McGraw-Hill/Irwin Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives

LEARNING OBJECTIVES

How does a firm decide what type of

segmentation strategy to use?
What is the best method of segmenting a market?
How do firms determine whether a segment is
attractive?
What is positioning and how do firms do it?

8-2
 Coke Zero

Why a new
Diet Soda?

8-3
Segmentation, Targeting,
Positioning Process

8-4
Step 1: Establish Overall Strategy or
Objectives

Derived from mission

Check Yourself
and current state

8-5
Segmentation Strategy

8-6
 A firms segmentation strategy must be
consistent with and derived from the firms
_______________, as well as its current situation.

A. perceptual map
B. disclosure statement
C. mission and objectives
D. self-concept
E. lifestyle

8-7
Step 2: Describe Segments

8-8
Geographic Segmentation

8-9
 Demographic Segmentation

Most common
segmentation strategy

U.S. Census Bureau Website

8-10
 Demographic segmentation is the most common basis of
consumer market segmentation, because these segments are:

A. easy to define and usually easy to reach.

B. psychographically distinct.
C. self-value, self-contained segments.
D. defined by the benefits consumers receive.
E. all of the above.

8-11
Balancing Act Career Moms

8-12
 Psychographic Segmentation

Psychographic Self-values

Self-concept Lifestyles

8-13
VALS Framework

VALS Website

8-14
Benefit Segmentation

8-15
Geodemographic Segmentation

Claritas Website

8-16
State Farm Not Insuring Mississippi

8-17
 Loyalty Segmentation

Much cheaper to keep an

Lifetime value
existing customer

8-18
 One of the reasons marketers utilize
_______________ segmentation is the high cost of
finding new customers.

A. geographic
B. benefit
C. psychographic
D. loyalty
E. geodemographic

8-19
Step 3: Evaluate Segment
Attractiveness

8-20
 Identifiable

Who is in their market?

Are the segments unique?
Does each segment require a unique marketing mix?

8-21
 Substantial

Too small and it is

insignificant
Too big and it might
need its own store

8-22
Reachable

Know the
product exists

Understand
what it can do

Recognize
how to buy

8-23
Responsive

Customers must:
React positively to firms
offering

Move toward the firms

products/services

Accept the firms value

proposition

8-24
Profitable

8-25
 Profitable Segments

Segment size = 60 million

(<15 yrs)
Segmentation Adoption
Percentage = 35%
Purchase Behavior = $500
x 1 time purchase
Profit margin % = 10%
Is this segment profitable?
Fixed Cost = $50M

8-26
 Step 4: Selecting a Target Market

How does Hallmark

select target markets?

8-27
Segment Attractiveness

8-28
Step 5: Identify and Develop
Positioning Strategy

8-29
Step 5: Identify and Develop
Positioning Strategy

Value
Salient Attributes
Symbol
Competition

8-30
 Value

Meet Grandpa Tony, now

retired:
He knows the price of
everything.
He clips coupons.
How can marketers He goes to multiple stores to
appeal to price get the best price.
sensitive customers He is willing to pay more for
like Grandpa Tony? quality.
He trusts brand names.

8-31
 Value

Meet Celia, college freshman:

Reasons for her college choice:
Close to home.
Good academic reputation.
Good financial aid package.
Did we mention cute guys? What were the
salient attributes of
your college choice?

8-32
Symbol

8-33
Competition

Position against a
specific competitor

Position against an
entire product
classification

8-34
Positioning

8-35
When selecting a target market, a marketer
should:

A. determine a customers objective.

B. describe past market segments.
C. evaluate the attractiveness of each
consumer.
D. Match the firms competency with a market
segments attractiveness.
E. identify a positioning strategy.

8-36
 Check Yourself

1. Identify the steps in the segmentation

process
2. What are the four segmentation
strategies?
3. What are the various segmentation
methods?
4. Identify four positioning strategies.

8-37
 Positioning Steps

1. Determine consumers perceptions and

evaluations in relation to competitors.

2. Identify competitors positions

3. Determine consumer preferences.

4. Select the position.

5. Monitor the positioning strategy.

8-38
Perceptual Maps

8-39
 Check Yourself

1. What is a perceptual map?

2. Identify the five positioning steps.

8-40
 Repositioning

Disposal
freshener

Fridge Tooth
freshener cleaner

Stain
Baking
remover

Volcano
Cleaner
maker

8-41
 Glossary

Benefit segmentation groups consumers on the

basis of the benefits they derive from products or
services.

Return to slide

8-42
 Glossary

Demographic segmentation groups consumers

according to easily measured, objective
characteristics such as age, gender, income, and
education.

Return to slide

8-43
 Glossary

Geodemographic segmentation uses a combination

of geographic, demographic, and lifestyle
characteristics to classify consumers.

Return to slide

8-44
 Glossary

Geographic segmentation organizes customers into

groups on the basis of where they live.

Return to slide

8-45
 Glossary

Loyalty segmentation classifies customers by

whether they buy almost exclusively from the
firm.

Return to slide

8-46
 Glossary

Psychographic segmentation, or psychographics,

allows people to describe themselves using
characteristics that help them choose how they
occupy their time (behavior) and what underlying
psychological reasons determine these choices.

Return to slide

8-47
 Glossary

The Value and Lifestyle Survey (VALS) is a

psychographic tool that classifies consumers into
eight categories based on their answers to a
questionnaire.

Return to slide

8-48