chapter5

Segmenting and positioning

Kotler | Armstrong

Christina Lai
 Learning Objectives

• Why segment markets ?

• When to segment markets ?
• Steps in segmenting and targeting markets
• Positioning the product

5-2
 Types of Markets
Consumer Markets
 Purchasers are household members who intend to consume or
benefit from purchased products and do not buy products to
make profits

Business Markets
 Individuals or groups that purchase a specific kind of product
for resale, direct use in producing other products, or use in
general daily operations

© 2019 South-Western, a part of Cengage Learning 5-3

 Discussion Question

 If a baseball team wants to purchase 12 cases of

baseballs for use in official games, is this an example of
a purchase for the consumer market or the business
market?

© 2019 South-Western, a part of Cengage Learning 5-4

 Designing a Customer-Driven
Marketing Strategy
• Segmentation
• Targeting
• Differentiation
• Positioning

6- 5

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 A. Market Segmentation

Market segmentation involves dividing a

market into smaller segments of buyers with
distinct needs, characteristics or behaviors that
might require separate marketing strategies or
mixes.

6-6

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Market Segmentation

Through market segmentation, companies

divide large, heterogeneous markets into
smaller segments that can be reached more
efficiently and effectively with products and
services that match their unique needs.

6-7

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Major Segmentation Variables for
Consumer Markets

6-8

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 1. Geographic Segmentation

Geographic segmentation calls for dividing the

market into different geographical units such as
nations, regions, states, counties, cities,
neighborhoods or even climate.

6-9

Copyright © 2015 Pearson Education, Inc. Publishing as Prentice Hall

 2. Demographic Segmentation

Demographic segmentation divides the market

into segments based on variables such as age,
life-cycle, gender, income, occupation,
education, religion, ethnicity and generation.

6 - 10

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Demographic Segmentation

Age and Life-Cycle Stage

• Age and life-cycle segmentation is offering
different products or using different
marketing approaches for different age
and life-cycle groups.

Gender
• Gender segmentation has long been used
in clothing, cosmetics, toiletries and
magazines. 6 - 11

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Demographic Segmentation

Income
• Income segmentation has long been used
by marketers for products and services
such as automobiles, clothing, cosmetics,
financial services and travel.

6 - 12

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 3. Psychographic Segmentation

Psychographic segmentation divides buyers into

different segments based on social class,
lifestyle or personality characteristics.

6 - 13

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Psychographic Segmentation

Lifestyle segmentation groups individuals

according to how they spend their time, the
importance of things in their surroundings,
beliefs about themselves and broad issues and
some demographic characteristics such as
income and education. E.g. activities (daily
routinerk, hobbies, entertainment, sports),
interests (leisure timen, food, technology) and
opinions (general commentspolitics, social
issues, education, the future). AIOs 6 - 14

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 4.Behavioral Segmentation

Behavioral segmentation Occasions

divides buyers into
segments based on their Benefits sought
knowledge, attitudes, uses
or responses to a product. User Status

Usage Rate

Loyalty Status

6 - 15

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Behavioral Segmentation
Occasion segmentation
• Is dividing the market into segments
according to occasions when buyers get
the idea to buy, actually make their
purchase, or use the purchased item.

Benefit segmentation
• Is dividing the market into segments
according to the different benefits that
consumers seek from the product.

6 - 16

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Behavioral Segmentation

User status
• Is segmenting the market into nonusers,
ex-users, potential users, first-time users
and regular users of a product.

Usage rate
• Is segmenting the market into light,
medium and heavy product users.

6 - 17

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Behavioral Segmentation

Loyalty status
• Is segmenting buyers into groups
according to their degree of loyalty.

6 - 18

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Multiple Segmentation

Using multiple segmentation bases

• Marketers rarely limit their segmentation
analysis to only one or a few variables.
Rather, they often use multiple
segmentation bases in an effort to identify
smaller, better-defined target groups.

6 - 19

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Segmenting Business and
International Markets

• Operating characteristics • Geographic location (common

• Purchasing approaches traits/behavior)
• Situational factors • Economic (population income/
• Personal characteristics economic development)
• Political (stability of government)
• Legal (monetary policy)
• Cultural (language/ religion)

International
Business
markets

6 - 20

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 B. Market Targeting

Market targeting
refers to the process
of evaluating each
market segment’s
attractiveness and
selecting one or more
segments to enter.

6 - 21

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Evaluating Market Segments

Segment size and

growth

Segment structural
attractiveness

Company objectives
and resources
6 - 22

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Evaluating Market Segments

Segment size and growth

• The largest, fastest-growing segments are
not always the most attractive ones for
every company.

