Chapter 4: Planning Segmentation, Targeting, and Positioning The Marketing Plan Handbook Fourth...

Chapter 4: Planning Segmentation, Targeting, and Positioning

The Marketing Plan HandbookFourth Edition

Marian Burk Wood

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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Fragmentation and Intense Competition Customers exhibiting a wider variety of:

Needs Attitudes Behaviors

Companies must differentiate themselves more distinctly in the markets where they compete.

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The Need for Segmentation, Targeting, and Positioning A move away from mass marketing.

A move towards segment marketing.

Allows marketers to focus their resources on the most promising opportunities.

Improves marketing efficiency and effectiveness.

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Market Segmentation Definition: the process of grouping

customers within a market according to similar needs, habits or attitudes that can be addressed through marketing.

Even within a large segment, marketers often can identify niches.

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Steps in the Segmentation Process1. Select the general market: Eliminate

markets that have no need for the product or are inappropriate for other reasons.

2. Apply segmentation variables.

3. Assess and select segments for targeting.

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Consumer Segmentation Variables

Type of Variable Examples

Behavioral and Attitudinal

Benefits sought, rate of usage, attitude toward product and usage, price sensitivity.

Demographic Age, gender, family status, household size, income, occupation, education.

Geographic Location, distance, climate.

Psychographic Lifestyle, activities, interests.

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Consumers: Segmenting by Behaviors and AttitudesIn many ways, the best way to segment: Help marketers analyze the specific value that a

particular group expects from the offering.

Include variables like: Benefits required or expected. Usage occasion and status. Loyalty status. Technological orientation. Attitudes toward products or usage.

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Consumers: Segmenting by Demographics Popular because they are common and

easily identified.

Often point to meaningful differences in: Consumer needs and wants. Product consumption. Media usage.

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Consumers: Segmenting by Geography By certain areas or climates.

Targeting promising new markets.

Reluctance to sell in certain areas due to environmental threats or unfavorable climate.

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Consumers: Segmenting by Psychographics

Lifestyles, activities, interests and attitudes.

Provides a deeper understanding of what and why consumers buy.

When consumer activities or interests cross demographic and/or geographic lines.

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Business Segmentation Variables

Type of Variable

Examples

Behavioral and Attitudinal

Purchasing patterns and process, user status, benefits expected, order size/frequency, buyer/influencer/user attitudes.

Demographic Industry, business size, business age, ownership structure.

Geographic Location, distance, climate.

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Businesses: Segmenting by Behaviors and Attitudes Purchasing patterns. User status. Attitude toward technology. Loyalty status. Price sensitivity. Order size/frequency. Attitudes. Benefits expected.

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Businesses: Segmenting by DemographicsCommon business demographic variables

used:

Industry

Business size

Business age

Ownership structure

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Businesses: Segmenting by Geography Utilizes such variables as nation, region,

state, city, and climate.

Allows for the grouping of potential customers according to: Concentration of outlets. Location of headquarters. Geography-related needs or responses.

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Assessing Potential Target Markets Target Market: The segment of the overall

market that a company chooses to pursue.

Each potential segment must be evaluated based upon fit with the firm’s: Resources. Core competencies. Goals and objectives. Offerings.

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Assessing Segment AttractivenessFit with company resources and competencies

Identify most promising segments and order of entry.

Market FactorsEconomic and

Technological Factors

Competitive Factors Business Environment Factors

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Coverage Strategies Concentrated Marketing

Undifferentiated Marketing

Differentiated Marketing

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Personas Detailed but fictitious profiles representing how

individual customers in their targeted segments behave, live, and buy.

Give marketers a deeper understanding of what shapes each segment’s needs, preferences, buying behavior and consumption patterns.

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Positioning Differentiation on the basis of attributes that

customers find meaningful.

Conveys the value that the brand provides and sets the brand apart.

Sets the tone for the marketing plan.

Should be re-evaluated periodically.

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Meaningful Differentiation Some sources of meaningful

differentiation: Product features Service attributes Channel attributes Pricing attributes Other attributes

Consideration is also given to positions being staked out by the competition.

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Copyright © 2011 Pearson Education, Inc. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallPublishing as Prentice Hall

Chapter 4: Planning Segmentation, Targeting, and Positioning The Marketing Plan Handbook Fourth...

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