Chapter 6

Segmentation,
Targeting, and
Positioning

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 Chapter 6: Segmentation, Targeting,
and Positioning

LEARNING
OBJECTIVES
LO1 Describe the bases marketers use to segment a market
LO2 Identify the criteria for determining the attractiveness of a
segment & whether it is worth pursuing (targeting)
LO3 Explain the differences among targeting strategies:
undifferentiated, differentiated, concentrated, or
micromarketing
LO4 Describe positioning & how firms do it

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 Segmentation, Targeting, & Positioning

 Who is the target market for SoCIAL LITE Vodka?

 Product location strategy
 Multiple segmentation strategies were employed

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The segmentation-targeting-position process

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 Step 1: Establish Overall
Strategy or Objectives
Consistent with
mission statement

Derived from
mission & current
state

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 Step 2: Segmentation Bases
Segmentation
Sample Segments
Base
Geographic Continent (North America, Asia, Europe, Africa), country, region (West Coast,
Prairies, Central, Maritimes), province, city, urban, suburban, rural, climate
Demographic Age, gender, income, education, occupation, race, marital status, family size,
family life cycle, religion, ethnic background (white, black, Asian, Indian,
German, Irish, Arab), generational cohort (baby boomer, Generation X,
Generation Y), home ownership
Psychographic Lifestyle (Innovators, Thinkers, Achievers, Experiencers, Believers, Strivers,
Makers, Survivors), personality/self-concept (conservative, liberal,
adventuresome, outgoing, health- and fitness-conscious), social class (upper
class, middle class, working class)
Behavioural Benefits sought (convenience, economy, prestige, quality, speed, service,
environmental impact), usage (heavy, moderate, light, non-user, ex-user,
potential user, first-time user), loyalty (not loyal, somewhat loyal, completely
loyal)

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 Geographic Segmentation

 Divide market into separate geographic units

 Countries, regions provinces, cities,
neighbourhoods, climate, etc.
 Develop appropriate marketing programs

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 Test Your Knowledge

Geographic segmentation is most useful for companies whose

products satisfy needs that vary by __________.
A) gender
B) region
C) age
D) nationality

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 Test Your Knowledge

Geographic segmentation is most useful for companies whose

products satisfy needs that vary by __________.
A) gender
B) region
C) age
D) nationality

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 Demographic Segmentation
 Most common method
 Divide market into groups based on:
– gender
– age
– ethnic group
– family lifecycle stage
– household type
– income
– Other, e.g. occupation, education, religion
 Census excellent source of segmentation data

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 Psychographic
Segmentation
How consumers describe themselves:
 Self-values

 Self-concept

 Lifestyles

Marketers such as MEC want their ads to appeal to one’s self-concept. “I’m like
them, so I should buy their products.”

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 DESCRIPTION OF VALS
Innovators
CATEGORIES
• Successful,
sophisticated, take-
charge people
• High-esteem
• Change leaders, open to
new ideas and
technology
• Actively seek new
information
• Experiment with
confidence, future
oriented
• Problem-solvers
• Active consumers,
cultivated tastes
Strivers
• Live in the moment
• Trendy, fun-loving
• Money defines success
• Favour stylish products
• Revolving rates of
temporary
unemployment
• Looking for a better
life, not easily achieved
• Active yet impulsive
consumers
Thinkers
• Old guard, respect
Believers
• Hold conservative
Achievers
• Goal-oriented
authority belief systems, deep- professionals
• Well-educated rooted moral codes • View money as source
• Mature, satisfied, • Value family, religion, of authority
comfortable community • Deep commitment to
• Carefully research and • Value stability career, family
plan before taking • Dislike ambiguity • Respect authority and
action • Not looking to change the status quo
• Appreciate historical society • Active consumers
perspective • Predictable, loyal • Favour prestige
• Act in accordance with consumers products, conscious of
what’s right • Choose familiar peers
• Not influenced by latest products, established • Embrace technology
trends brands with productivity
benefits
Experiencers Makers Survivors
• Seek variety, • Practical people with • Oldest consumers
excitement constructive skills • Cautious, risk averse,
• Enthusiastic, impulsive • Strong mechanical and feel world is changing
consumers automotive interests too fast
• Want it all mentality • Traditional views of • Concern for safety,
• Active in sports and family, work, gender security
social activities roles • Comfortable with
• Heightened sense of • Protect what they see as routine and the familiar
visual stimulation theirs • Loyal to favourite
• Keep up with latest • Value self-sufficiency brands
fashions • Suspicious of new ideas • Laggards in technology
• Want to look good, • Unimpressed with • Focus on needs vs.
have cool stuff material possessions wants
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 VALS TYPES

