SEGMENTATION, TARGETING,

AND POSITIONING
Segmentation
Product

positioning
strategy
Bases for
segmentation
Positioning
Targeting
Repositioning
BUAD 307

SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

SEGMENTATION, TARGETING, AND

POSITIONING
SEGMENTATION
IDENTIFYING
MEANINGFULLY
DIFFERENT GROUPS
OF CUSTOMERS

TARGETING

PROUDCT

PRICE

SELECTING WHICH
SEGMENT(S) TO
SERVE

POSITIONING
DISTRIBUTION

IMPLEMENTING
CHOSEN IMAGE AND
APPEAL TO CHOSEN
SEGMENT

PROMOTION

BUAD 307

SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

Definitions

Although not all these consumers

are completely alike, they share
relatively similar needs and wants.
Marketing action involves: efforts,
resources, and decisions--product,
distribution, promotion,
and price.

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Segmentation:
Aggregating
prospective buyers into
groups that (1) have
common needs and (2)
will respond similarly
to a marketing action.
The process of
dividing a market into
meaningful, relatively
similar, and identifiable
segments or groups.
(Text, p. 97)

SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

Approaches to Marketing
Undifferentiated Strategy (no

Southwest
Airlines

Auto
makers
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intended difference from

competitors; no specific
consumer group sought out)
Concentrated Strategy
(differentiation; one consumer
segment sought)
Differentiated Strategy (same
firm makes different versions
for different segments)

SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

Segments--Examples (1)
Air Travel
Business/Executive: Inflexible; relatively

price insensitive (Small number of people, but

travel often)
Leisure Traveler/Student: Relatively
flexible; very price sensitive (other methods of
travel--e.g., bus, car, train--are feasible; travel
may not be essential) (Very large segment)
Comfort Travelers: Comfort (e.g., space,
food) important; willing to pay (Small
segment)

BUAD 307

SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

Price Sensitivity

Low

High
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Low

Convenien
ce

Fancy Restaurants
--e.g., Ritz Carlton

High

E.g.,
--speed
--location

High-end
delivered food

Dennys
McDonalds
Local, unbranded
fast food restaurants
Taco Bell
SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

Combining variables
Soft drink preferencessome

segmentation variables

Preferred taste: Cola, lime, no taste, natural

juice, ice tea

Calorie/taste tradeoff: taste more important,
some importance of both, will sacrifice taste for
low calories
Usage occasion: Multi-pack for home; single
can/bottle; fountain drink
Price sensitivity/brand loyalty: Willingness to
pay more for name brand or specialty soda
BUAD 307

SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

Some combined segments

Price sensitive, non-brand loyal cola-taste,

full-flavor segment, multi-pack

Price insensitive, cola taste, brand loyal, low
calorie, multi-pack
Price insensitive, natural juice, taste sensitive,
single serving
Typical behaviors of these consumers.
Circumstances may involve occasional
variations.
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SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

Bases for Segmentation

Geographic
Demographic
Psychographic
Benefit Desired
Usage Rate
Other Behavior

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SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

Geographic
Regional differences
Climate and physical environment
Tastes

Campbells Soup

Lifestyle and values

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Urban vs.rural areas

SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

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Demographics
Age
Gender
Willingness to spend
More useful than incomeincome
willingness to spend!
Trading Up: Consumers may splurge in
certain, personally significant categories
while buying more downscale in other
categories
Ethnicity
Family lifecycle stage
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SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

11

Psychographics
Personality
Very difficult to measure
Limited empirical support

Motives
Lifestyle
Usually more practical than personality

Geodemographics
Characteristics of residents of limited areas

e.g., PRIZM
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SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

12

The PRIZM System

60 consumer

measures within zip

code area
36,000 zip code areas
Statistical methods
used to find areas
containing relatively
consumers ---> 60
segments
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SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

13

Usage Rate
80/20 rule20% of consumers may account

for 80% of consumption (in many product

categories)
Note that larger consumption rate segments

may be subject to heavy competition

Reasons for targeting smaller segments
Reduced competition
Opportunity for growth

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SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

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Other Behavioral Bases for

Segmentation
Involvement
Interest
Knowledge
Willingness to spend time on making product category

decisions

Dealproneness
Coupon usage
Brand switching in response to price incentives

Outlet (store) choice

Specialty
Convenience store
Category killer (e.g., Frys, Best Buy, Circuit City)
Discount
Warehouse
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SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

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Benefits Sought
Based on
differences in

arbitrary tastes
(e.g., cola vs. noncola drink)
ideal point
tradeoffs (e.g.,
taste vs. calories)
usage situation
(e.g., coffee for
camping (instant)
vs. higher quality
for home brewing)
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SEGMENTATION, TARGETING, AND POSITIONING

A consumer in
search of benefits.

