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Segmentation, Targeting, and
Positioning
Learning Objectives
1. To Understand Why Market Segmentation Is
Essential.
2. To Understand the Criteria for Targeting
3. To Understand the Bases for Segmenting
Consumers.
4. Positioning
Why Segmentation is Necessary
01: Consumer needs differs
02: Differentiation helps products to compete
03: Segmentation helps identify media
Criteria for Effective Targeting
Criteria for targeting
• Identifiable
Marketers divide consumers into separate segments on the basis of common or shared needs by
using demographics, lifestyles, and other factors named “bases for segmentation.” Some
segmentation factors, such as demographics (e.g., age, gender, ethnicity), are easy to identify, and
others can be determined through questioning (e.g., education, income, occupation, marital
status). Other features, such as the product benefits buyers seek and customers’ lifestyles, are
difficult to identify and measure.
• Sizeable
To be a viable market, a segment must consist of enough consumers to make targeting it
profitable. A segment can be identifiable, but not large enough to be profitable.
• Stable and Growing
Most marketers prefer to target consumer segments that are relatively stable in terms of
lifestyles and consumption patterns (and are also likely to grow larger and more viable in the
future) and avoid “fickle” segments that are unpredictable. For example, teenagers are a sizeable
and easily identifiable market segment, eager to buy, able to spend, and easily reached. Yet, they
are also likely to embrace fads, and by the time marketers produce merchandise for a popular
teenage trend, interest
• Reachable
To be targeted, a segment must be accessible, which means that marketers must be able to
communicate with its consumers effectively and economically.
• With the diversification of magazines (and their online versions), the emergence of TV channels
that target narrowly defined interests, and the growth of new media (e.g., sending ads to cell
phones), marketers have significantly more avenues for reaching unique segments and can also
do so with customized products and promotional messages.
• Congruent with the Marketer’s Objectives and Resources
Not every company is interested in or has the means to reach every market segment, even if that
segment meets the four preceding criteria. For example, in contrast to the four in-flight options
that Qantas provides, Southwest Airlines offers only one class of service because its business
objective is to provide uniform, inexpensive, no-frills air transportation.
Bases for Segmentation
A segmentation strategy begins by dividing the market for a product
into groups that are relatively homogeneous and share characteristics
that are different from those of other groups.
Generally, such characteristics can be classified into two types:
1: behavioral segmentation
2: cognitive segmentation
Behavioral segmentation
Behavioral data is evidence-based; it can be determined from direct
questioning (or observation), categorized using objective and
measurable criteria, such as demographics, and consists of:
1. Consumer-intrinsic (natural ) factors, such as a person’s age, gender,
marital status, income, and education.
2. Consumption-based factors, such as the quantity of product
purchased, frequency of use, usage occasion, brand loyalty.
Cognitive Segmentation
Cognitive factors are abstracts that “reside” in the consumer’s mind, can be
determined only through psychological and attitudinal questioning, and
generally have no single, universal definitions, and consist of:
such as
1. Consumer-intrinsic (natural ) :personality traits, cultural values, and
perceptions, attitudes towards an issues.
or
2. Consumption-based : Attitudes towards product (benefits wanted),level
of involvement, perceived commitment, preferences, attitudes regarding
shopping, product , brand.
Marketers use multiple bases for segmentation.
For example, although demographics and lifestyles (or psychographics),
which are the most widely used bases psychographics explain buyers’
purchase decisions and choices. For example, being a student and having
limited financial resources are demographic factors, but how students
spend their resources is a function of their lifestyles, values, and interests.
Some students buy expensive designer brands, whereas others rummage
for clothes in thrift and vintage clothing stores. Some students go to sports
events, while others go to the latest nightclubs.
Behavioral segmentation: Demographic
segmentation
Demographics divides consumers according to
• age, gender, ethnicity, income and wealth, occupation, marital status,
household type and size, and geographical location.
• These variables are objective, empirical(observed), and can be
determined easily through questioning or observation.
• They enable marketers to classify each consumer into a clearly
defined category, such as an age group or income bracket.
Prominent demographics.
