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CHAPTER

SEGMENTATION, TARGETING, AND POSITIONING

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L E A R N I N G O B J E C T I V E S

Outline the different methods of segmenting a market.

Describe how firms determine whether a segment is attractive and therefore worth pursuing.

Articulate the difference among targeting strategies: undifferentiated, differentiated, concentrated, or micromarketing.

Determine the value proposition.

Define positioning, and describe how firms do it.

Segmentation, Targeting, and Positioning

LO1

LO2

LO3

LO4

LO5

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Segmentation, Targeting, Positioning Process

Step 1 • Strategy or Objectives

Step 2 • Segmentation Methods

Step 3 • Evaluate Segment Attractiveness

Step 4 • Select Target Market

Step 5 • Identify and Develop Positioning Strategy

Segmentation

Targeting

Positioning

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Step 1: Establish Overall Strategy or Objectives

Check YourselfDerived from mission

and current state

©M. Hruby.

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Step 2: Segmentation Methods

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CHECK YOURSELF

1. What are the various segmentation methods?

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Step 3: Evaluate Segment Attractiveness

SEGMENT ATTRACTIVENESS

Substantial

Reachable

ResponsiveProfitable

Identifiable

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Identifiable

Who is in their market?

Are the segments unique?

Does each segment require a unique marketing mix?

Liquidlibrary/Dynamic Graphics/Jupiterimages

Liquidlibrary/Dynamic Graphics/Jupiterimages

Comstock Images/JupiterImages

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Substantial

Too small and it is insignificant

Too big and it might need it’s own store

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Arc

ieri

/Co

rbis

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Reachable

Know the product exists

Understand what it can do

Recognize how to buy

©Digital Vision/PunchStock

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Responsive

React positively to firm’s offering

Move toward the firms

products/services

Accept the firm’s value proposition

Customers must:

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Profitable Segments

Segment size = 60 million (<15 yrs)

Segmentation Adoption Percentage = 35%

Purchase Behavior = $500 x 1 time purchase

Profit margin % = 10%

Fixed Cost = $50MIs this segment profitable?

©Comstock/PunchStock

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Step 4: Selecting a Target Market

Conde Nast has more than 20 niche magazines focused on different aspects of life.

©M Hruby

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Segmentation Strategy

Targeting

Strategies

Differentiated

Concentrated

Micromarketingor

one-to-one

Undifferentiated ormass marketing

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Step 5: Develop Positioning Strategy

Positioning Methods

• Value• Salient Attributes• Symbol• Competition Photo by Tiffany Rose/WireImage/Getty Images

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Positioning Steps

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Perceptual Maps

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CHECK YOURSELF

1. What is a perceptual map?

2. Identify the six positioning steps.