CHAPTER 5 - Market Segmentation and Market Targeting

Market Segmentation

The process of dividing a market into distinct groups of buyers who might require separate products and/or marketing mixes.

Targeting

The process of evaluating each segment’s attractiveness and selecting one or more of the market segments.

Positioning

The process of developing competitive positioning for the product and an appropriate marketing mix.

Requirements for Effective Segmentation

Measurability, accessibility, substantiality, and actionability.

Demographic Segmentation

Dividing the market into different groups based on characteristics such as age, gender, income, and education.

Psychographic Segmentation

Dividing the market into segments based on social class, lifestyle, or personality characteristics.

Behavioral Segmentation

Dividing the market into groups based on knowledge, attitude, use, or response to a product.

Concentrated Marketing

A targeting strategy where a firm focuses on a small share of a large market and aims for a large share of one or a few small markets.

Differentiated Marketing

A strategy where a company targets several market segments and designs separate offers for each.

Undifferentiated Marketing

A strategy where a company ignores market differences and goes after the entire market with one market offer.

Market Positioning

The way the product is defined by consumers on important attributes; the place it occupies in consumers’ minds relative to competing products.

Competitive Advantage

A unique advantage that allows a company to outperform its competitors.

Substantiality

A requirement for effective segmentation where segments must be large enough to be profitable.

Actionability

A requirement for effective segmentation that indicates marketing programs can be developed to attract and serve a segment.

Measurability

A requirement for effective segmentation that refers to the ability to measure the size and purchasing power of segments.

Accessibility

A requirement for effective segmentation indicating that the segment must be reachable and served.

Positioning Errors

Includes underpositioning, over-positioning, and confused positioning.

Positioning Strategy

Marketers position products based on specific product attributes.

Luxury Segmentation

Sub-categorizing target markets focusing on affluent consumers seeking high-end services.