MARK4210 Class 6 STP Complete Spring 2021

MARK 4210 Professor Eugene R.
Raitt Spring 2021
SEGMENTATION,
TARGETING &
POSITIONING
MARK4210 Spring 2020

MARK 4210 Professor Eugene R. Raitt Spring 2021
2 Course Roadmap
Fundamentals Elements of Marketing Strategy Application
Situation Analysis
(Customer, Competitor, Company)
Market Selection
- Quantitative Analysis Simulation Game
(Segmentation, Targeting, Positioning)
- Consumer Behavior PharmaSim
Marketing Mix Formulation

(Product, Pricing, Distribution, Promotion)
3 THE STP PROCESS
Segmentation
Targeting
Positioning
Se g m e n ta tio n I
No n -se g m e n te d Se g m e n ta tio n II
m a rke t
Se g m e n ta tio n III
5 MARKET SEGMENTATION
• Dividing a heterogeneous market into groups

of (potential) customers (i.e., market
segments) with smaller groups of consumers
with distinct needs, characteristics, or
behaviors across groups, but homogeneous
within the group – and thus, reacts differently
to specific marketing strategies.
Why do it?
Source: A Note of Consumer Market Segmentation, Harvard Business School
6 MARKET SEGMENTATION
• Firms can serve the needs of segments more efficiently

and effectively with products that match segment
needs
• Identify groups that can be more effectively targeted with
specific marketing efforts
• Minimizes “guessing” in formulating marketing mix
strategy
• Leads to more effective implementation of marketing mix
• Provides basis for long range planning (e.g., market
evolution, product development)

7 Typical Segmentation Variables

• Based on consumers market history
• Product usage: frequency of brand/product use, brand loyalty
• Product benefit: needs product must fill
• Decision process: shopping patterns, information search, price
sensitivity
• Based on consumer characteristics
• Geography
• Demographic: age, gender, income, education level, social status
• Psychographic: personality traits, attitudes
• General lifestyle: activities, interests
• No single best way to segment a market, often need to
combine variables and identify smaller, better-defined target
groups
8 CRITERIA FOR SELECTING

SEGMENTATION VARIABLES
• Differentiable: group is internally homogenous (similar
characteristics/behavior) and different from other groups
• Identifiable: individuals can be “placed” within or outside a segment based
on an easily observable and measurable factor
• Substantial: have effective demand – group is large and profitable enough to
serve
• Accessible: can be reached by promotional efforts and distribution channels
• Stable: segment characteristics & members do not change in the short term

9
Steps in Segmentation
Steps Some Guide Questions
1. Define the • What are the marketing objectives (e.g., increase share,
purpose and increase demand, combat competition)?
scope of the • Looking for new segments, or to better satisfy existing ones?
segmentation • Use existing data or new research?
2. Analyze total • Characteristics of the total market (e.g., size, structure)?
market data • Differences between users/non-users of the product class?
• Factors that distinguish users, non-users, users of competitors?
• Current competitive position (e.g., leader, niche)?
3. Develop • What factor differentiates groups of consumers most clearly?
segment profiles • Are profiles of each segment internally consistent?
4. Evaluate • Differentiable, Identifiable, Stable, Measurable, Accessible?
segmentation • Major similarities and differences among segments?
• Should number of segments be reduced or increased?

18 Example: Cosmetics Industry Segmentation
Total Market
Male Female
Under 25 60 y.o.
25-39 y.o. 40-59 y.o.
y.o. above
Skin Wrinkle Glowing Social

Repair removal skin status
19
THE STP PROCESS
Segmentation
Targeting
Positioning
20 TARGETING
• What is targeting?
• The act of choosing which segment(s) to serve
and which ones to ignore.
Ta rg e t se g m e n t A
Ta rg e t se g m e n t B
Ta rg e t se g m e n t C

21 TARGETING
• What are the considerations in selecting a

target?
• Segment attractiveness
e.g., size, growth, market share, profitability, risk,
competition, reachability
• Segment compatibility with the company
e.g., compatible with the company’s competencies
and strategic goals
22 FOOD FOR THOUGHT

