Marketing Chapter 7: Market Segmentation, Targeting, and Positioning in Marketing

Market Segmentation

Understanding market segments helps firms define needs and wants of customers, design specific marketing strategies, and decide how to allocate marketing resources.

Criteria for Effective Market Segmentation

Substantial, Measurable, Differentiable, Accessible, Actionable.

Substantial

Large enough for firm to make a profit.

Measurable

Size and purchasing power clearly identified.

Differentiable

Must be able to be differentiated.

Accessible

Must be able to reach and serve the segment.

Actionable

Must be able to develop strategies that attract certain segments.

Demographic Segmentation

Segments based on Age, Gender, Income, Marital status and family size.

Geographic Segmentation

Segments based on Market size, Customer convenience, and Population shift due to economic conditions, retirement, natural disasters.

Psychographic Segmentation

Lifestyle segmentation divides people based on opinions, interests, and activities.

VALS Network

Identifies three motivations: Ideals, Achievement, Self-expression.

Behavioral Segmentation

Variables include occasions, loyalty, and usage rate.

80/20 Rule

20 percent of heavy users account for 80 percent of the total demand for a product.

Business-to-Business Segmentation Bases

Includes Demographic, Geographic, and Behavioral segmentation.

Global segmentation

Segmentation based on global markets.

Regional segmentation

Segmentation based on specific regions.

Unique segmentation

Segmentation based on unique characteristics of a market.

Target Markets

Specific groups of consumers a business aims to reach.

Targeting

The process of identifying and reaching target markets.

Undifferentiated targeting

A strategy that targets the entire market with one offer.

Differentiated targeting

A strategy that targets multiple segments with different offers.

Niche marketing

A strategy focused on a specific, well-defined segment.

Growth potential

The expected increase in market size or demand.

Level of competition

The intensity of rivalry among businesses in the market.

Strategic fit

Alignment of target market with the company's goals and resources.

Perceptual map

A visual representation of consumer perceptions of brands.

Positioning

The process of establishing a brand's identity in the market.

Positioning Statement

A statement that summarizes the brand's competitive advantage.

Repositioning

Changing the market position of a product or brand.

Evaluating feedback

The process of assessing responses from the target market.

Ethical concerns

Moral considerations in marketing practices.

Children and older adults

Demographic groups that require special marketing considerations.

Rise of 'tween' consumers

The increasing influence of pre-teen consumers in the market.

Reverse mortgages

A financial product that raises ethical concerns in marketing.

Disney's 'Mickey Check'

A seal of approval indicating healthy food options for children.

Elmer's glue repositioning

Rebranding traditional products as ingredients for making slime.