• Age, gender
• Families and house hold life cycle
is a classification of the phases that most families go through; each stage
represents an important target segment to many marketers
• life events: birth, marriage
• Social class: Social class is a hierarchy in which individuals in the
same class generally have the same degree of status, whereas members of
other classes have either higher or lower status
• Ethnicity: Culturally distinct segments may be prospects for the same
product, but marketers should target them using different promotional
appeals
• Income/population
Family life cycle stages
• Geo demographics, a hybrid segmentation scheme based on the premise
that people who live close to one another are likely to have
similar financial means, tastes, preferences, lifestyles, and consumption
habits (as an old adage states, “Birds of a feather flock together”)
• Usage rate segmentation is reflects the differences among heavy, medium,
and light users, and nonusers of a specific
product, service, or brand.
• Usage occasion segmentation recognizes that consumers purchase some
products for specific occasions, as expressed in the following statements:
• “cake on birthdays”
Positioning:
“Positioning refers to the place that a brand occupies in the minds of the customers
and how it is distinguished from the products of the competitors”.
Positioning is the process of communicating with target market(s) in such a way as
to help consumers differentiate the firm’s product from other products and
understand how the product can specifically satisfy their needs and wants.
Umbrella positioning is a statement or slogan that describes the universal benefit
of the company’s offering. At times, this statement does not refer to specific
products(it’s a general slogan representing the positioning of a company(for all
products)”.
Examples:
McDonald’s has used this strategy over the years, with slogans such as: “Make
every time a good time” (2002); and “I’m Lovin’ It” (2003).
Nestle : good food good life
Premier Position: This positioning strategy focuses on the brand’s
exclusivity (specially for you, create importance of their products,
claim their products are superior, only for special customers), L’Oreal’s
hair coloring product presented women with an unstated but obvious
question: “Why should I use this product?” and then provided an
answer in the form of a positioning statement: “Because we Worth
It”.
For example, the marketer of Joy (a fragrance brand) positioned it as
“the costliest perfume in the world.”
Repositioning is the process by which a company strategically changes the
distinct image and identity that its product or brand occupies in
consumers’ minds.
Companies do so when consumers get
used to the original positioning and it no longer stands out in their minds.
Similarly, when consumers begin to view the old positioning as dull,
marketers must freshen up their brands’ identities. At times,
too many competitors stress the same benefit in their positioning, so
marketers must uncover other attributes that consumers perceive as
important.
• Another reason to reposition a product or service is to appeal to a new
segment
• Lipton green tea reposition themselves for

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Chapter 02

  • 2. Learning Objectives 1. To Understand Why Market Segmentation Is Essential. 2. To Understand the Criteria for Targeting 3. To Understand the Bases for Segmenting Consumers. 4. Positioning
  • 3. Why Segmentation is Necessary 01: Consumer needs differs 02: Differentiation helps products to compete 03: Segmentation helps identify media
  • 4.
  • 6. Criteria for targeting • Identifiable Marketers divide consumers into separate segments on the basis of common or shared needs by using demographics, lifestyles, and other factors named “bases for segmentation.” Some segmentation factors, such as demographics (e.g., age, gender, ethnicity), are easy to identify, and others can be determined through questioning (e.g., education, income, occupation, marital status). Other features, such as the product benefits buyers seek and customers’ lifestyles, are difficult to identify and measure. • Sizeable To be a viable market, a segment must consist of enough consumers to make targeting it profitable. A segment can be identifiable, but not large enough to be profitable. • Stable and Growing Most marketers prefer to target consumer segments that are relatively stable in terms of lifestyles and consumption patterns (and are also likely to grow larger and more viable in the future) and avoid “fickle” segments that are unpredictable. For example, teenagers are a sizeable and easily identifiable market segment, eager to buy, able to spend, and easily reached. Yet, they are also likely to embrace fads, and by the time marketers produce merchandise for a popular teenage trend, interest
  • 7. • Reachable To be targeted, a segment must be accessible, which means that marketers must be able to communicate with its consumers effectively and economically. • With the diversification of magazines (and their online versions), the emergence of TV channels that target narrowly defined interests, and the growth of new media (e.g., sending ads to cell phones), marketers have significantly more avenues for reaching unique segments and can also do so with customized products and promotional messages. • Congruent with the Marketer’s Objectives and Resources Not every company is interested in or has the means to reach every market segment, even if that segment meets the four preceding criteria. For example, in contrast to the four in-flight options that Qantas provides, Southwest Airlines offers only one class of service because its business objective is to provide uniform, inexpensive, no-frills air transportation.