• “There is a segment in the market which BMW is not
catering to and that is the minivan or MPV segment.
We don’t have a van because a van as it is in the
market today does not fulfill any of the BMW group
brand values. We all as a team said ‘no’ .”
-- former BMW CEO Helmut Panke
23 TARGETING STRATEGIES
• Range of target market
Full Market Multiple Single Individuals as
Coverage Segments Segments Segments
Mass Customization
Market
Ignoring segment differences Targeting several segments Targeting a small Tailoring products and
and appeal the whole market with different products segment with specific marketing strategies to
with one offer or one strategy and/or marketing strategies well-defined needs suit individual tastes
Source: Marketing Management, Kotler & Keller

24
EXAMPLE: UNDIFFERENTIATED MARKETING
25 EXAMPLE: DIFFERENTIATED
MARKETING
26 EXAMPLE: NICHE
MARKETING
27 EXAMPLE:
MICROMARKETING
28 THE STP PROCESS
Segmentation
Targeting
Positioning
29 POSITIONING
• What is positioning?
• The process by which marketers identify a unique
selling proposition for the product
• The goal is to occupy a clear, attractive, and distinctive
position in the minds of the target consumers.

30 POSITIONING STATEMENT
• A statement that specifies how the company/product
wants to be perceived by the target consumers
• Elements
• Target market
• Frame of reference (product category)
• Point of difference
• Reason to believe
•Common form
• To (target market), (X) is the brand of (frame of reference) that
(point of difference) because (reason to believe).

31
32 POSITIONING: KEY
CONSIDERATIONS
• Competitive Frame of Reference
• Defining the target market and competition;
i.e., “category membership”
• Points of Difference (POD) => Differentiation
• Attributes or benefits consumers strongly
associate positively with a brand, and believe
they cannot find with a competitive brand
33 POSITIONING: KEY
CONSIDERATIONS
• Points of Parity (POP)
• Associations by consumers that are shared with other
brands
• May not be reason to choose a brand, but absence can
be reason to drop a brand
• Important to nullify competition by matching POP’s,
e.g., late market entrants try to make competitor's POD
into a POP for the category, and then introduce a new
POD to gain leadership
34 Positioning: Key Considerations
• A clear differentiation point is key

• Clearly linked to who you are for…(and thus delineated
from who you are not for)
• Offer points of differentiation that are valuable to your
target consumers
• Positioning may change over time
35
POSITIONING TOOL
• Perceptual map
• A positioning tool that helps define a brand’s
position relative to competitors
• Conveys product information on a few key
dimensions
• Represents the position of your product in
consumers’ mind relative to competitors
Beverage
36 Unhealthy
Coffee Pepsi
Coke
Fanta
Ginger Ale
Natural Artificial
Milk Sprite /7-up
Water a d e)
G a tor e)
( e.g. cozad
ra g es g . L u
e v e ( e . r
t s b n k s a te
r ri w
Tea Spo cose d itamin
Juice Gl u V
Beneficial
37 LOOKING AHEAD:
SEGMENTATION, TARGETING, POSITIONING
• Case Preparation: Project Team Cialis

1. How would you characterize the industry Cialis is in?
• How should their market area be segmented? What are the
characteristics of each of these segments?
• Which segment(s) should they pursue? Why?

MARK4210 Class 6 STP Complete Spring 2021

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MARK4210 Class 6 STP Complete Spring 2021

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MARK 4210 Professor Eugene R.

Raitt Spring 2021

MARK4210 Spring 2020

Marketing Mix Formulation

3 THE STP PROCESS

• Dividing a heterogeneous market into groups

• Firms can serve the needs of segments more efficiently

Source: A Note of Consumer Market Segmentation, Harvard Business School

7 Typical Segmentation Variables

8 CRITERIA FOR SELECTING

Source: A Note of Consumer Market Segmentation, Harvard Business School

Source: A Note of Consumer Market Segmentation, Harvard Business School

18 Example: Cosmetics Industry Segmentation

Skin Wrinkle Glowing Social

Source: A Note of Consumer Market Segmentation, Harvard Business School

• What are the considerations in selecting a

22 FOOD FOR THOUGHT

Source: Marketing Management, Kotler & Keller

28 THE STP PROCESS

Source: A Note of Consumer Market Segmentation, Harvard Business School

Source: A Note of Consumer Market Segmentation, Harvard Business School

34 Positioning: Key Considerations

• A clear differentiation point is key

• Case Preparation: Project Team Cialis

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