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6/1/2010<br />

<strong>Chapter</strong> <strong>15</strong><br />

Market Segmentation<br />

and Product Positioning<br />

McGraw-Hill/Irwin<br />

Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.<br />

Introduction<br />

• Selection of the appropriate target market is<br />

paramount to developing successful<br />

marketing programs<br />

• Market segmentation is based on the idea<br />

that a single product usually will not appeal<br />

to all consumers<br />

<strong>15</strong>-2<br />

Introduction cont.<br />

• Market segmentation is the process of<br />

dividing a market into groups of similar<br />

consumers and selecting the most<br />

appropriate group(s) of individuals for the<br />

firm to serve<br />

• Five tasks in the process of market<br />

segmentation<br />

<strong>15</strong>-3<br />

1


6/1/2010<br />

Tasks in Market Segmentation<br />

Analyze Consumer-Product<br />

Relationships<br />

• Entails analysis of the affect and cognition,<br />

behavior, and environments involved in the<br />

purchase/consumption process for the<br />

particular product<br />

• Three general approaches<br />

– Brainstorm the product concept<br />

– Focus groups and other types of primary<br />

research<br />

– Secondary research<br />

<strong>15</strong>-5<br />

Analyze Consumer-Product<br />

Relationships cont.<br />

• Considerable information is available for<br />

analyzing various markets for many<br />

established product categories<br />

• For many products, the initial breakdown in<br />

markets is between the prestige and mass<br />

markets<br />

<strong>15</strong>-6<br />

2


6/1/2010<br />

Investigate Segmentation Bases<br />

• No simple way to determine the best bases<br />

for segmenting markets<br />

• Four specific types of segmentation<br />

– Benefit<br />

– Psychographic<br />

– Person/situation<br />

– Geodemographic<br />

<strong>15</strong>-7<br />

Useful Segmentation Bases for<br />

Consumer Markets<br />

Useful Segmentation Bases for<br />

Consumer Markets cont.<br />

3


6/1/2010<br />

Benefit Segmentation<br />

• Benefits people seek in consuming a given<br />

product is the basic reason for the existence<br />

of true market segments<br />

– Attempts to measure consumer value systems<br />

and consumers’ perceptions of various brands<br />

in a product class<br />

<strong>15</strong>-10<br />

Toothpaste Market Benefit<br />

Segmentation<br />

Psychographic Segmentation<br />

• Divides markets on differences in consumer<br />

lifestyles<br />

– Generally follows a post hoc model<br />

– Studies often include hundreds of questions and<br />

provide a tremendous amount of information<br />

about consumers<br />

– Activity, interest, and opinion (AIO) questions<br />

are sometimes very general<br />

– Validity of this segmentation is sometimes<br />

questioned<br />

<strong>15</strong>-12<br />

4


6/1/2010<br />

Psychographic Segmentation cont.<br />

– The best-known psychographic segmentation is<br />

called VALS<br />

• Based on two dimensions<br />

– Vertical dimension<br />

» Based on the degree to which they are innovative and<br />

have resources<br />

– Horizontal dimension<br />

» Motivated primarily by ideals<br />

» Motivated primarily by achievement<br />

» Motivated primarily by self-expression<br />

<strong>15</strong>-13<br />

VALS Framework and Segments<br />

<strong>15</strong>-14<br />

VALS TM Framework and Segments<br />

cont.<br />

5


6/1/2010<br />

Person/Situation Segmentation<br />

• Markets can often be divided on the basis of<br />

the usage situation in conjunction with<br />

individual differences of consumers<br />

– Combines not only the person and the situation,<br />

but also other important segmentation bases<br />

• Benefits sought<br />

• Product and attribute perceptions<br />

• Marketplace behavior<br />

<strong>15</strong>-16<br />

Person/Situation Segmentation<br />

cont.<br />

<strong>15</strong>-17<br />

Geodemographic Segmentation<br />

• Identifies specific households by<br />

– Focusing on local neighborhood geography<br />

– Creates classifications of actual, addressable,<br />

mappable neighborhoods where consumers live<br />

and shop<br />

– PRIZM NE system<br />

