Chapter 4

Focusing Marketing Strategy

with Segmentation and
Positioning

For use only with

Perreault/Cannon/
McCarthy texts, © 2009
McGraw-Hill
Companies, Inc.
McGraw-Hill/Irwin

www.mhhe.com/fourps
Focusing Marketing Strategy with
Segmentation and Positioning (Exhibit 4-1)
Focusing Marketing Strategy with
Segmentation and Positioning (Exhibit 4-1)

Segmentation
•Defining markets
•Dimensions to use
•Identifying segments
•Identifying segments to target
•Segmentation approaches
Positioning
•Understanding customer’s view
•Positioning techniques
•Evaluating segment preferences
•Differentiating the marketing mix
•Relationship between
positioning & targeting
Taking
Advantage of
Opportunities
Naming Product Markets and Generic Markets

Product Customer
Type Needs

Product-Market
Definition

Geographic Customer
Area Type

No Product Type in Generic Market Definition

Segmentation is a Two-Step Process

1. Naming broad
product-markets

and

2. Segmenting
markets and
selecting
targets
The Process of Narrowing Down to Target
Markets (Exhibit 4-3)
All customer needs
Narrowing
Some generic market down to
specific
product-market
One broad
product-market

Homogeneous Segmenting
(narrow) product- into possible
markets target markets

Single Multiple Combined

Selecting target
target target target marketing
market markets markets approach
Market Segmentation Defines Possible Target
Markets (Exhibit 4-4)

Broad product-market (or generic market) name

goes here (The bicycle-riders product-market)

Submarket 1
(Exercisers) Submarket 3 Submarket 4
(Transportation riders) (Socializers)
Submarket 2
(Off-road
adventurers) Submarket 5
(Environmentalists)
How Far Should the Aggregating Go? (Exhibit 4-5A
and 4-5B)

B. Product-market showing
A.
Status dimension six segments
three segments

Dependability dimension
 Segmenters and Combiners Aim at Specific
Target Markets (Exhibit 4-6)

A segmenter Single target

market approach The
develops a Strategy
different
marketing
mix for each Strategy two
segment. Multiple target
market approach Strategy
one Strategy three

A combiner aims at two or The

more submarkets with the strategy
same marketing mix.
Segmenting vs. Combining

Too Much
Combining Is
Combiners Risky Segmenters
Try to Satisfy Try to Satisfy
“Pretty Well” “Very Well”

Key Issues
Profit Is the Segmenting
Balancing May Produce
Point Bigger Sales

Segment or
Combine?
Behavioral dimensions for segmenting
consumer markets

Information Needs Benefits

required Sought

Type of
problem- Thoughts
Behavioral
solving
Segmenting
Dimensions
Kind of
Rate of use
shopping

Brand Purchase
familiarity relationship
Geographic dimensions for segmenting
consumer markets

Region of
Region in a
world or
country
country
Geographic
Segmentation
Dimensions

Size of city
Demographic dimensions for segmenting
consumer markets
Income

Gender or age
Demographic
Segmentation Family size or family
Dimensions life cycle stage

Occupation or
education

Ethnicity or social
class
Segmenting business markets

Kind of Type of
relationship customer

Segmenting
Dimensions
Purchasing for Demographics
methods Business
Markets

How customers
Type of buying
will use the
situation
product
Business-to-
Business
Segmentation
What Dimensions are used to Segment
Markets?

Qualifying Determining
Dimensions Dimensions
• Relevant to • Affect the
including a customer’s
customer type in a purchase of a
OR
product-market product or brand

• Help identify “core • Can be further

benefits” segmented
Determining vs. Qualifying Dimensions

Determining Determining
Dimensions May Dimensions May
Be Very Specific Change

Key Issues

Different
Dimensions For Qualifying
Different Dimensions Are
Submarkets Important Too
Ethical Issues in Segmenting Markets

Ethical International
Exploitation
Issues Issues

Creates
Unnecessary
Wants

Does Harm
Psychographic Segmentation

© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Segmenting Product Markets (Exhibit 4-11)
1. Select (name) the broad
product-market
2. Identify potential
customer needs

3. Form initial homogeneous

submarkets
4. Identify determining
dimensions
Best
Practice 5. Name possible
product-markets
Approach
for 6. Evaluate product-market
Segmenting segments
Product-Markets 7. Estimate size of each
product-market segments
More Sophisticated Techniques May Help in
Segmenting

Clustering

Customer Database

Customer Relationship
Management (CRM)
Cluster
Analysis
“Product Space” Representation of Positioning
(Exhibit 4-13)

High moisturizing

Tone 7
Zest
4
Dove Lever 2000
5 2
Safeguard
Coast
Lux 8
Nondeodorant 3 Deodorant

1
Dial
Lifebuoy
Lava
6

low moisturizing
You should now be able to:

1. Know about defining generic markets

and product-markets.
2. Know what market segmentation is and
how to segment product-markets into
submarkets.
3. Know three approaches to market-
oriented strategy planning.
4. Know dimensions that may be useful
for segmenting markets.
5. Know a seven-step approach to market
segmentation that you can do yourself.
6. Know what positioning is and why it is
useful.
Key Terms

• Market • Combiners
• Generic market • Segmenters
• Product market • Qualifying dimensions
• Market • Determining dimensions
segmentation • Clustering techniques
• Segmenting • Customer relationship
• Market segment management (CRM)
• Single target market • Positioning
approach
• Multiple target
market approach
• Combined target
market approach