Segmentation, Targeting, and Positioning

Professor Lawrence Feick

University of Pittsburgh

Outline

• Definitions• Segmentation and Targeting

– segmentation bases– criteria

• Positioning– definition and uses– perceptual maps

• Summary

Definitions: markets

• Market– people or organizations with the willingness, ability,

and authority to buy a product

• Target market– people or organizations to whom a particular

marketing mix is aimed

• Segmentation– dividing a heterogeneous market into homogeneous

submarkets

Definitions: targeting approaches

• Mass market (undifferentiated marketing)

• Segmentation– focus (concentrated marketing, niche

marketing)– multi-segment (differentiated marketing)

Segmentation questions

• Segmentation– dividing a heterogeneous market into

homogeneous submarkets

• Questions:– heterogeneous on what?– on what basis to divide?– how finely to divide?

Segmentation bases

• Segmentation base: the variable or variables on which the market is divided

• A good segmentation base should:– yield differences in product behavior– give insight into why consumers buy– help guide marketing mix decisions

Types of segmentation bases

• Independent of product category– demographic characteristics– geographic characteristics– psychographic/AIO characteristics

• Product category related– benefits sought/needs met – product usage, brand loyalty, price sensitivity

Examples of demo/geo-graphics

• Age

• Income

• Education

• Marital status

• Family lifecycle

• Region of country

Ebony, June 1998

Family Circle, June 1998

Proprietary geodemographic segmentation solutions

• Census data updated and augmented with purchases, subscriptions, auto registrations

• Group (cluster) geographic regions that are similar: often zip code-based

• Uses: direct mail, media buys, site location

• Eg: PRIZM from Claritas. Check it out:– http://www.claritas.com/prizm.htm

Examples of psychographics

• Activities– work, hobbies, social events, vacation, clubs

• Interests– family, home, job, community, fashion, food

• Opinions– self, politics, social issues, business, culture

• Lifestyle– VALS2 groups

What is your VALS 2 type?

• Typical questions:– I follow the latest trends in fashion– I would rather make something than buy it– I would like to spend a year or more in a

foreign country

• Check it out at:– http://future.sri.com/vals/survey.html

Examples of benefits sought

• Toothpaste– cavity prevention, whiteness, fresh breath

• Cake mix– ease of preparation, cost, taste, uniqueness

• Cameras– ease of use, technical features, compactness

Redbook, July 1998

Examples of product-related segmentation

• Product usage: nonusers, light users, heavy users– e.g., beer, soft drinks, movie renters

• Brand loyalty: loyals and switchers– e.g., laundry detergent, coffee

• Price sensitive v. price insensitive

Selecting segments

• Segment size

• Segment growth and growth potential

• Present and future competition

• Consumer purchase ability and likelihood

• Reachability

Positioning

• Usage is sloppy- often combining a brand’s position with the marketers actions to create the position

• Position: brand meaning perceived by the target market in terms of– other, competing products– perceived product characteristics, features

How the manufacturer sees the product

Manufacturer’s view

• It is made from a durable alloy

• It is sold through independent dealers

• It has a three year warranty

• It is the best we have ever produced

How the customer sees the product

Target market’s view

• It looks really good and seems sturdier than brand x or y

• Can it fit in my apartment?

• Would people like me buy one?

Positioning matters!

• Virginia Slims

• Acura, Lexus, Infiniti

• Vodka

What affects a product’s position?

• Product: design, features, style, packaging, warranty

• Price: price level, discounts

• Promotion: message, media, sales promotion, publicity

• Distribution: exclusivity of coverage, types of retailer

Issues in positioning

• What/how many characteristics do consumers use to distinguish products?

• Where are existing products located with respect to these characteristics?

• Where is an ideal product located?

Perceptual mapping

• Statistical tools used to locate products in terms of perceived characteristics

• Interpretation:– Products closer together are perceived as

similar– Similarity relates to competitiveness

• Can also plot “ideal points”

Perceptual maps: examples

• Pain reliever map (text page 251)

• US auto industry circa 1985

Perceptual map of the US auto market circa 1985

Practical, inexpensive to own and operate

Classy, prestigious, distinctive

Sporty, youth oriented, performance

Conservative,

older appeal

Toyota

Mercedes-Benz

BMW

Porsche

Chrysler

BuickOldsmobile

Dodge

Datsun

Chevrolet

Cadillac

Volkswagen

Pontiac

Questions

• What is the most likely competitor for Cadillac?

• Would a GM manager be happy about Buick and Oldsmobile?

• How is VW perceived in the US in 1998 compared to the mid 1980s?

Reprise: segmentation, targeting, and positioning

• Benefits:– focus on meeting customer needs, wards off

competition, and helps anticipate changes– increases focus on longer term relationship

• Costs– segments foregone

• Issues– Colt 45, Joe Camel