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    Market Segmentation, Targeting, and Positioning

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    Chelsea Martinez
    Companies recognize they cannot appeal to all customers equally, so they segment markets into groups with similar needs and target specific segments. There are three main steps to target marketing: 1) market segmentation, which divides the market into distinct groups; 2) market targeting, which evaluates segments and selects ones to target; and 3) market positioning, which develops competitive positioning and marketing mixes for targeted segments. Markets can be segmented demographically, behaviorally, geographically, and psychographically. Effective segmentation results in segments that are measurable, accessible, substantial, and actionable. Companies must evaluate segments based on size, growth, attractiveness, and fit with company objectives to select which segments to target.

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    Market Segmentation, Targeting, and Positioning

    Uploaded by

    Chelsea Martinez
    168 views6 pages
    Companies recognize they cannot appeal to all customers equally, so they segment markets into groups with similar needs and target specific segments. There are three main steps to target marketing: 1) market segmentation, which divides the market into distinct groups; 2) market targeting, which evaluates segments and selects ones to target; and 3) market positioning, which develops competitive positioning and marketing mixes for targeted segments. Markets can be segmented demographically, behaviorally, geographically, and psychographically. Effective segmentation results in segments that are measurable, accessible, substantial, and actionable. Companies must evaluate segments based on size, growth, attractiveness, and fit with company objectives to select which segments to target.

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    Market Segmentation, Targeting, And Positioning

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    Companies recognize they cannot appeal to all customers equally, so they segment markets into groups with similar needs and target specific segments. There are three main steps to target marketing: 1) market segmentation, which divides the market into distinct groups; 2) market targeting, which evaluates segments and selects ones to target; and 3) market positioning, which develops competitive positioning and marketing mixes for targeted segments. Markets can be segmented demographically, behaviorally, geographically, and psychographically. Effective segmentation results in segments that are measurable, accessible, substantial, and actionable. Companies must evaluate segments based on size, growth, attractiveness, and fit with company objectives to select which segments to target.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    168 views6 pages

    Market Segmentation, Targeting, and Positioning

    Uploaded by

    Chelsea Martinez
    Companies recognize they cannot appeal to all customers equally, so they segment markets into groups with similar needs and target specific segments. There are three main steps to target marketing: 1) market segmentation, which divides the market into distinct groups; 2) market targeting, which evaluates segments and selects ones to target; and 3) market positioning, which develops competitive positioning and marketing mixes for targeted segments. Markets can be segmented demographically, behaviorally, geographically, and psychographically. Effective segmentation results in segments that are measurable, accessible, substantial, and actionable. Companies must evaluate segments based on size, growth, attractiveness, and fit with company objectives to select which segments to target.

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    MARKET SEGMENTATION, TARGETING, AND POSITIONING

    Companies today recognize that they cannot appeal to all customers in the
    marketplace, or at least not all customers the same way.
    Customers are too numerous, too widely scattered, and too varied in
    their needs and buying processes.
    Most companies have moved away from mass marketing and toward target
    marketing:
    Identifying market segments;
    Selecting one or more of them; and
    Developing products and market programs tailored to each.

    STEPS IN TARGET MARKETING


    1. The first is market segmentation
    Dividing a market into distinct groups who might require separate
    products and/or marketing mixes (See Slide 4)
    2. The second step is market targeting
    Evaluating each segments attractiveness and selecting one or more of
    the market segments (See Slide 5)
    3. The third step is market positioning
    Developing competitive positioning for the product and an appropriate
    marketing mix (See Slide 6)
    MARKET SEGMENTATION
    Markets consist of buyers who differ in one or more ways. They may differ in
    their wants, resources, locations, buying attitudes, and buying practices.

    Because buyers have unique needs and wants, each is potentially a separate
    market.

    DIFFERENT WAYS IN SEGMENTING A MARKET


    1. Geographic Segmentation

    Geographic segmentation calls for dividing the market into


    different geographic units, such as nations, states, regions, counties,
    cities, or neighborhoods.
    2.

    3.

    4.

