Fundamentals of Marketing - Chapter 6: Segmentation, Targeting, and Positioning

A comprehensive vocabulary review of Chapter 6 on Market Segmentation, Targeting, and Positioning, covering segmentation forms, descriptors, analytics, process steps, personas, and perceptual maps.

Market Segmentation

The aggregation of prospective buyers into groups that have common needs and respond similarly to marketing programs, dividing a market into smaller segments with distinct needs, characteristics, or behaviors.

Product Differentiation

Positioning a product to a target group so that it appears distinct from competitive offerings, which can involve adding unique features, creating a unique image, or offering a better price.

Mass (Undifferentiated) Marketing

Marketing a product with broad appeal to the entire market without any product or market differentiation, ignoring segment differences and pursuing the whole market with one offer.

Segment (Differentiated) Marketing

Marketing a wide range of different products and brands designed to meet the specific needs of several target market segments with separate offers; the most common form of segmentation.

Niche (Concentrated) Marketing

Marketing a limited product line to a narrow but profitable segment of the market that is of marginal interest to major competitors, capturing a large share of one or a few niches.

Individualized Marketing

One-to-one marketing that involves customizing offers and products to fit individual needs and preferences; also known as segments-of-one marketing.

Mass Customization

The process by which firms interact one-to-one with masses of customers to design products, services, and marketing programs tailor-made to individual needs.

Target Market

The specific group or segment(s) of existing and potential consumers to which marketers direct their marketing efforts.

Segment Size and Growth

A criterion in evaluating market segments noting that the largest and fastest-growing segments are not always the most attractive, especially if smaller firms lack the resources to serve them.

Segment Structural Attractiveness

A factor in evaluating market segments assessing competitive pressures such as aggressive competitors, ease of entry for new entrants, substitute products, and the power of buyers and suppliers.

Company Objectives and Resources

A segment evaluation factor where potentially attractive segments are dismissed if they fail to align with a firm's long-run objectives or exceed its skills and resources.

Target Market Profile

A description of the target market containing specific information across four core areas: geographics, demographics, psychographics, and behavioristics.

Geographics

Target market descriptors detailing where consumers live and work, including country, region, province, city size, neighborhood, population density, and climate.

Hyperlocal Social Marketing

Location-based targeting to consumers in local communities or neighborhoods using digital and social media to customize marketing content to local search intent.

Demographics

Basic census-type descriptors for a target market, including age, family composition, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation.

Age and Life-Cycle Segmentation

Segmenting markets based on how consumer needs and wants shift across ages, although age is often a poor predictor of health, work status, family status, or buying power.

Psychographics

Descriptors that capture prevailing attitudes to life, values, personalities, general interests, opinions, and activities shared by consumers in a target market.

Behavioristics

Descriptors detailing how consumers interact with and use a product, covering consumer knowledge, benefits sought, user status, usage rate, occasions, and brand loyalty.

Occasion Segmentation

Dividing the market into segments according to when buyers get the idea to buy, make their actual purchase, or use the purchased item.

Benefit Segmentation

Dividing the market into distinct segments according to the specific benefits or value that consumers seek from a product.

User Status Segmentation

Segmenting markets into nonusers (to attract), ex-users (to reinvigorate), potential users (to convert), first-time users, and regular users (to reinforce and retain).

Usage Rate Segmentation

Segmenting consumers into light, medium, and heavy users, recognizing that heavy users are often a small percentage of the market but account for a high percentage of total consumption.

Loyalty Status

Segmenting consumers based on their degree of brand commitment, ranging from highly vocal loyal advocates to less loyal buyers and consumers shifting away to competitors.

Brand Loyalty

The favourable attitudes that a consumer has over time toward a brand that result in varying levels of purchase commitment to the brand.

Personas

Character descriptions of a typical customer in the form of fictional character narratives with images that capture the personalities, values, attitudes, and demographics of a target group.

Lululemon Customer Personas (Ocean and Duke)

Fictional customer profiles where Ocean is a $32$-year-old engaged woman earning \\$100{,}000/\text{year} who exercises $1.5$ hours daily, and Duke is a $35$-year-old 'athletic opportunist' earning \\$100{,}000+/\text{year}.

Segmentation Analytics

Detailed data provided by research companies to analyze population clusters and consumer trends to help firms target specific groups with high accuracy.

PRIZM5

A granular lifestyle segmentation system developed by Environics Analytics that categorizes consumers into $67$ distinct lifestyle segments.

PSYTE HD

A cluster-based segmentation tool developed by Pitney Bowes that classifies the market into $57$ lifestyle clusters.

Six Key Tribes of Millennials

An Environics Analytics millennial segmentation model consisting of Lone Wolves, Engaged Idealists, Bros and Brittanys, Diverse Strivers, Critical Counterculturists, and New Traditionalists.

RFM Analysis

A database software method that evaluates customers based on Recency of purchases, Frequency of purchases, and the Monetary value of transactions.

Market Segmentation Step 1

Identifying consumer/customer needs and common characteristics in the market by looking from a customer perspective at category drivers and evolving trends.

Market Segmentation Step 2

Clustering common consumer/customer variables to create meaningful market segments and identify gaps from a consumer perspective rather than a product perspective.

Market Segmentation Step 3

Estimating the size and feasibility of each segment, including forecasting sales potential while accounting for anticipated competitive reactions.

Market Segmentation Step 4

Identifying the segment(s) to be targeted using criteria including market size, expected growth, competitive position, cost of reaching the segment, and compatibility with company objectives.

Market Segmentation Step 5

Taking actions with marketing programs by designing marketing mix strategies (product, price, place, promotion) tailored to the segment's needs and setting specific objectives.

Market Segmentation Step 6

Monitoring and evaluating the success of marketing programs in comparison with established objectives, sales forecasts, and financial projections.

Product Positioning

The impression of the product that the marketer wants to establish in consumers' minds relative to their needs and the competition.

Product Position

The complex set of perceptions, impressions, and feelings that consumers have for a product compared with competing products.

Positioning Statement

A formalized statement that identifies the image a branded product represents in the market and what sets it apart from the competition.

Perceptual Map (Positioning Map)

A visual representation showing consumer perceptions of brands versus competing products on key buying dimensions, where circle size indicates sales volume.

Repositioning

Changing the place a product occupies in consumers' minds relative to competitive products to more accurately meet consumer needs or reflect changing lifestyles.

Customer Value-Driven Marketing Strategy

A strategic model that links selecting customers to serve (segmentation and targeting) with deciding on a value proposition (differentiation and positioning) to create superior value.