Principles of Marketing UML Fall 2014: Chapter 9: Segmentation, Targeting, and Positioning

Objectives:

Outline Different methods for segmenting a market,
Describe how firms determine whether a segment is attractive and worth pursuing,
Articulate the differences among targeting strategies: undifferentiated, differentiated, concentrated, or micromarketing,
Determine the value proposition,
Define positioning and describe how firms do it.

I. The Segmentation, Targeting, and Positioning Process

Derived from the firm's mission or value statement as well as its current SWOT analysis.

Geographical Segmentation: The grouping of consumers on the basis f where they live.
Demographic Segmentation: The grouping of consumers according to easily measured, objective characteristics such as age, gender, income, and education.
Psychographic Segmentation

Psychographics: Delves into how consumers describe themselves; allows people to describe themselves using those characteristics to help them choose how they occupy their time (behavior) and what underlying psychological reasons determine those choices.
Self-Values: Goals for life; not just goals one wants to accomplish in a a day; a component of psychographics that refers to overriding desires that drive how a person lives his or her life.
Self-Concept: The image a person has of him or herself.
Lifestyles: refers to the way a person lives his or her life to achieve their goals.
VALS Framework:

Benefit Segmentation: The grouping of consumers on the basis of the benefits they derive from products or services.
Behavioral Segmentation: Divides consumers into groups based on how they use the product or the service. Some common behavioral measures include occasion and loyalty.

Occasion Segmentation: Type of behavioral segmentation based on when a product or service is purchased or consumed. (Holiday products....)
Loyalty Segmentation: Strategy of investing in loyalty incentives to retain the firm's most profitable customers.

Geodemographic Segmentation: The grouping of consumers on the basis of a combination or geographic, demographic, and lifestyle characteristics.

Identifiable: Must be identifiable
Substantial: Must have a substantial population size.
Reachable: Can the value be communicated and goods be distributed.
Responsive: Will the segment react and provide feedback.
Profitable: Will the firm gain revenue above the costs to communicate and distribute product or service.

Undifferentiated Targeting Strategy, or Mass Marketing: A marketing strategy a firm can use if the product or service is perceived to provide the same benefits to everyone, with no need to develop separate strategies for different groups.
Differentiated Targeting Strategy: A strategy through which a firm targets several market segments with a different offering for each.
Concentrated: A marketing strategy of selecting a single, primary target market and focusing all energies on providing a product to fit that market's needs.
Micromarketing or One to One: An extreme form of segmentation that tailors a product or service to suit an individual consumer's wants or needs.

Value Proposition: The unique value that a product or service provides to its customers and how it is better than and different from those of competitors.

Value: Reflects the relationship of benefits to costs, or what the consumer gets for what he or she gives.

Determine consumers' perceptions and evaluations of the product or service in relation to competitors.
Identify the market's ideal points and size.
Identify competitors positions
Determine consumer preferences
Select the position
Monitor the positioning strategy

Principles of Marketing UML Fall 2014