Lars Perner, Instructor

16

Targeting: Selecting
Segment(s) and Specializing
You cant be all things to

all people ---> choose

one or more groups
Focus narrows scope of
competition, but
demands are greater

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SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

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IDENTIFYING TARGETS
Customer information enhancement

information from different sources integrated

(e.g., real estate records, purchase lists,
magazine subscription, credit records)
Merge-purge
Customer lists from different sources are

combined with removal of duplicates

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SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

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SEGMENTATION, TARGETING, AND

POSITIONING
PROUDCT

PRICE

PREMIUM

PREMIUM

BASIC
DURABLE

POSITIONING

LOW PRICE

IMPLEMENTING
CHOSEN IMAGE AND
APPEAL TO CHOSEN
SEGMENT

VALUE

PROMOTION

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DISTRIBUTION

PRESTIGE

INTENSIVE

FUN

SELECTIVE

POWERFUL

EXCLUSIVE

SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

19

STUCK IN THE MIDDLE PROBLEM

Brands that offer a clear benefit tend to do

better
Clear orientation
Wal-Mart
Nordstroms
KFC

Stuck in the middle

Sears
Successful middelers: Dennys, Vons,

Ralphs

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SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

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Positioning Strategies
Head-on competition
Airlines (want to differentiate but have difficulty

pulling it off in practice)

Beef products

Differentiation
Burger King: Grilled instead of McDonalds fried

burgers
Halmark: When you care to send the very best
Hertz (vs. Not exactly)
Zachy Farms (chicken)
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SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

21

The Three Value Disciplines

Many successful firms are

distinguished by excelling in
one of three value disciplines
(Treacy and Wiersema, 1993)
Operational excellence (high

efficiency)e.g., Wal-Mart,
Southwest Airlines
Customer intimacy (high service to
customers)e.g., Nordstroms, IBM
Technological excellence (constant
innovation of state of the art)
e.g., Intel

All firms must meet acceptable

levels on the other two

dimensions

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SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

22

Repositioning
Repositioning: Changing established

position may be difficult -- e.g.,

Sears
McDonald

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Good sales;
poor everyday
values

Lunch; not dinner

Good for children

SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

23

Multidimensional Scaling
Consumer product perception is identified

along two or more dimensions

Methods:

A priori specification of dimensions

respondents make judgments

Respondent rating of relative similarity of
brands/product categories statistical model
identifies unnamed dimensions dimensions
are inferred from characteristics of items at
different points

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SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

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BUAD 307

SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

25

Mr. Goodbar

HIGH

Hersheys

Toblerone
Ritter

M&M

HIGH

LOW

Almond Joy

Kitkat
York
Smores
Heath
Twix
Milky Way
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Snickers
Mars

Reeses
Butterfinger
LOW

SEGMENTATION, TARGETING, AND POSITIONING

Lars Perner, Instructor

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Some Repositioning Campaigns

Cadillac: Its not your fathers car.
Geritol: Not too young for Geritol.
Orange juice: It isnt just for breakfast

anymore.
Chocolate milk for adults
NOTE: Repositioning is difficult. It will
take a great deal of advertising
support. There is no guarantee that
consumers will cooperate!

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SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

27

Some Brands That Were Dropped

Rather Than Repositioned
ValueJet AirTran
Packard Bell e-Machines
German Communist Party Party for

Democratic Socialism

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SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

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Euphemisms in Positioning
Loss Prevention Associate
Sales Counselor
Pre-Owned or Previously Loved Vehicle
Gaming

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SEGMENTATION, TARGETING, AND POSITIONING

MK, Instructor

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