Chapter 4

Focusing Marketing Strategy

with Segmentation and
Positioning

For use only with

Perreault/Cannon/
McCarthy texts, © 2009
McGraw-Hill
Companies, Inc.
McGraw-Hill/Irwin

www.mhhe.com/fourps
Focusing Marketing Strategy with
Segmentation and Positioning (Exhibit 4-1)
Focusing Marketing Strategy with
Segmentation and Positioning (Exhibit 4-1)

Segmentation
•Defining markets
•Dimensions to use
•Identifying segments
•Identifying segments to target
•Segmentation approaches
Positioning
•Understanding customer’s view
•Positioning techniques
•Evaluating segment preferences
•Differentiating the marketing mix
•Relationship between
positioning & targeting
Taking
Advantage of
Opportunities
Naming Product Markets and Generic Markets

Product
Product Customer
Customer
Type
Type Needs
Needs

Product-Market
Product-Market
Definition
Definition

Geographic
Geographic Customer
Customer
Area
Area Type
Type

No Product Type in Generic Market Definition

Segmentation is a Two-Step Process

1.
1. Naming
Naming broad
broad
product-markets
product-markets

and

2.
2. Segmenting
Segmenting
markets
markets and
and
selecting
selecting
targets
targets
The Process of Narrowing Down to Target
Markets (Exhibit 4-3)
All customer needs
Narrowing
Some generic market down to
specific
product-market
One broad
product-market

Homogeneous Segmenting
(narrow) product- into possible
markets target markets

Single Multiple Combined

Selecting target
target target target marketing
market markets markets approach
Market Segmentation Defines Possible Target
Markets (Exhibit 4-4)

Broad product-market (or generic market) name

goes here (The bicycle-riders product-market)

Submarket 1
(Exercisers) Submarket 3 Submarket 4
(Transportation riders) (Socializers)
Submarket 2
(Off-road
adventurers) Submarket 5
(Environmentalists)
How Far Should the Aggregating Go? (Exhibit 4-5A
and 4-5B)

B. Product-market showing
A.
Status dimension six segments
three segments

Dependability dimension
 Segmenters and Combiners Aim at Specific
Target Markets (Exhibit 4-6)

A segmenter Single target

market approach The
develops a Strategy
different
marketing
mix for each Strategy two
segment. Multiple target
market approach Strategy
one Strategy three

A combiner aims at two or The

more submarkets with the strategy
same marketing mix.
Segmenting vs. Combining

Too Much
Combining Is
Combiners Risky Segmenters
Try to Satisfy Try to Satisfy
“Pretty Well” “Very Well”

Key
Key Issues
Issues
Profit Is the Segmenting
Balancing May Produce
Point Bigger Sales

Segment or
Combine?
Behavioral dimensions for segmenting
consumer markets

Information
Information Needs
Needs Benefits
Benefits
required
required Sought
Sought

Type
Type of
of
problem-
problem- Thoughts
Thoughts
Behavioral
Behavioral
solving
solving Segmenting
Segmenting
Dimensions
Dimensions
Kind
Kind of
of Rate
Rate of
of use
use
shopping
shopping

Brand
Brand Purchase
Purchase
familiarity
familiarity relationship
relationship
Geographic dimensions for segmenting
consumer markets

Region
Region of
of Region
Region in
in aa
world
world or
or country
country
country
country
Geographic
Geographic
Segmentation
Segmentation
Dimensions
Dimensions

Size
Size of
of city
city
Demographic dimensions for segmenting
consumer markets
Income
Income

Gender
Gender or
or age
age
Demographic
Demographic
Segmentation
Segmentation Family
Family size
size or
or family
family
Dimensions
Dimensions life
life cycle
cycle stage
stage

Occupation
Occupation or
or
education
education

Ethnicity
Ethnicity or
or social
social
class
class
Segmenting business markets

Kind
Kindof
of Type
Type of
of
relationship
relationship customer
customer
Segmenting
Segmenting
Dimensions
Dimensions
Purchasing
Purchasing for
for Demographics
Demographics
methods
methods Business
Business
Markets
Markets

How
How customers
customers
Type
Typeofof buying
buying will
will use
usethe
the
situation
situation product
product
Business-to-
Business
Segmentation
What Dimensions are used to Segment
Markets?

Qualifying
Qualifying Determining
Determining
Dimensions
Dimensions Dimensions
Dimensions
• Relevant to • Affect the
including a customer’s
customer type in a purchase of a
OR
product-market product or brand
• Can be further
• Help identify “core
segmented
benefits”
Determining vs. Qualifying Dimensions

Determining
Determining Determining
Determining
Dimensions
Dimensions May
May Dimensions
Dimensions May
May
Be
Be Very
Very Specific
Specific Change
Change

Key
Key Issues
Issues

Different
Different
Dimensions Qualifying
Qualifying
Dimensions For
For
Different Dimensions
Dimensions AreAre
Different
Submarkets Important
Important Too
Too
Submarkets
Ethical Issues in Segmenting Markets

Ethical
Ethical International
International
Exploitation
Exploitation
Issues
Issues Issues
Issues

Creates
Creates
Unnecessary
Unnecessary
Wants
Wants

Does
Does Harm
Harm
Psychographic Segmentation

© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Segmenting Product Markets (Exhibit 4-11)
1.
1. Select
Select (name)
(name) the
the broad
broad
product-market
product-market
2.
2. Identify
Identify potential
potential
customer
customer needs
needs
3.
3. Form
Form initial
initial homogeneous
homogeneous
submarkets
submarkets
4.
4. Identify
Identify determining
determining
dimensions
dimensions
Best
Best
Practice
Practice 5.
5. Name
Name possible
possible
product-markets
product-markets
Approach
Approach
for
for 6.
6. Evaluate
Evaluate product-market
product-market
Segmenting
Segmenting segments
segments
Product-Markets
Product-Markets 7.
7. Estimate
Estimate size
size of
of each
each
product-market
product-market segments
segments
More Sophisticated Techniques May Help in
Segmenting

Clustering
Clustering

Customer
Customer Database
Database

Customer
Customer Relationship
Relationship
Management
Management (CRM)
(CRM)
Cluster
Analysis
“Product Space” Representation of Positioning
(Exhibit 4-13)

High moisturizing

Tone 7
Zest
4
Dove Lever 2000
5 2
Safeguard
Coast
Lux 8
Nondeodorant 3 Deodorant

1
Dial
Lifebuoy
Lava
6

low moisturizing
You should now be able to:

1. Know about defining generic markets

and product-markets.
2. Know what market segmentation is and
how to segment product-markets into
submarkets.
3. Know three approaches to market-
oriented strategy planning.
4. Know dimensions that may be useful
for segmenting markets.
5. Know a seven-step approach to market
segmentation that you can do yourself.
6. Know what positioning is and why it is
useful.
Key Terms

• Market • Combiners
• Generic market • Segmenters
• Product market • Qualifying dimensions
• Market • Determining dimensions
segmentation • Clustering techniques
• Segmenting • Customer relationship
• Market segment management (CRM)
• Single target market • Positioning
approach
• Multiple target
market approach
• Combined target
market approach