6 - 23

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Evaluating Market Segments

Structural attractiveness
• A segment is less attractive if it already
contains many strong and aggressive
competitors or if it is easy for new entrants
to come into the segment.
• The existence of many actual or potential
substitute products may limit prices and
the profits.
• The relative power of buyers also affects
segment attractiveness. 6 - 24

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Evaluating Market Segments

• A segment may be less attractive if it

contains powerful suppliers who can
control prices.

Company objectives and resources

• The segments must mesh with the
company’s long-run objectives.
• The company must have the skills and
resources needed to succeed in an
attractive segment. 6 - 25

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Selecting Target Market Segments

A target market consists of a set of buyers who

share common needs or characteristics that the
company decides to serve.

6 - 26

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Market Targeting Strategies

6 - 27

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Market Targeting Strategies

i) Undifferentiated Marketing
• Using an undifferentiated marketing (or
mass marketing) strategy, a firm might
decide to ignore market segment
differences and target the whole market
with one offer.
• Such a strategy focuses on what is
common in the needs of consumers rather
than on what is different.
6 - 28

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Market Targeting Strategies
i) Undifferentiated Marketing

6 - 29

Copyright ©
Copyright © 2015
2021 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Market Targeting Strategies
i) Undifferentiated Marketing

6- 30
Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Market Targeting Strategies

ii) Differentiated Marketing

• Using a differentiated marketing (or
segmented marketing) strategy, a firm
decides to target several market segments
and designs separate offers for each.
• It hopes for higher sales and a stronger
position within each market segment. But it
also increases the cost of doing business.

6 - 31

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Market Targeting Strategies

ii) Differentiated Marketing

6 - 32

Copyright ©
Copyright © 2015
2021 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Market Targeting Strategies

ii) Differentiated Marketing

6- 33
Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Market Targeting Strategies

iii) Concentrated Marketing

• Concentrated marketing also called as niche
marketing strategy.
•Instead of going after a small share of a large
market, a firm goes after a large share of one or
a few smaller segments or niches.
• It can market more effectively by fine-tuning
its products, prices and programs to the needs
of carefully defined segments.
6 - 34

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Market Targeting Strategies

iii) Concentrated Marketing

6 - 35

Copyright ©
Copyright © 2015
2021 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Market Targeting Strategies

iii) Concentrated Marketing

6- 36
Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Market Targeting Strategies

iv) Micromarketing
• Micromarketing is the practice of tailoring
products and marketing programs to suit
the tastes of specific individuals and
locations.

 Local marketing involves tailoring brands and

promotions to the needs and wants of local
customer groups – cities, neighborhoods, and
specific stores.
6 - 37

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Market Targeting Strategies

 Individual marketing involves tailoring

products and marketing programs to the
needs and preferences of individual
customers.

 Also known as:

One-to-one marketing
Mass customization

6 - 38

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Think About It

 Mont Blanc pens are known for

high quality and high prices
 What targeting strategy does
Mont Blanc use?
• Undifferentiated
• Concentrated
• Differentiated

5-39
 C. Differentiation and Positioning

Differentiation involves actually differentiating

the firm’s market offering to create superior
customer value.

Positioning consists of arranging for a market

offering to occupy a clear, distinctive and
desirable place relative to competing products
in the minds of target consumers.

6 - 40

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Product Position

A product’s position is the

way the product is defined
by consumers on
important attributes – the
place the product occupies
in the consumer’s mind
relative to competing
products.

6 - 41

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Perceptual Positioning Maps

Perceptual positioning
maps show consumer
perceptions of their
brands versus
competing products on
important buying
dimensions.

6 - 42

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Positioning Maps

6- 43

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Identifying Possible Value Differences
and Competitive Advantages

Competitive advantage is an advantage over

competitors gained by offering greater
customer value, either through lower prices or
by providing more benefits that justify
higher prices.

6 - 44

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Developing a Positioning Statement
• Positioning statement summarizes company or
brand positioning using this form: To (target
segment and need) our (brand) is (concept)
that (point of different).

6 - 45

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
 Communicating and Delivering the
Chosen Position
• Choosing the positioning is often easier than
implementing the position.

• Establishing a position or changing one usually

takes a long time.

• Maintaining the position requires consistent

performance and communication.
6 - 46

Copyright ©
Copyright © 2015
2018 Pearson Education,
by Pearson Inc. Publishing as Prentice Hall
Education
• Looking Ahead to -

Week 6: Understanding consumer

behaviour

47