Segmentation, Targeting, and Positioning

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Segmentation, Targeting, and

Positioning

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter Objectives

After reading this chapter you should be able to:1. Appreciate the importance of market segmentation

for specific consumer groups and realize that the targeting decision is the initial and most fundamental of all marcom decisions.

2. Understand the role of behavior segmentation in targeting consumer groups.

3. Describe the nature of psychographic segmentation.4. Appreciate major demographic developments such

as changes in the age structure of the population and ethnic population growth.

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Chapter Objectives (cont’d)

5. Explain the meaning of geodemographics and understand the role for this form of targeting.

6. Recognize that any single characteristic of consumers—whether their age, ethnicity, or income level—likely is not solely sufficient for sophisticated marcom targeting.

7. Appreciate the concept and practice of brand positioning.

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Positioning McDonald’s versus Starbucks

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Major Steps in the Market Segmentation Process

Following a consideration of customer needs and benefits sought, the following are the major steps in the market segmentation process:

•Market segmentation:• Identify bases (e.g., behavior, demographics) to segment the

market• Develop profiles of resulting segments

•Market targeting:• Develop measures of segment attractiveness• Select the target segment(s)

•Market positioning:• Develop positioning for each target segment• Develop marketing mix for each target segment

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Segmentation Bases

Behavior Segmentation

Demographics

Psychographics

Geodemographics

Measurable ConsumerCharacteristics

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Figure 5.1: Classification of Four General Targeting Characteristics

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Behavior Segmentation Issues

•Behavior Segmentation• Describe how people behave with respect to a particular

product category or class of related products• Assume that the best predictor of future behavior is past

behavior•Online Behavioral Targeting

• Tracks the online site-selection behavior of users so as to enable advertisers to serve targeted ads

•Privacy Concerns• Technological advances increase the ability to serve

consumers at the risk of invading their privacy

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Figure 5.2: An Illustration of the Online Ad Process

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Psychographic Segmentation

•Psychographics• Describe aspects of consumers’ psychological

make-ups and lifestyles as they relate to buying behavior in a particular product category• Attitudes• Values• Motivations

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Types of Psychographic Profiles

•Customized Psychographic Profiles• Are typically customized to the client’s specific

product category• Contain questionnaire items related to the unique

characteristics of the product category•General Purpose Psychographic Profiles

• Can be purchased as “off-the-shelf” psychographic data from services that develop psychographic profiles of people independently of any particular product or service

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Illustrative Statements Used In a Customized Banking-Related Psychographic Study

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Psychographic Study of Consumers’ Banking Practices

Worried Traditionalists

Bank Loyalists

Secured Investors

Thrifty Bankers

Psychographic Segments of Banking Behaviors

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MindBase Segments

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MindBase Segments (Table 15.2 cont’d)

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Figure 5.2: The 8 VALS Segments

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VALS Psychographic Segments

• Successful, sophisticated, take-charge, with high self-esteemInnovators

• Mature, satisfied, comfortable and reflective; value order, knowledge, and responsibility, and motivated by ideals

Thinkers• Conservative, conventional with concrete

beliefs based on traditional, established codes: family, religion, community, and the nation, motivated by ideals

Believers• Motivated by the desire for achievement have

goal-oriented lifestyles and a deep commitment to career and family

Achievers

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VALS Psychographic Segments• Trendy and fun loving, motivated by

achievement out of concern about the opinions and approval of others

Strivers• Motivated by self-expression, young,

enthusiastic, and impulsive consumers; quickly become enthusiastic about new possibilities, but are equally quick to cool

Experiencers• Motivated by self-expression; express

themselves and experience the world by working on it, and have enough skills and energy to carry out their projects successfully

Makers• Live narrowly-focused lives with few resources

with which to cope, often believe the world is changing too quickly, are comfortable with the familiar, and are primarily concerned with safety and security

Survivors

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Geodemographic Segmentation

•Geodemographics• Consumers who reside within geographic clusters

such as zip codes or neighborhoods and also share demographic and lifestyle similarities

•Typical Clusters (PRIZM NE)• Bohemian Mix• White Picket Fences• Suburban Pioneers

