West, Ford, & Ibrahim

Strategic Marketing, 3rd edition

Chapter 5: Segmentation,
targeting, and positioning
strategies

© Douglas West, John Ford, and Essam Ibrahim, 2015. All rights reserved.
 A. INTRODUCTION

1. Overview and Strategy Blueprint

2. Marketing Strategy: Analysis &
perspectives

C. WHERE DO WE WANT TO BE?

B. WHERE ARE WE NOW?
3. Environmental & Internal Analysis:
Market Information & Intelligence,
Financial Analyses
4. Strategic Marketing Decisions,
Choices & Mistakes
5. Segmentation, Targeting
& Positioning Strategies
6. Branding Strategies
7. Relational & Sustainability
Strategies

D. HOW WILL WE GET THERE?

8. Product Innovation & Development
E. DID WE GET THERE? Strategies
9. Service Marketing Strategies
14. Strategy Implementation, Control 10. Pricing & Distribution Strategies
& Metrics 11. Marketing Communications Strategies
12. International Marketing Strategies
13. Social and Ethical Strategies

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Learning Objectives
Ø To understand the ways in which companies can segment
markets

Ø To discern how marketers can measure the effectiveness of

identified target segments

Ø Be able to differentiate among the various ways in which

marketers can reach the identified market segments

Ø Be able to explain the importance of positioning the product in

the head of the target consumer

Ø To know how to use important tools for perceptual mapping

Ø To know how to achieve a powerful position within the mind of the

target consumer
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
 Introduction

• Market segmentation is vital for company

success

ü Dividing the market into reasonable segments is

the starting point
ü Develop a series of strategic goals & strategies
to reach the identified target.
ü Establish an important perceptual position in the
mind of the consumer.

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Foundations for effective segmentation

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Foundations for effective segmentation

Ø Market segmentation involves the identification

of subgroups of consumers with similar wants
and buying requirements

Ø The point is to maximize between segment

differences while minimizing within segment
differences. Why?

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Criteria for identifying segments

Behavioristic bases

Psychographic Geographic
bases bases

Demographic bases

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Geographic bases for segmentation

Ø Geography
Ø Focuses on the where issue

Ø Local segmentation
Ø Global segmentation
Ø Need to also consider
topography & climate

Ø Campbell’s Soup: its cheddar

cheese soup in Midwest à put
in jalapeno peppers in
Southwest

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Demographic bases for segmentation
Demographic
– Gender
– Virginia Slim cigarettes
– Age:
– Youth
– Elderly consumers
– Cohorts of society
• Moments and events in late adolescence
/ early adulthood.
• This may not work globally. (Baby
boomers, Generation X, Y, Millennials)
– Level of Education:
– Firms like Coca-Cola, Nike, and Nabisco

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Demographic bases for segmentation

Demographic
– Level of Income: the difference between disposable
income and discretionary income
– Occupation:
– homemakers as opposed to professionals, students,
– “white collar” workers as opposed to “blue collar”
workers
– retirees/pensioners, and the unemployed.
– Religion:
– In the US, the Manischewitz Company sells products
which meet Jewish kosher standards.
– Ethnicity:
West, Ford,
– In& Ibrahim:
the US, Strategic Marketing,
McDonald’s ads 3 edition
rd
 Demographic bases for segmentation
Demographic
– Family size:
– Family life cycle stage
• Food packaging, dating
services,
• Automobile companies:
vans
– Social class/status: there are
six accepted grade definitions
used in the UK
– 1. A, upper middle class
– 2. B, middle class
– 3. C1, lower middle class
– 4. C2, skilled working
class
– 5. D, working class
– 6. E, lowest-grade
workers
– Each group has different
wants, needs,
expectations, and
preferences.

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Psychographic bases for segmentation
Psychographic Bases
• Lifestyle
– The ways in which
individuals choose to live
their lives
– Three main lifestyles
1. The arts and culturally
oriented consumer
2. The sports enthusiast
3. The outdoors
adventurer

• Personality
– Aaker(1997) identified five
different personality traits for
brands
– The idea is to match the
brand personality with the
consumer segment
personality profile to
establish a strong
connection.
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
 Psychographic bases for segmentation
Psychographic Bases

• Core Values
– The company stresses
values in its
products/services as well
as in its corporate
environment and culture

– Core values are deep set in

the individual by life
experiences and teachings,
and cannot be changed
easily.

– Starbucks’ environmental
mission statement:
Starbucks is committed to a
role of environmental
leadership in all facets of
our business.
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
 Psychographic &
Demographic

VALS Typology

• The acronym VALS,

(for "Values,
Attitudes and
Lifestyles") was a
breakthrough.

• VALS™ places U.S.

adult consumers
into one of eight
segments based on
their responses to
the VALS questionn
aire.