    Demographic Segmentation
    Demographic segmentation consists of dividing the marketing
    into groups based on demographic variables such as age, life cycle,
    gender, income, occupation, education, religion, race, and nationality.
    Demographic variables are the most popular bases for
    segmenting customer groups (See Slide 5).
    Psychographic Segmentation
    Psychographic segmentation divides buyers into different
    segments based on social class, lifestyle, or personality characteristics.
    People in the same demographic group can have very different
    psychographic characteristics.
    Marketers also use personality variables to segment markets.
    Behavioral Segmentation

    Page 1 of 6

    5.

    In behavioral segmentation, buyers are divided into groups


    based on their knowledge, attitude, and use or response to a product
    (See Slide 6).
    Using Multiple Segmentation Bases
    Marketers rarely limit their segmentation analysis to only one or
    a few variables only.
    Rather, they often use multiple segmentation bases in an effort
    to identify smaller, better-defined target groups.

    DEMOGRAPHIC SEGMENTATION
    Demographic characteristics must be known to assess the size of the market
    and to reach it efficiently.
    FACTORS TO CONSIDER IN DEMOGRAPHIC SEGMENTATION
    a.
    Age and Life-Cycle Stage

    Consumer preferences change with age.

    However, marketers must be careful to guard against


    stereotypes when using age and life-cycle segmentation.
    b.

    Gender

    Gender marketing is by no means simplistic.

    Gender marketing is most effective when combined with lifestyle


    and demographic information.

    c.

    Income segmentation

    Income does not always predict which customers will buy a given
    product or service.

    BEHAVIORAL SEGMENTATION
    Many marketers believe that behavioral variables are the best starting point
    for building market segments.
    FACTORS TO CONSIDER IN BEHAVIORAL SEGMENTATION
    a. Occasion Segmentation
    Buyers can be grouped according to occasions when they make a
    purchase or use a product.
    b. Benefits Sought
    Buyers can also be grouped according to the product benefits they
    seek.
    Knowing the benefits sought by customers is useful in two ways:
    First, managers can develop products with features that
    provide the benefits their customers are seeking; and
    Second, managers communicate more effectively with their
    customers if they know what benefits they seek.
    c. User Status
    Many markets can be segmented into nonusers, former users,
    potential users, first-time users, and regular users of a product.
    d. Usage Rate
    Markets can also be segmented into light, medium, and heavy
    product users.
    Page 2 of 6

    e. Loyalty Status
    A market can also be segmented on the basis of consumer loyalty.
    A major reason for increasing customer loyalty is that loyal
    customers are price insensitive compared to brand-shifting
    patrons.
    REQUIREMENTS OF EFFECTIVE SEGMENTATION
    To be useful, market segments must have the following characteristics:
    1. Measurability
    The degree to which the segments size and purchasing power can be
    measured.
    2. Accessibility
    The degree to which segments can be assessed and served.
    3. Substantiality
    The degree to which segments are large or profitable enough to serve
    as markets.
    4. Actionability
    The degree to which effective programs can be designed for attracting
    and serving segments.
    EVALUATING MARKET SEGMENTS
    When evaluating different market segments, a firm must look at three factors:
    segment size and growth, segment structured attractiveness, and company
    objectives and resources.
    FACTORS IN EVALUATING MARKET SEGMENTS
    1. Segment Size and Growth

    A company must first collect and analyze data on current


    segment sales growth rates and expected profitability for various
    segments.
    2.

    3.

    Segment Structural Attractiveness


    A segment might have desirable size and growth and still not
    offer attractive profits.
    The company must examine several major structural factors
    that affect long-run segment attractiveness.

    For example, a segment is less attractive if it already


    contains many strong and aggressive competitors.
    Company Objectives and Resources
    All companies must consider their own objectives and
    resources in relation to available segments.
    Some attractive segments can be dismissed quickly because
    they do not mesh with the companys long-run objectives.

