Lecture 5

Segmentation, Targeting, Positioning

- Segment: by dividing a market into different segments and what type of
products/services they are looking for
- Targeting: providing these goods/products to the targeted segment
- Positioning: when a company looks at the competitors and try to differentiate from the
competitors and create more customer value
- Segmentation looks at the different segments and see how similar their desires are,
which determines how advertisement may get through to different groups of people
- What makes good segmentation? (*it may depend on the company’s objectives)
o Divide the market into large enough segments
o Needs to identifiable and specific (e.g. spiritual vs people who do yoga 2 to 3
times a week)
o Distinctiveness of a segment (e.g. people with different incomes, it matters for a
real estate company for castles)
o Stable (e.g. income, apple targeting for creative career people)
- Many different ways to segment a market:
1. Personal characteristics:
o Using demographics: easily measurable, basic info (e.g. age, gender, income,
etc.)
o Psychographics and lifestyle: since 40 years ago, new ways to measure
consumption; using AIO (Activities, Interests, Opinions) (e.g. surveys) or VALS
 VALS Dimensions: what are the primary motivations of people? What
kind of resources does people have (innovators vs survivors)?
o Geographic segmentation: where do people live? (regional segmentation) (e.g.
soda vs pop), ZIP clustering (separate according to neighbourhood)
2. Benefits sought
o Focus on benefits that people want in a product/service (e.g. jeans and types of
things people are looking for), this allows firms to target customers that want
certain benefits
3. Product-related behaviours
o Focus on brand loyalty, and how much a customer uses of a certain
product/brand; may do this by looking at purchase frequency and how often
some switches brand; this changes how a brand market itself (e.g. bulk items are
marketed to the brand switching user)
- Targeting weighs each segment’s attractiveness and creates a criterion for picking the
segment
- Some factors to consider include how competitive the market is for different segments
and if there are existing unserved needs that are not satisfied by current competitors;
also look at how well a product/service fits with the company; also if there are
opportunities for profit by looking at segment size and the growth rate
 - E.g. Mobil, a gas retailer conducted a survey to determine cause for low sales; contrary
to popular belief, the customers were not all price conscious, but more focused on quick
service and more food options at gas station, there were 5 groups of customers, instead
of 1
- Product lines with segmentation (e.g. Old Navy (young kids + family, price conscious),
Gap (university, price conscious, but has income), Banana Republic (career people with
higher income))
- Product positioning is by placing an image of the brand to customers, holding a valued
position when compared to competitors
- Product’s position is the actual image in the minds of customers of the brand
- Positioning statement is the company/brand’s desired image for customers
- Many ways to position a product/brand: attribute, benefit, price/quality, use/occasion,
product user, etc.
- Positioning depends on differentiation in order to make lasting image about brand to
customers
- The key to positioning is to determine what customer needs are the most important and
how customers view competitors perform in terms of these needs

Market Research
- “It is the eyes and ears of the corporation”
- The process of determining a marketing problem or opportunity, collecting and
analyzing information and recommend steps for improvement
- Types of research methods:
o Exploratory research: small samples, data collection (e.g. focus groups, small
group questions with a discussion leader and may be followed up by
surveys/experiments; observation, looking at people’s behaviour; projective
techniques, what comes to the minds of customers when mentioning the brand,
“what is the first things that comes to mind when you hear Heinz?”)
o Descriptive research-surveys: more structured with questions, could be done
over the phone, online, in person; looks at the time, cost, length and response
rate of the survey
o Casual research-experiment: use an experiment to determine casual
relationships by looking at 2 to 3 variables (e.g. mattress ads that have 2
versions, show to groups of people to see which is more popular)