Marketing Chapter 6: Segmentation, Targeting, and Positioning

Comprehensive vocabulary flashcards covering Chapter 6: Segmentation, Targeting, and Positioning (STP), including segmentation bases, attractiveness criteria, targeting strategies, positioning methods, and perceptual mapping.

Market Segmentation

The process of dividing the total market into distinct groups of consumers with shared needs, wants, or characteristics, who are homogenous within the segment and heterogenous between segments.

Targeting

The process of evaluating the attractiveness of various market segments and choosing which specific group(s) to pursue by focusing organizational resources and competencies.

Positioning

The process of defining and shaping the marketing mix variables so that target customers have a clear, distinct, and desirable understanding of what the brand represents relative to competing brands in their minds.

The STP Process

A 5-step strategic framework consisting of: Step 1: Establish strategy or objectives; Step 2: Determine segmentation bases; Step 3: Evaluate segment attractiveness; Step 4: Select targeting strategy; Step 5: Identify and develop positioning strategy.

Geographic Segmentation

A segmentation base that groups customers according to where they live, such as continent, country, region (e.g., West Coast, Prairies, Central, Maritimes), province, city, neighbourhood, or climate zone.

Demographic Segmentation

The most common segmentation approach, which groups consumers based on objective, easily measurable characteristics such as age, gender, income, education, occupation, race, marital status, family lifecycle stage, and generational cohort.

Psychographic Segmentation

A segmentation method that classifies consumers based on how they live, what they value, and how they see themselves, focusing on lifestyle, self-concept, and personality characteristics (such as Innovators, Thinkers, or Achievers in VALS).

Behavioural Segmentation

A segmentation method that groups consumers on the basis of their actions and responses to a product, structured around four core pillars: benefits sought, usage rate, brand loyalty, and occasion.

Geodemographic Segmentation

A segmentation approach combining geographic, demographic, and lifestyle variables based on the premise that people who live in the same geographic area share similar consumer behaviours ('birds of a feather flock together').

PRIZM

A geodemographic segmentation system in Canada developed by Environics Analytics that integrates geographic, demographic, and psychographic data to classify Canadian neighbourhoods into 67 distinct lifestyle clusters (e.g., Urban Digerati, Keep On Trucking).

Segment Attractiveness Criteria

The four standards used to evaluate whether a market segment is worth pursuing: identifiable, reachable, responsive, and substantial and profitable.

Identifiable (Segment Attractiveness)

A segment attractiveness criterion assessing whether a firm can determine who is in the market, verify that segments are unique from one another, and establish that each segment requires a distinct marketing mix.

Reachable (Segment Attractiveness)

A segment attractiveness criterion requiring that the target market can be accessed through persuasive communication and distribution channels, ensuring customers know the product exists, understand its value, and know how to purchase it.

Responsive (Segment Attractiveness)

A segment attractiveness criterion requiring that consumers in the segment react positively to the firm's offering, move toward purchasing its products or services, and accept its value proposition.

Substantial and Profitable (Segment Attractiveness)

A segment attractiveness criterion assessing whether a segment possesses adequate market size, growth potential, and financial margins to generate sustainable profits and justify fixed operational costs.

Segment Profitability Formula

A quantitative formula used to calculate the financial return of a market segment: $\text{Segment profitability} = (\text{Segment size} \times \text{Segment adoption percentage} \times \text{Purchase price} \times \text{Purchase frequency} \times \text{Profit margin percentage}) - \text{Fixed costs}$.

Targeting Strategies

The four strategic paths a firm can select to target potential buyers: undifferentiated (mass marketing), differentiated, concentrated (niche), or micromarketing (one-to-one).

Undifferentiated Targeting Strategy (Mass Marketing)

A targeting approach that applies the same product, message, and marketing mix to everyone because consumers share similar needs; most effective for basic, low-involvement commodities such as salt, sugar, or flour.

Differentiated Targeting Strategy

A strategy where a firm targets several different market segments with distinct product offerings and tailored marketing mixes for each (e.g., Condé Nast publishing The New Yorker, GQ, Vogue, and Wired), broadening market coverage and diversifying risk.

Concentrated (Niche) Targeting Strategy

A strategy in which a company focuses all of its marketing efforts and resources on serving a single, clearly defined primary segment (e.g., Newton Running focusing exclusively on forefoot runners).

Micromarketing (One-to-One Marketing)

An extreme form of segmentation where products, services, or promotions are customized to suit an individual customer's specific needs and preferences, often powered by digital data and AI (e.g., Reebok Impact custom designs).

Value Positioning

A positioning strategy that communicates the relationship between price and quality, allowing consumers to perceive that the offering delivers strong benefits relative to its cost (e.g., KIND bars vs. PowerBar).

Product Attributes Positioning

A positioning strategy focusing on key design, performance, or technical features that are most important to the target market (e.g., Audi positioning its Quattro all-wheel drive for snowy and icy roads).

Benefits and Symbolism Positioning

A positioning method highlighting the functional benefits and psychological or symbolic identity of the brand to the consumer (e.g., SoCIAL LITE Vodka emphasizing 80 calories, no sugar, and all-natural ingredients for Gen Z).

Competitive Positioning

A positioning approach where a company positions its brand directly against a specific competitor or an entire product category (e.g., Avis's head-to-head slogan: 'We’re number two. We try harder.').

Market Leadership Positioning

A positioning strategy emphasizing a brand's industry scale, dominant market share, and credibility (e.g., Royal Bank of Canada, Canadian Tire, Amazon), which sets the standard for reliability and reduces perceived risk.

Perceptual Map

A visual display in two or more dimensions that plots consumers' mental perceptions of competing brands along key evaluative attributes (e.g., sweet vs. light taste, healthy vs. less natural).

Repositioning

A strategic shift where marketers alter a brand's core focus and identity to target new markets or realign its value proposition with changing consumer preferences and competitive pressures.