

Similarity-based procedures:
Multidimensional scaling (MDS)

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BA-3365 Marketing Management
Positioning: GM’s Repositioning
Strategies Using Perceptual Map
A. Consumer perceptions
in 1982 [o] and GM goals B. Potential change in goals
for 1990 [ ] from 1990 [ ] to 2000

High Price
High Price Cadillac
?
Cadillac o Buick
?
Buick o Oldsmobile
Oldsmobile ?
o
Family/ Personal/ Family/ Personal/
Conservative Expressive Conservative Expressive
o Pontiac Pontiac
? ?
Chevrolet o
Chevrolet
Saturn Saturn
(1990)

Low Price Low Price

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BA-3365 Marketing Management