It is just as easy to identify Thinkers (left) as it is Makers (right). A person is given the VALS™ questionnaire, and the VALS™ program at
SRIC-BI runs the answers through the computer for scoring to determine the VALS™ type.

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Behavioural Segmentation

Benefits

Behavioural
Usage
Occasion Segmentatio Rate
n

Loyalty

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 Geodemographic
Segmentation
 How consumers describe themselves using a
combination of geographic, demographic, and
lifestyle characteristics to segment a market.

 “Birds of a feather flock together.”

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 Geodemographic
Cluster
Segmentation PSYTE clusters
Urban Lower Middle (U4):
Name Urban Bohemia
Description From body piercing to
tattoos, Urban Bohemia
includes a diverse population
by design. A neighbourhood
with a youthful skew, this
cluster occupies itself in
a variety of artistic, retail,
and generally creative
employment. Men and
women employed in cultural,
artistic, and entertainment
related
jobs abound.
Household maintainers under
age 25, many with college
degrees, are also
Average $46,000
Household
Income
Source: Used by permission of Pitney Bowes Software.
© 2023 McGraw Hill Limited
Suburban Affluent (S1):
Suburban Affluence
This cluster with a flair for fine
living represents both old and
new wealth. Because wealth
accumulates throughout life
stages, this cluster exhibits an
older skew with many empty
nests. Suburban Affluence
indexes high on managerial
and technical employment
and are married with children.
$166,000
Suburban Affluent (S1):
Asian Heights
Asian ancestries combined with
hard work and growing wealth
create and mould these upscale
neighbourhoods. Asian Heights
represents the affirmation of
dreams cultivated through
generations of immigrants and
often through hardship. These
families boost local economies
as well as family prospects.
Asian Heights indexes high
on Chinese, Korean, and
Japanese immigration as well
as households of six or more
persons.
$96,000
6-16
 Test Your Knowledge

Which of the following tools is widely used for geodemographic

segmentation?
A) PSYTE
B) LSAT
C) GNP
D) LIMRA

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 Test Your Knowledge

Which of the following tools is widely used for geodemographic

segmentation?
A) PSYTE
B) LSAT
C) GNP
D) LIMRA

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Step 3: Evaluate Segment
Attractiveness

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 Identifiable
 Who is in their The Gap has identified several
distinct segments to pursue.

market? Two of its brands: Gap (left)

and Gap Kids (below) appeal
to different target markets.

 Are the segments

unique?
 Does each segment
require
a unique marketing
mix?

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 Reachable
Know the
product exists

Understand
what it can do

Recognize how
to buy
La Senza must ensure that any new segment it
considers is identifiable, reachable, responsive,
substantial, and profitable.

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 Responsive
Customers must:
 React positively to firm’s offering
 Move toward the firm’s products/services
 Accept the firm’s value proposition

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 Substantial &
Profitable
 Size matters
 Too small & the segment is insignificant, & will not be
profitable
 Growth potential equally important

Which segment will be more profitable to Mark’s: its traditional

market for industrial workwear (above), or the top-line casual
apparel segment (right)?

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 Segment Profitability – How to
Determine?
• Segment size (# of people in segment) = 60 million (<15 yrs)
• Segmentation Adoption Percentage = 35%
• Purchase Behavior = $500 x 1 time purchase
• Profit margin % = 10%
• Fixed Cost = $50M

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 Test Your Knowledge

Which of the following factors is NOT a key factor when

considering
profitability of a market segment?
A) market growth
B) market competitiveness
C) purchase behaviour
D) market access

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 Test Your Knowledge

Which of the following factors is NOT a key factor when

considering
profitability of a market segment?
A) market growth
B) market competitiveness
C) purchase behaviour
D) market access

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 Step 4: Select Target Market

How do you choose your target

market?