  • 8. Bases for Segmentation A segmentation strategy begins by dividing the market for a product into groups that are relatively homogeneous and share characteristics that are different from those of other groups. Generally, such characteristics can be classified into two types: 1: behavioral segmentation 2: cognitive segmentation
  • 9. Behavioral segmentation Behavioral data is evidence-based; it can be determined from direct questioning (or observation), categorized using objective and measurable criteria, such as demographics, and consists of: 1. Consumer-intrinsic (natural ) factors, such as a person’s age, gender, marital status, income, and education. 2. Consumption-based factors, such as the quantity of product purchased, frequency of use, usage occasion, brand loyalty.
  • 10. Cognitive Segmentation Cognitive factors are abstracts that “reside” in the consumer’s mind, can be determined only through psychological and attitudinal questioning, and generally have no single, universal definitions, and consist of: such as 1. Consumer-intrinsic (natural ) :personality traits, cultural values, and perceptions, attitudes towards an issues. or 2. Consumption-based : Attitudes towards product (benefits wanted),level of involvement, perceived commitment, preferences, attitudes regarding shopping, product , brand.
  • 11. Marketers use multiple bases for segmentation. For example, although demographics and lifestyles (or psychographics), which are the most widely used bases psychographics explain buyers’ purchase decisions and choices. For example, being a student and having limited financial resources are demographic factors, but how students spend their resources is a function of their lifestyles, values, and interests. Some students buy expensive designer brands, whereas others rummage for clothes in thrift and vintage clothing stores. Some students go to sports events, while others go to the latest nightclubs.
  • 12. Behavioral segmentation: Demographic segmentation Demographics divides consumers according to • age, gender, ethnicity, income and wealth, occupation, marital status, household type and size, and geographical location. • These variables are objective, empirical(observed), and can be determined easily through questioning or observation. • They enable marketers to classify each consumer into a clearly defined category, such as an age group or income bracket.
  • 13. Prominent demographics. • Age, gender • Families and house hold life cycle is a classification of the phases that most families go through; each stage represents an important target segment to many marketers • life events: birth, marriage • Social class: Social class is a hierarchy in which individuals in the same class generally have the same degree of status, whereas members of other classes have either higher or lower status • Ethnicity: Culturally distinct segments may be prospects for the same product, but marketers should target them using different promotional appeals • Income/population
  • 15. • Geo demographics, a hybrid segmentation scheme based on the premise that people who live close to one another are likely to have similar financial means, tastes, preferences, lifestyles, and consumption habits (as an old adage states, “Birds of a feather flock together”) • Usage rate segmentation is reflects the differences among heavy, medium, and light users, and nonusers of a specific product, service, or brand. • Usage occasion segmentation recognizes that consumers purchase some products for specific occasions, as expressed in the following statements: • “cake on birthdays”
  • 16. Positioning: “Positioning refers to the place that a brand occupies in the minds of the customers and how it is distinguished from the products of the competitors”. Positioning is the process of communicating with target market(s) in such a way as to help consumers differentiate the firm’s product from other products and understand how the product can specifically satisfy their needs and wants. Umbrella positioning is a statement or slogan that describes the universal benefit of the company’s offering. At times, this statement does not refer to specific products(it’s a general slogan representing the positioning of a company(for all products)”. Examples: McDonald’s has used this strategy over the years, with slogans such as: “Make every time a good time” (2002); and “I’m Lovin’ It” (2003). Nestle : good food good life
  • 17. Premier Position: This positioning strategy focuses on the brand’s exclusivity (specially for you, create importance of their products, claim their products are superior, only for special customers), L’Oreal’s hair coloring product presented women with an unstated but obvious question: “Why should I use this product?” and then provided an answer in the form of a positioning statement: “Because we Worth It”. For example, the marketer of Joy (a fragrance brand) positioned it as “the costliest perfume in the world.”
  • 18. Repositioning is the process by which a company strategically changes the distinct image and identity that its product or brand occupies in consumers’ minds. Companies do so when consumers get used to the original positioning and it no longer stands out in their minds. Similarly, when consumers begin to view the old positioning as dull, marketers must freshen up their brands’ identities. At times, too many competitors stress the same benefit in their positioning, so marketers must uncover other attributes that consumers perceive as important. • Another reason to reposition a product or service is to appeal to a new segment • Lipton green tea reposition themselves for