chapter

nine
segmentation, targeting and
positioning marketing strategies

9-1
Segmenting/Designing TV Shows

9-2
 Segmentation, Targeting,
Positioning Process

Step 1 •Strategy or Objectives

Segmentation

Step 2 •Segmentation Methods

Step 3 •Evaluate Segment Attractiveness

Targeting

Step 4 •Select Target Market

Step 5 •Identify and Develop Positioning Strategy Positioning

9-3
 Step 1: Establish Overall
Strategy or Objectives

Check Yourself Derived from mission

and SWOT

https://www.youtube.com/watch?v=Vtz4qL4-hNE http://www.youtube.com/v/Zza3GqEL5B0

9-4
Innovations in Segmentation:
Self-Segmentation

9-5
 Step 2: Segmentation Methods

Segmentation Method Sample Segments

Geographic Continent: North America, Asia, Europe, Africa
Within U.S.: Pacific, mountain, central, south,
mid-Atlantic, northeast

Demographic Age, gender, income

Geodemographic Combination of geographic and demographic

segmentation variables
Psychographic Lifestyle, self-concept, self-values

Benefits/Goals Convenience, economy, prestige

Behavioral Occasion, loyalty

9-6
 Geographic Segmentation

McDonald’s US Burger Offerings

Geographic Information Software (GIS) Aids Segmentation

McDonald’s Menu Adapted for India

9-7
Segment by region/state
 Demographic Segmentation

Most common
segmentation strategy

U.S. Census Bureau Website

9-8
 Geodemographic Segmentation

Source: Reprinted with permission of The Nielsen Company. Prizm Segmentation Zip
Code Look-Up 9-9
Are Easy to Collect Segmentation Variables Enough?

• 67 Years Old • Bikes 50 miles

• Married per day
• One child • Drives a Porsche
• Has lived in Boxster
Dallas, • Hobbies – 19th
Miami, Century Navajo
Boston and Jewelry, Hiking,
Denver Fashion/Clothing

9-10
 Psychographic Segmentation

Psychographic Self-values

Self-concept Lifestyles

9-11
 Then and now…

Mac vs PC commercials: http://www.youtube.com/watch?v=0eEG5LVXdKo

9-12
 Mac vs PC

http://www.youtube.com/v/0eEG5LVXdKo

9-13
 Benefit/Goals Segmentation

Low Risk Instruments High Risk Instruments

9-14
What Goals Does JP Morgan Satisfy?

9-15
What Goals Does HoloLogic Satisfy?

9-16
Behavioral Segmentation

Occasion
segmentation

Loyalty
segmentation

9-17
From Use Case to Segment:
23andMe

9-18
 23andMe’s Segmentation & Positioning

https://www.youtube.com/watch?v=tJcODboSSEg https://www.youtube.com/watch?v=ou3GOqU-YX8

https://www.youtube.com/watch?v=MRbB3jW4dt0 9-19
 Pharmacy Segmentation

Warehousing chains

Non-Warehousing chains

Buying Group

9-20
 Physician Segmentation

What are some

of the ways to
segment
physicians into
groups?

Source: https://www.linkedin.com/pulse/20140828152818-7469697-5-keys-considerations-for-
successful-multichannel-physician-recruitment
9-21
 Pharmaceutical Segmentation:
Therapeutic Category

What are some

other ways to
segment
pharmaceuticals?

Source: http://www.reportlinker.com/ci02266/Therapy.html
9-22
Step 3: Evaluate Segment Attractiveness
(Targeting)

Substantial

Identifiable Reachable
SEGMENT
ATTRACTIVENESS

Profitable Responsive

9-23
 Identifiable

• Who is in their market?

• Are the segments unique?
• Does each segment require a unique marketing mix?

