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Chapter 2 Learning Objectives

2.1 To understand the interrelationship among market

segmentation, targeting, and positioning and how to select
the best target markets.
2.2 To understand the bases used to segment consumers,
including demographics, psychographics, product benefits
sought, and product usage-related factors.
2.3 To understand behavioral targeting and its key role in today’s
marketing.
2.4 To understand how to position, differentiate, and reposition
products.

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Learning Objective 2.1
2.1 To understand the interrelationship among market
segmentation, targeting, and positioning and how to
select the best target markets.
• Market segmentation
– the process of dividing a market into subsets of consumers with
common needs or characteristics that are different from those
shared by other groups.
• Targeting
– consists of selecting the segments that the company views as
prospective customers and pursuing them.
• Positioning
– the process by which a company creates a distinct image and
identity for its products, services, and brands in consumers’ minds.
– The image differentiates the company’s offering from competition
by communicating to the target audience that the product, service
or brand fulfills their needs better than alternatives.
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How does Qantas position its offering for different
market segments?
Qantas targets four distinct
segments: coach passengers;
premium economy, which
costs 50% more than coach;
business class, which costs
twice as much as premium;
and first class, which often
costs twice as much as
business (or even more). The
four alternatives are clearly
differentiated: an almost
hotel-like privacy and sleeping
accommodations, personal
attention, and luxurious
amenities in first class;
privacy, beds, and extensive
amenities in business class;
more space, legroom, and
generously reclining seats in
premium economy; and
improved seating and food
service in coach.

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 To be an effective target…
A market segment must be:
• Identifiable
– demographics, lifestyles, and other factors named
– “bases for segmentation.” Some segmentation
– factors (e.g. demographics) are easier to identify
– than others (e.g. lifestyles).
• Sizeable
– there must be enough consumers in a segment to make it profitable to target the
segment
• Stable and growing
– stable in terms of consumption patterns and likely to grow larger in the future
• Reachable
– accessible; marketers must be able to communicate with the consumers in the
segment effectively and economically
• Congruent with the marketer’s objectives and resources
– companies must be interested in and have the means to reach the segment(s) they
select

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Segmentation: An Application
Table 2.2 illustrates how Perry & Swift, and investment management firm,
applied the criteria for effective targeting to two segments: the Wealth Market
and the Business Class.

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Learning Objective 2.2

2.2 To understand the bases used to segment

consumers, including demographics,
psychographics, product benefits sought, and
product usage-related factors.

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 Two Types of Shared Characteristics
• Behavioral data
– is evidence-based; it can be determined from direct questioning (or
observation), categorized using objective and measurable criteria, such
as demographics, and consists of:
– Consumer-intrinsic
• such as a person’s age, gender, marital status, income, and education
– Consumption-based
• such as the quantity of product purchased, frequency of leisure activities,
or frequency of buying a given product
• Cognitive factors
– Consumer-intrinsic
• such as personality traits, cultural values, and attitudes towards politics and
social issues
– Consumption-specific
• attitudes and preferences, such as the benefits sought in products and
attitudes regarding shopping
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Demographic Segmentation

Age Gender

Household
Marital Status
type and Size

Income and
Geographical
Wealth;
location
Occupation

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Who is the target of this ad?

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Geodemographic Segmentation

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Segmenting Green Consumers

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Personality Traits
Many psychographic factors overlap with personality characteristics or
traits. Through personality tests—which consist of questions or statements
presented to respondents—researchers can study consumers’ personality
characteristics and apply them in segmenting markets

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 Psychographics

Consumers’ lifestyles, which

include consumers’ activities,
interests, and opinions

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Psychographic Segmentation

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VALSTM
VALS™ (an acronym for “values and lifestyles”) is the
most popular segmentation system combining
lifestyles and values
three primary motivations:
the ideals motivated (these consumer segments are
guided by knowledge and principles),
the achievement motivated (these consumer segments
are looking for products and services that demonstrate
success to their peers),
and the self-expression motivated (these consumer
segments desire social or physical activity, variety, and
risk).
Furthermore, each of these three major self-
motivations represents distinct attitudes, lifestyles, and
decision-making styles. Examining the figure from top
to bottom, the diagram reveals
a kind of continuum in terms of resources and
innovation—that is, high resources-high innovation (on
the top) to low resources-low innovation (on the
bottom). This range of resources/innovation (again,
from most to least) includes the range of psychological,
physical, demographic, and material means
and capacities consumers have to draw upon, including
education, income, self-confidence, health, eagerness
to buy, and energy level, as well as the consumer’s
propensity to try new products.

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Provide an example: how could this information be
used?

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Benefit Segmentation
• Benefits sought represent
consumer needs
– The benefits that consumers
look for represent unfilled
needs,
• Important for positioning
– buyers’ perceptions that a
given brand delivers a
unique and prominent
benefit result in loyalty to
that brand. Marketers of
personal care products, such
as shampoos, soaps, and
toothpastes, create different
offerings designed to deliver
specific benefits.
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 Behavioral Targeting

sending consumers personalized and

prompt offers and promotional messages
designed to reach the right consumers and
deliver to them highly relevant messages at
the right time and more accurately than
when using conventional segmentation
techniques

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Tracking Online Navigation Includes:
• Recording Websites visited
• Measuring consumers’ levels of Engagement
on sites
– (i.e., which pages they look at, the length of
their visits, and how often they return).
• Recording Lifestyles and personalities
– (derived from the contents of consumers’ blogs,
tweets, and Facebook profiles).
• Keeping track of consumer’ purchases,
almost purchases (i.e., abandoned shopping
carts), and returns or exchanges
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 Predictive Analytics
Measures that predict consumers’
future purchases on the bases of past
buying information and other data,
and also evaluate the impact of
personalized promotions stemming
from the predictions.

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Learning Objective 2.4

2.4 To understand how to position,

differentiate, and reposition products.

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 Positioning
The process by which a company
creates a distinct image and identity
for its products, services, or brands in
consumers’ minds.

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Positioning Process

1. Define the market, buyers and competition.

2. Identify key attributes and research consumers’
perceptions
3. Research consumers’ perceptions on competing
offerings.
4. Determine preferred combination of attributes.
5. Develop positioning concept that communicates
attributes as benefits.
6. Create a positioning statement and use it to
communicate with the target audiences.
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Positioning Application

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Umbrella Positioning
Umbrella positioning is a statement or slogan that describes the universal benefit of the
company’s offering. Mobinil, a mobile network company in Egypt, does the same with
its slogan “Dayman maa baad” (always together). This slogan focuses on the notion of a
unified, interconnected community facilitated by a mobile network company.

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Other Types of Positioning

• Premier positioning
– focuses on the brand’s exclusivity.
• Positioning against the competition
• Key attribute
– is based on a brand’s superiority on relevant
attributes
• Un-owned positioning
– when a position is not associated with a product
from the category.
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Repositioning
Repositioning is the process by which a company strategically changes the distinct image and identity
that its product or brand occupies in consumers’ minds. Companies do so when consumers get used
to the original positioning and it no longer stands out in their minds. Similarly, when consumers
begin to view the old positioning as dull, marketers must freshen up their brands’ identities.

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 Perceptual Map
Perceptual mapping is constructing a map-like diagram representing consumers’ perceptions of
competing brands along relevant product attributes

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