 Based on competing a SWOT analysis

 Assess the attractiveness of the opportunity
 Considers the organization’s competencies

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Targeting Strategies

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 Types of Targeting Strategies
 Undifferentiated Targeting Strategy, or Mass Marketing
 Differentiated Targeting Strategy
 Concentrated (Niche) Targeting Strategy
 Micromarketing

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Undifferentiated Targeting Strategy, or Mass Marketing

Undifferentiated/Mass
the product or service is
perceived to provide the same
benefits to everyone, there
simply is no need to develop
separate strategies for different
groups.

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 Differentiated Targeting Strategy

Differentiated
Targeting target several
market segments with a
different offering for
each

Condé Nast has 26 niche magazines focused on different aspects of life—from The
New Yorker for literature lovers to GQ for fashion-conscious men to Vogue for
fashionistas to Wired for techies.

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 Concentrated (Niche)
Targeting Strategy
Concentrated (Niche)
Targeting Strategy
when an organization
selects a single, primary
target market and focuses
all its energies on
providing a product to fit
that market’s needs

3 © 2023 McGraw Hill Limited

Newton Running uses a concentrated
segmentation strategy—not all runners,
but those who want to improve their
running form.

6-32
 Micromarketing
Micromarketing
(one-to-one)a form of
segmentation that
tailors a product or
service to suit an
individual customer’s
wants or needs.
Build-A-Bear lets customers design their own stuffed furry friend with
unique clothes, accessories, sounds, and the name printed on its birth
certificate.

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 Test Your Knowledge

Which of the following products is most likely to use an

undifferentiated segmentation strategy?
A) shoes
B) jewellery
C) cereal
D) sugar

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 Test Your Knowledge

Which of the following products is most likely to use an

undifferentiated segmentation strategy?
A) shoes
B) jewellery
C) cereal
D) sugar

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 Step 5: Identify & Develop
Positioning Strategy

Positioning Methods
 Value
 Product attributes
 Benefits & symbolism
 Competition
 Market leadership

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 Value
The relationship of price to quality…..
Different consumers = different value

KIND and PowerBar both offer their respective target markets a good value. KIND bars (left) are made with
natural ingredients, all of which are pronounceable, thus supporting a healthy lifestyle. PowerBars (right)
are protein bars designed to improve the performance of athletes.

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 Product Attributes

Focus on the attributes that are most important and varies by

target market.

Audi features the all-wheel-drive Quattro, which is positioned to appeal to those wanting
great performance and handling, particularly on snowy and icy roads.

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 Benefits & Symbolism

Emphasizes the
benefits of the brand
as well as the
psychological
meaning of the
brand to consumers.

SoCIAL LITE Vodka targets Gen Z men and women and is positioned on
functional benefits: great taste, all natural, 80 calories, and no sugar.

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 Competition

Has two options:

 Position against a specific competitor

 Position against an entire product
classification

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 Test Your Knowledge

When positioning a product based on the relationship of price to

quality the positioning method being used is _______________.
A) product attributes
B) benefits and symbolism
C) value
D) competition

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 Test Your Knowledge

When positioning a product based on the relationship of price to

quality the positioning method being used is _______________.
A) product attributes
B) benefits and symbolism
C) value
D) competition

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Positioning By Using Perceptual
Mapping
1. Determine consumers’ perceptions &
evaluations in relation to competitors

2. Identify the market’s ideal points & size

3. Identify competitors’ positions

4. Determine consumer preferences

5. Select the position

6. Monitor the positioning strategy

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Perceptual Maps

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 Repositioning
 Refers to a strategy in which marketers change a
brand’s focus to target new markets or realign the
brand’s core emphasis with changing market
preferences

Powerade (left) and Gatorade (right) are positioned similarly and compete with each other
for customers who seek healthy, sweet drinks.

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