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Demographic Segmentation

Age structure of the population

Change in household

composition

Ethnic population developments

Major Demographic Aspects

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Demographic Trends

•World Population Growth• 6.95 billion (2012) to 8 billion (2025)

to 9.5 billion (2050)•Changing Age Structure in United States

• Median age will increase to 38 by 2025• More middle-aged Baby Boomers• Fewer children, teenagers, and young adults due to

decreased birthrates

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World’s 25 Largest Countries as of 2011

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Population of the United States by Age Group, as of 2010

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Demographic Segments by Age Group•Preschoolers (5 years or younger)•Elementary-school-age children (6-11 years)•Tweens (8-12 years)•Teenagers (13-19 years)

• Millennial Generation or Generation Y• Highly conformist, narcissistic, and fickle consumers

•Young adults (20-34 years)• Generation X (Baby Busters)• Yup & Comers, Bystanders, Playboys, and Drifters

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Figure 5.4: An Appeal to Preschoolers’Parents

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Figure 5.5: An Appeal to Teenagers

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Demographic Segments: Age

•Middle-Aged (35-54 years)• Younger baby boomers and older Gen Xers• Target category for luxury goods and youth

•Mature Consumers (55 years or older)• Are 25% of the total U.S. population• Have highest discretionary income and most assets• Census Bureau classification: Olders (55 to 64); Elders (65

to 74); and the Very Old (75 and over)• Descriptive groups: Healthy Hermits, Ailing Outgoers, Frail

Recluses, and Healthy Indulgers

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The Ever-Changing American Household•Household Defined

• An independent housing entity, either rental property or owned property.

•U.S. Households• Growing in number, shrinking in size, and

changing in character.• Married couples with children younger than 18

now represent less than one-third of all households.• Single-person and unrelated-person households are

a growing market.28


Ethnic Population Developments

•Changes in the U.S. Melting Pot• More diversity in the overall population • Growth in all ethnic groups

•Implication for Marketers• Need to devise marcom strategies to meet

ethnic groups’ unique wants/needs

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Ethnic Groups’ Population Representation

in the United States, 2000–2050 (in millions)

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Ethnic Population Developments

•African Americans• Are of an average age that is considerably younger

than that for Caucasians• Are geographically-concentrated, with three-

fourths of all African-Americans living in 16 states• Tend to purchase prestige and name-brand products

in greater proportion than do Caucasians• Have spending power that totals

nearly $1.1 trillion annually

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Figure 5.6: African-American Models Appeal to African American Consumers

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Ethnic Population Developments (cont’d)•Hispanic Americans (Latinos)

• Are the largest U.S. minority population segment

• Are not a single unified market• Are underserved by current

marketing efforts• Are responsive to advertising in

their dominant language

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Top 10 U.S. Hispanic Markets (estimates as of 2010)

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Ethnic Population Developments (cont’d)•Asian-Americans

• Represent many nationalities• Are the newest “hot” ethnic market• Are better educated than average• Have higher incomes than average• Occupy more prestigious jobs• Speak a variety of languages• Are heavy users of the Internet• Respond to marketing programs that reflect their values

and lifestyles

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Market Targeting

The 5 Criteria for Effective Segmentation:1. Measurable2. Substantial3. Accessible4. Differentiable5. Actionable

Target Market Selection Strategies:6. Undifferentiated marketing7. Differentiated marketing8. Concentrated marketing

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Figure 5.7: A Framework for Brand Positioning

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Benefit Positioning

Functional Needs

Symbolic Needs

Experiential Needs

Appealing to Consumer Needs

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Categories of Appeals to Consumer Needs

• Positioning communicates that the brand’s benefits are capable of solving consumers’ consumption-related problems

Functional Needs

• Positioning attempts to associate brand ownership with a desired group, role, or self-image

Symbolic Needs

• Positioning promotes brand’s extraordinary sensory value, or rich potential for cognitive stimulation

Experiential Needs

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Figure 5.8: Croc Advertisement Illustrating Appeal to Functional Needs

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Figure 5.9: Dove Advertisement Illustrating Appeal to Experiential Needs

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Attribute Positioning

Product-Related Non-Product Related:Usage and User Imagery

Attribute Positioning

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Figure 5.10: Highlander Advertisement Illustrating Product-Related Attribute Positioning

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Figure 5.11: Ralph Lauren Advertisement Illustrating User Imagery Positioning

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Segmentation, Targeting, and Positioning