    SELECTING MARKET SEGMENTS

    After evaluating different segments, the company must decide which and how
    many segments to serve.
    Page 3 of 6

    STRATEGIES IN SELECTING MARKET SEGMENTS


    1. Undifferentiated Marketing
    Using an undifferentiated marketing strategy, a company ignores
    market segmentation differences and goes after the entire market with
    one market offer.
    It focuses on what is common in the needs of consumers rather than on
    differences.
    Undifferentiated marketing provides cost economies.
    Most contemporary marketers have strong doubts about
    the strategy in todays competitive environment.
    It is difficult to develop a product and brand that will satisfy all or
    even most consumers.
    2. Differentiated Marketing
    Using a differentiated marketing strategy, a company targets several
    market segments and designs separate offers for each.
    Differentiated marketing typically produces more total sales than
    undifferentiated marketing.
    3. Concentrated Marketing
    Concentrated marketing, is especially appealing to companies with
    limited resources.
    Instead of going for a small share of a large market, the firm pursues a
    large share of one or a few small markets.
    POSITIONING STRATEGY

    Once a company has chosen its target market segments, it must decide what
    positions to occupy in those segments.

    A products position is the way the product is defined by consumers on


    important attributesthe place the product occupies in consumers minds
    relative to competing products.

    The positioning task consists of three steps:


    1. Identifying a set of possible competitive advantages on which to build a
    position.
    2. Selecting the right competitive advantages.
    3. Effectively communicating and delivering the chosen position to a carefully
    selected target market.
    WAYS TO DIFFERENTIATE

    A hospitality company or a visitor destination must differentiate its


    products/services from those of competitors
    Differentiation can occur by physical attributes, service, personnel, location,
    or image.

    1. Physical Attribute Differentiation

    Page 4 of 6

    Restaurants such as Chez Panisse in Berkeley, Lidias in Kansas City,


    and the chain Chipotle Mexican Grill use natural/organic foods to
    differentiate themselves.

    2. Service Differentiation
    For example, Sheraton, Shangri-La, and other hotels provide an in-room
    check-in service. Red Lobster takes call aheads.
    3. Personnel Differentiation
    Companies can gain a strong competitive advantage through hiring
    and retaining better people than their competitors.
    4. Location Differentiation
    Location can provide a strong competitive advantage.
    5. Image Differentiation
    Even when competing offers look the same, buyers may perceive a
    difference based on company or brand image.
    Thus, hospitality companies need to work to establish images that
    differentiate them from competitors.
    POSITIONING ERRORS

    As companies increase the number of claims for their brands, they risk
    disbelief and a loss of clear positioning.

    TYPES OF POSITIONING ERROR


    1. Underpositioning
    Failing ever to position the company at all.
    2. Overpositioning
    Giving buyers too narrow a picture of the company.
    3. Confused positioning
    Leaving buyers with a confused image of a company.
    PRODUCT/SERVICE DIFFERENTIATION
    Not all brand differences are meaningful or worthwhile.
    Not every difference makes a good differentiator.
    Each difference has the potential to create company costs as well as
    customer benefits.
    Therefore, a hospitality company or a visitor destination must carefully select
    the ways in which it will distinguish itself from competitors.

    A difference is worth establishing to the extent that it satisfies the


    following criteria:
    a. Important
    The difference delivers a highly valued benefit to target buyers.
    In the case of a visitor destination, personal safety has become a
    top benefit.
    b. Distinctive

    Page 5 of 6

    Competitors do not offer the difference, or the company can


    offer it in a more distinctive way.

    c. Superior
    The difference is superior to other ways that customers might
    obtain the same benefit.
    d. Communicable
    The difference is communicable and visible to buyers.
    e. Preemptive
    Competitors cannot easily copy the difference.
    f. Affordable
    Buyers can afford to pay for the difference.
    g. Profitable
    The company can introduce the difference profitability.
    PERCEPTUAL MAPPING
    Perceptual mapping, a research tool, is sometimes used to measure a brands
    position.
    This slide (Slide #14) is an example of hotels plotted on the attributes of price
    and perceived service.
    On this map we see there is a correlation between service and price; as
    price goes up, so does service.

    Perceptual maps can also be developed using consumers perceptions of a


    number of product attributes.
    Increased competition or an ineffective positioning strategy can make
    repositioning necessary.
    Perceptual maps provide data supporting the need for repositioning.

    Page 6 of 6

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