Chapter 5: Market Segmenting, Targeting, and Positioning

by Jeff Tanner and Mary Anne Raymondby Jeff Tanner and Mary Anne Raymond

Principles of Marketing

Chapter 5Chapter 5Market Segmenting, Targeting, Market Segmenting, Targeting,

and Positioningand Positioning

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Learning ObjectivesLearning Objectives

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1. Distinguish between targeted marketing and mass marketing and explain what led to the rise of each.

2. Describe how targeted marketing can benefit firms.

3. Explain why companies differentiate among their customers.

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Targeted marketing—selecting a group(s) of consumers for marketing1.A relatively new phenomena2.A rifle approach

vs.

Mass marketing—selling the same product to all consumers1.Came first2.Evolved with mass production3.A shotgun approach

Mass vs. Targeted MarketingMass vs. Targeted Marketing

Benefits in Segmenting and Benefits in Segmenting and TargetingTargeting

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Targeting MarketsTargeting Markets

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Targeting MarketsTargeting Markets

Segment and Target Existing Segment and Target Existing CustomersCustomers

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Finding new customers is more expensive than keeping existing ones!• Changing vendors can be a hassle for customers, too.• Both parties can benefit by a continued relationship .

Economic downturns make it hard to find new customers.• Focusing on current customers is required.• Social networking sites are being followed by providers of products.

Not all customers are equal.• Often it is found that 20% of the customers account for 80% of sales or profits.• But, impactful customers have clout—they may want different products.

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One to One Marketing StepsOne to One Marketing Steps

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Mass marketing—selling the same product to everyone

Differentiated marketing—targeting select groups

Major vs. minor customers—all customers are not equal

•It costs significantly more to find a new customer vs. keeping current ones.• 20% of the customers can lead to 80% of revenue/profits• CRM products and messages tailored to major customers

Key TakeawaysKey Takeaways

Segmenting MarketsSegmenting Markets

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Learning Objectives

1.Understand techniques used in segmentation.

2.Explain why some marketing people use segmentation while others do not.

Types of Segmentation BasesTypes of Segmentation Bases

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Segmenting by BehaviorSegmenting by Behavior

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Benefits—segmenting buyers by the benefits that they seek from the product

Usage—segmenting buyers by the frequency that they use/buy products

Application—segmenting buyers by the way in which they use products

Knowing the benefits that buyers seek, how often they purchase the product, and the manner in which the product is used allows marketing people to tailor products to buyers for optimum results.

Segmenting by DemographicsSegmenting by Demographics

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Demographic segmentation is the most commonly used technique because of the ready access to extensive global data and information.

Product needs and wants are readily identified with life cycle, purchasing power, and interests of classes of individuals

Demographic factors aid the targeting of markets.

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Where do buyers live? What are the unique needs/wants in this area?

Geocoding is the process of mapping customer zip code and purchase information.

http://www.claritas.com/MyBestSegments/Default.jsp?ID=20

Geodemographics combines both geographic and demographic information.

Claritas PRISM NE is a good source to see how this process works.

(bring up the site with an online computer)

Segmentation by GeographySegmentation by Geography

Segmentation by PsychographicsSegmentation by Psychographics

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Psychographic SegmentationPsychographic Segmentation

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Value and Lifestyle (VALS)Value and Lifestyle (VALS)

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SRI did/is doing this with VALS• value• life style• primary and secondary• now a Pacific data base is available

Take the survey athttp://www.sric-bi.com/vals/surveynew.shtml

The VALS TypesThe VALS Types

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Innovators—successful, satisfied, take charge people

Thinkers—mature, satisfied, comfortable, well informed

Achievers—goal oriented, conservative, predictable, stable

Experiencers—young, enthusiastic, seek variety and excitement

Believers—conservative, conventional, moral codes, in organizations

Strivers—trendy, fun loving, seek approval, job vs. career

Makers—practical, self sufficient, suspicious of large institutions

Survivors—few resources, concerned with safety, low motivation

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Segmentation uses criteria to classify buyers• Behavioral—how buyers behave towards products• Geographic—where buyers live• Demographic—age, income, education, ethnicity, etc.• Psychographic—buyer values and lifestyles

Firms may use more than one technique to get a fuller picture of buyers.

Marketing professionals gather qualitative and quantitative information.

Key TakeawaysKey Takeaways

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Learning Objectives

1.What makes some markets more attractive then others?

2.Describe various market segmentation strategies.

3.Global segmenting strategies.

Market Targeting StrategiesMarket Targeting Strategies

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Targeting CriteriaTargeting Criteria

Multi-Segment MarketingMulti-Segment Marketing

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Pursuing multi-segment markets reduces the risk from competition.

Some firms, including those with limited resources, choose to concentrate activities to a very select set of customers (concentrated marketing).

Niche marketing addresses very select groups of customers—big fish, small pond.

Microtargeting addresses unique characteristics of buyers that combine a variety of features identified with individuals or small groups. It raises The issue of ethics as to how the targeting information was developed.

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Targeting techniques for global markets may be the same as domestic markets.

Due to varying customs and ethnicities mostcompanies tailor their products and messagesfor global markets.

Targeting Global MarketsTargeting Global Markets

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Targeting Criteria1.Can it be profitable?2.Is it growing?3.Is there room for another competitor?4.Is it accessible?5.Are sufficient resources available?6.What is the fit with company objectives?

Other Target-segment Considerations1.Multi-segment 2.Concentrated marketing3.Microtargeting4.Global target parameters

Key TakeawaysKey Takeaways

Positioning OfferingsPositioning Offerings

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Learning Objectives

1.Explain positioning and targeting customers.

2.Describe product positioning and mapping.

3.Explain what repositioning is designed to do.

PositioningPositioning

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Positioning—allowing a product to stand out from competition

Positioning can use a perceptual map and seeks a position where competitors are not clustered.Re-positioning—moving a

product to a different place in buyers’ minds

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Key TakeawaysKey Takeaways