9-24
 Substantial

• Too small and it is

insignificant
• Too big and it might
need it’s own store or
brand

9-25
Reachable

Know the product

exists

Understand what it
can do

Recognize how to
buy

9-26
Responsive

Customers must:
React positively to firm’s
offering

Move toward the firms

products/services

Accept the firm’s value

proposition

9-27
 Key to Attractiveness is Profitability
(Market Value/Sizing)

Projected Profitability =
Segment Size x
Segment Adoption x
Purchase Behavior (Purchase Price X Number of
times Purchased) x
Contribution Margin (Price-Variable Cost/Price)
Minus Fixed Costs

9-28
 Profitable

Homeowners Businesses
Segment size 75,000 1,000

Segment adoption 1% 20%

percentage
Purchase behavior
Purchase price $100 $500
Frequency of purchase 12 times 20 times

Profit margin 60% 80%

percentage
Fixed costs $400,000 $1,000,000

Segment profit $140,000 $600,000

9-29
 Step 4: Select Target Markets

• Look at Segments
– How do they fit
relative to the firm’s Segment Attractiveness
strengths? (Opportunity and Threats)
Low Medium High

High

Match with Firm

Competency Medium
(Strengths and
Weaknesses)

Low
9-30
Source: Dr. Dhruv Grewal, Babson College
 Targeting Strategy

Differentiated

Undifferentiated or Targeting Concentrated

mass marketing Strategies

Micromarketing
or
one-to-one

9-31
Step 5: Develop Positioning Strategy

Positioning
Methods

•Value
•Salient Attributes
•Symbol
How should this be positioned in the market?
•Competition http://www.youtube.com/v/r70vNAEUk7Q

9-32
 Value Proposition Defined

Value Proposition: A cogent reason why the target market

should buy your offerings

SALES TIP: Success is determined

by knowing the customer, the
customer’s issues and needs, and
only after that matching how your
products and services might
resolve those needs

33
9-33
 What a value proposition is (not)…

A value proposition is
A value proposition is…
not…
•A unifying, overarching idea •A vision or mission
that appeals to the minds statement
and hearts of customers •A business strategy
•A defined and differentiated •An advertising slogan or tag
perceptual space relative to line
the space occupied by •A description of a product or
competitors service
•A description of the
strategic intent and benefits
of the brand

34
9-34
 “Circles of Success” Model

Unique
Value
Competitors’
Proposition Your
Benefits
Benefits

Customers’
Needs

9-35
Source: Dr. Dhruv Grewal, Babson College
 Circles for a Successful Value Proposition
Determining the Value Proposition

#1: Firm’s value proposition.

#2: Customer’s unmet needs (marketing

Competitor opportunity).
benefits #3: Firm’s benefits that are not required -
#7 educate customer or redesign product.

#4: Key benefits that both the firm and

#5 #6 competitor provide that customers
require - carefully monitor performance
#4 relative to competitor on these benefits.

#5: Competitor’s value proposition - monitor

Customer needs Firm benefits and imitate if needed.
#1
#2 #3
#6: Benefits both firms provide that
customers do not appear to need.

#7: Competitor benefits that are not required.

9-36
Source: Dr. Dhruv Grewal, Babson College
 Parit: How is it Positioned?
(Anti-Ulcer Proton Pump Inhibitor)

Efficacy? Price? Pain Relief?

9-37
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
 B&D Example:
B2B Market

Before:
B&D Makita Milwaukee

Awareness 98% 90% 95%

Preference 44% 67% 80%

Market Share 9% 50% 10%

After:
DeWalt Makita Milwaukee
Awareness 70% 90% 95%
Preference 63% 67% 80%
Market Share 40% 28% 10%
9-38
Source: Dr. Dhruv Grewal, Babson College
 Positioning Steps

1. Determine consumers’ perceptions and evaluations in relation to competitors’.

2. Identify the market’s ideal points and size.

3. Identify competitors’ positions.

4. Determine consumer preferences.

5. Select the position.

6. Monitor the positioning strategy.

9-39
 Perceptual Maps

Dimension 2

Dimension 1
9-40
 Perceptual Maps

Contemporary
BMW
Cadillac

Buick
Style

Ford
Kia
Toyota

Traditional
Low High
Price
9-41
 Perceptual Maps

Contemporary

Target Market
Size indicated
By size of circle
Style

Traditional
Low High
Price
9-42
 Perceptual Maps

Contemporary
BMW
Cadillac Target Market
Size indicated
By size of circle
Buick
Style

Ford
Kia
Toyota

Traditional
Low High
Price
9-43
Blue Ocean Strategy

9-44
 Perceptual Maps

Contemporary
BMW
Cadillac Target Market
Size indicated
By size of circle
Buick
Style

Ford
Kia
Toyota

Traditional
Low High
Price
9-45