• Based on the assumptions that consumers in<br />

particular neighborhoods are similar in many<br />

respects and that the best prospects are those who<br />

actually use a product or other consumes like them<br />

<strong>15</strong>-18<br />

6


6/1/2010<br />

Develop Product Positioning<br />

• Positioning the product relative to competing<br />

products in the minds of consumers<br />

– Key objective is to form a particular brand<br />

image in consumers’ minds<br />

– Accomplished by developing a coherent<br />

strategy that may involve all of the marketing<br />

mix elements<br />

<strong>15</strong>-19<br />

Develop Product Positioning cont.<br />

– Five approaches to positioning strategy:<br />

• Attribute<br />

• Use or application<br />

• Product user<br />

• Product class<br />

• Competitors<br />

<strong>15</strong>-20<br />

Positioning by Attribute<br />

• Associating a product with an attribute, a<br />

product feature, or a customer feature<br />

– A new product can be positioned with respect to<br />

an attribute ignored by competitors<br />

– Sometimes a product can be positioned in<br />

terms of two or more attributes simultaneously<br />

– The price/quality attribute dimension is<br />

commonly used for positioning products as well<br />

as stores<br />

<strong>15</strong>-21<br />

7


6/1/2010<br />

Positioning by Use or Application<br />

• Products can have multiple positioning<br />

strategies, although increasing the number<br />

involves difficulties and risks<br />

• Often a positioning-by-use strategy<br />

represents a second or third position<br />

designed to expand the market<br />

<strong>15</strong>-22<br />

Positioning by Product User<br />

• Positions products according to segments of<br />

class of users that use the product/ brand<br />

• Highlights a specific lifestyle profile<br />

<strong>15</strong>-23<br />

Positioning by Product Class<br />

• Positioning of product according to product<br />

class, usually keeping one element as the<br />

identifying category representation<br />

<strong>15</strong>-24<br />

8


6/1/2010<br />

Positioning by Competitors<br />

• Competition is the explicit or implicit frame<br />

of reference<br />

– Major purpose is to convince consumers that a<br />

brand is better than the market leader on<br />

important attributes<br />

– Positioning with respect to a competitor is<br />

commonly done in advertisements in which a<br />

competitor is named and compared<br />

<strong>15</strong>-25<br />

Positioning Maps<br />

• A visual depiction of consumers’ perceptions<br />

of competitive products, brands, or models<br />

– Constructed by surveying consumers about<br />

various product attributes and developing<br />

dimension and a graph indicating the relative<br />

position of competitors<br />

– Can give marketers a sense of how their brands<br />

are perceived by consumers relative to<br />

competitors and suggest positioning strategies<br />

<strong>15</strong>-26<br />

Positioning Map for Automobiles<br />

<strong>15</strong>-27<br />

9


6/1/2010<br />

Select Segmentation Strategy<br />

• Four basic segmentation strategy<br />

alternatives<br />

– May decide not to enter the market<br />

– May decide to be a mass marketer instead of<br />

segmenting<br />

– May decide to market to only one segment<br />

– May decide to market more than one segment<br />

and design a separate marketing strategy for<br />

each<br />

<strong>15</strong>-28<br />

Select Segmentation Strategy cont.<br />

• Marketers must have some criteria on which<br />

to base segmentation strategy decisions<br />

– Measurable<br />

– Meaningful<br />

– Marketable<br />

<strong>15</strong>-29<br />

Design Marketing Mix Strategy<br />

• Selecting the target market and designing<br />

the marketing mix go hand-in-hand<br />

• Many marketing mix decisions are made in<br />

conjunction with target market selections<br />

<strong>15</strong>-30<br />

10


6/1/2010<br />

Summary<br />

• Market segment was defined<br />

• Market segmentation was analyzed in terms<br />

of interrelated tasks<br />

• Noted that market segmentation is a<br />

cornerstone of sound marketing strategy<br />

development<br />

<strong>15</strong>-31<br />

11

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