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Behaviouristic bases for segmentation
Behaviouristic
– Usage rate: light, moderate,
and heavy users.
– Rewards systems like
frequent flyer miles
– Loyalty level
• Brand insistence, brand
loyalty, split loyalty,
shifting loyalty, no
loyalty
– Benefits segmentation
• The health benefits of
anti-oxidant contained
in juice of
pomegranates,
blueberries, Concord
grapes, and red wines.
• This key health benefit
segmentation has been
successfully used by
the growers/processors.
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
 Behaviouristic bases for segmentation
Percent of First-Time Brides Who Receive Diamond Engagement
Rings (How an Ad Campaign Invented the Diamond Engagement
Behaviouristic Ring, The Atlantic)

– Creation of special events

– Florists, greeting card,

and candy companies

– Sweethearts’ Day,
Bosses’ Day, Secretaries’
Day, and Mother-in-Law’s
Day

– Jewelry companies
promotes diamond
engagement rings.

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Cross-border segmentation and
international challenges
– Culture is the
single biggest
challenge

– Diaspora
marketing

– Assimilators,
Marginals – poor
segments to target
– Biculturals, Ethnic
affirmers – good
segments to target

Lenovo
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
 Foundations à Strategic Framework: Principles of
Market Segmentation
Values
customer /
Attitudes
Who
client
characteristics
“soft” Psychographics
buys Lifestyle

Market Segments Socio-economic &

Size? demographic
Access?
“hard”
Geography
Differentiated?
Benefits
Subjective Perceptions
Preference trade-offs
What is
bought customer /
and why client
behaviour Usage
Price sensitivity
Objective
Promotional response
Loyalty/ repeat purchase
Source: Palmer & Millier (2004)

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Segmentation Tools

Cluster Analysis
Conjoint Analysis
Discriminant Analysis
Multidimensional Scaling

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Targeting

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Targeting

• Targeting involves
• deciding on the segments to serve and
• the best action plans to reach the identified segments

• Once the segments have been chosen, how do we know whether

they are viable or not?
• Requirements for segments to be appropriate by Kotler (2003)
– Measurable
– Accessible
– Substantial
– Differentiable
– Actionable

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Measuring effectiveness of target segments

• Trade off - production and marketing

– Unrestrained marketing vs unrestrained product differentiation
– In the US in 1985, Ford Motor Company’s Thunderbird offered 19,000
variation, hard to handle servicing. The Honda Accord shipped from Japan
provided 34 variation.

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Positioning

• Positioning refers to the

placing of the product or
service in a perceptual
position within the mind of the
consumer
• Al Reis and Jack Trout (2001)
“Positioning: The Battle for
Your Mind”
• A ladder inside every
consumer’s head for each
product class

• Being on the top of the ladder

à consumer franchise,

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Consumer Franchise

• The ability for the

firm to keep its
product/brand/com
pany name
foremost in the
mind of the target
consumer

• It is considered as
bankable asset

• There is a
psychological
buffering built in.

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 DHL Package Delivery - Sample Positioning
Statement

• A key element of positioning is the development

of a positioning statement.

[Convince] To business managers and professionals engaged

in making time sensitive decisions about international
business,
[That] DHL delivers on time

[Because] its pickup, transportation and delivery

system is wholly-owned and managed by DHL
personnel, not by third party providers.
West, Ford, & Ibrahim: Strategic Marketing, 3rd edition
 The criteria for successful positioning
- The 4 C‘s of Positioning

Apple offers …. the best personal

• Clarity computing experience to students,
educators, creative professionals
and consumers around the world
• Consistency through its innovative hardware,
software and Internet offerings.

• Credibility The Chrysler PT Cruiser is an

inexpensive, small car, that is
versatile, fun to drive, and will
• Competitive appeal to active singles and young
couples with children who
ness otherwise would have bought an
SUV or a minivan.

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Perceptual Mapping

• Perceptual position inside the heads of its

target audience
• Two different views of the confectionery
market in the UK

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Figure 5.5 - Perceptual Mapping: Mars’ four
products

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Perceptual Map UK Confectionery Brands

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Positioning and the importance of
consistency
• Calvin Klein Says
Designer Fashion Is
Over
• The brand is closing
its high-end line, in a
move that could have
ripple effects across
the American fashion
industry.

• (https://www.nytimes.
com/2019/03/07/fashi
on/calvin-klein-
closes-
collection.html)

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition

 Conclusion

• Companies that approach the process of segmentation, targeting

and positioning as a series of logical steps

• The company must find appropriate target consumers and grab a

position on the product ladder inside their heads.

• The company must also keep up with the perceptions of consumers

and continuing to build and maintain consumer franchise.

Segmentation Targeting Positioning Perceptual Mapping

West, Ford, & Ibrahim: Strategic Marketing, 3rd edition