Segmentation Targeting and Positioning Building The Right Relationships With The Right Customers

Chapter 8
Segmentation,
Targeting, and
Positioning:
Building the Right
Relationships
with the Right
Customers
Copyright © 2008 Pearson Education Canada Principles of Marketing, Seventh Canadian Edition
Learning Goals
1. Define the three steps of target marketing:
market segmentation, target marketing, and
market positioning
2. List and discuss the major bases for
segmenting consumer and business markets
3. Explain how companies identify attractive
market segments and choose a target
marketing strategy
4. Discuss how companies position their
products for maximum competitive advantage
in the marketplace
Copyright © 2008 Pearson Education Canada 8-2 Principles of Marketing, Seventh Canadian Edition
Steps
Stepsin
inSegmentation,
Segmentation,
Targeting,
Targeting,and
andPositioning
Positioning
Develop Marketing .6
Mix for Each Target Segment Market
Develop Positioning .5 Positioning
for Each Target Segment
Select Target .4
Segment(s) Market
Develop Measures .3 Targeting
of Segment Attractiveness
Develop Profiles .2
of Resulting Segments
Market Segmentation
Identify Bases .1
for Segmenting the Market
Segmentation, Targeting, and
Positioning
• Market segmentation: dividing market into
distinct groups with distinct needs,
characteristics, or behaviours, who might
require separate products or marketing mixes
• Target marketing: choosing which group(s) to
appeal to
• Market positioning: creating a clear, distinctive,
and desirable position in the target consumer’s
mind, relative to competition
Market
MarketSegmentation:
Segmentation:
Bases
Basesfor
forSegmenting
SegmentingConsumer
ConsumerMarkets
Markets
Geographic
,Nations, states
regions or cities
Demographic
family Age, gender,
orsize and life cycle,
income
Psychographic
orSocial class, lifestyle,
personality
Behavioral
Occasions, benefits
sought, user status,
usage rate, loyalty
Discussion Question
• Based on the car
examples on the
following slide, how
do car manufacturers
use the following
segments when
marketing products?
– Geographic
– Demographic
– Psychographic
– behavioural
Examples of Cars
Market
MarketSegmentation:
Segmentation:
Requirements
Requirementsfor
forEffective
EffectiveSegmentation
Segmentation
Measurable
Measurable • Size, purchasing power, profiles
.of segments can be measured
Accessible
Accessible • Segments can be effectively
.reached and served
Substantial
Substantial • Segments are large or profitable
enough to serve.
Differential • Segments must respond

Differential differently to different marketing
mix elements & programs.
Actionable
Actionable • Effective programs can be
designed to attract and serve the
segments.
Segmenting
International Markets
• Geographic segmentation
– Location or region
• Economic factors
– Population income or level of economic development
• Political and legal factors
– Type/stability of government, monetary regulations,
amount of bureaucracy, etc.
• Cultural factors
– Language, religion, values, attitudes, customs,
behavioural patterns
Segmenting
International Markets
• Intermarket segmentation
– Forming segments of consumers who have similar
needs, even though they live in different countries
Target Marketing
• Target Market
– Consists of a set of buyers who share common
needs or characteristics that the company
decides to serve
Target Marketing
• Evaluating Market Segments
– Segment size and growth
– Segment structural attractiveness
• Level of competition
• Substitute products
• Power of buyers
• Powerful suppliers
– Company objectives and resources
Figure 8.3
Target Marketing Strategies
Target Marketing Strategies
• Undifferentiated (mass) marketing:
– Market coverage strategy that ignores market segment differences and
targets the whole market with one offer
• Differentiated (segmented) marketing:
– Market coverage strategy that targets several market segments and
designs separate offers for each
• Concentrated (niche) marketing:
– Market coverage strategy in which a company pursues a large share of
one or a few submarkets
• Micromarketing:
– The practice of tailoring products and marketing programs to the
needs/wants of specific individuals and local customer groups
– Includes: local marketing and individual marketing
Choosing a
Target Marketing Strategy
• Considerations include:
– Company resources
– The degree of product variability
– Product’s life-cycle stage
– Market variability
– Competitors’ marketing strategies
Positioning
• The way the product is defined by consumers on
important attributes - the place the product
occupies in consumers’ minds relative to
competing products relative to competing
products
• Involves implanting the brand’s unique benefits
and differentiation in the customer mind
• Perceptual positioning maps show perceptions
of brands on important buying dimensions
Positioning map: Large luxury SUVs
Choosing a Positioning Strategy
• Identifying Possible • Differentiation can be
Competitive based on:
Advantages – Products
• Choosing the right – Services
competitive advantage – Channels
• Selecting an Overall – People
Positioning Strategy – Image
• Identifying Possible • How many differences to
Competitive Advantages promote?
– Unique selling proposition
• Choosing the right – Several benefits
competitive advantages • Which differences to
• Selecting an Overall promote? Criteria
include:
Positioning Strategy – Important
– Distinctive
– Superior
– Communicable
– Preemptive
– Affordable
– Profitable
• Identifying Possible • Value propositions
Competitive represent the full
Advantages positioning of the
brand
• Choosing the right
• Possible value
competitive advantages propositions:
• Selecting an Overall – More for more
Positioning Strategy – More for the same
– More for less
– The same for less
– Less for much less
Figure 8.5
Possible Value Propositions
What segment
is being
targeted?
What is the
positioning?
WestJet’s Value Proposition:
“Less for Much Less”
• Founded in 1996 to provide low-fare air travel across
western Canada
• Specializes in serving the VFR market (people visiting
friends and relatives).
• Main competitor: the family car
• People would choose to fly rather than drive if offered
low fares
• One type of plane, offers basic in-flight service (no
meals, no movies), single class service, no baggage
transfer services with other airlines, etc.
• However: “less service for less money” is defined as
fewer amenities for a lower fare, not less customer
service.
• Generates $1 billion in revenues
Developing a
Positioning Statement
• A positioning statement summarizes the
company or brand positioning
• EXAMPLE: To (target segment and need)
our (brand) is (concept) that (point-of-
difference)
Communicating and Delivering the
Chosen Position
• Companies must take strong steps to
deliver and communicate the desired
position to target consumers
• The marketing mix efforts must support
the positioning strategy
• Positions must be monitored and adapted
over time to match changes in consumer
needs and competitor’s strategies

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Chapter 8

Differential • Segments must respond

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