Lecture 5 - Segmentation, Targeting, Positioning, & Marketing Research

What is segmentation?

Dividing a broad market into smaller groups of consumers with similar characteristics or responses to marketing actions.

Steps in segmentation?

Identify segmentation bases → Form segments → Develop profiles.

Why do we segment?

To understand consumers better and deliver more effective marketing strategies.

What makes a segmentation good? (Characteristics of good segmentation) 

• Large enough (profitable)

• Identifiable (can recognize who they are)

• Distinctive (segments differ meaningfully)

• Stable (consistent traits over time)

What are the 3 major segmentation classifications?

1. Personal characteristics (Demographics)

2. Benefits sought (When you go shopping, what are you looking for?) 

3. Product-related behaviours (Focus is on degree of brand loyalty, amount
   of brand usage, etc.) 

What is demographic segmentation?

Segmenting by easily measurable stats (age, gender, income, ethnicity).

Why use demographics?

They are simple, measurable, and often combined into specific indexes.

What are psychographics?

Consumer activities, interests, opinions (AIO) and personality-based traits.

What is lifestyle segmentation?

Segmenting based on interests and how people choose to live.

What defines “Innovators”?

High resources, high innovation.

What defines “Survivors”?

Low resources, cautious consumers.

What are primary motivations?

• Ideals (knowledge, principles)

• Achievement (status, success)

• Self-expression (activity, variety)

What is targeting?

Selecting which segments are most attractive to pursue.

What is required when evaluating a target segment?

• Segment attractiveness

• Competitive intensity

• Company fit

What is “Market Opportunity for Profit”?

Looks at segment size and growth potential.

What is “Competitive Intensity”?

Whether needs are underserved and how strong competitors are.

What is “Company Fit”?

Alignment with the firm’s objectives, competencies, resources, and current customers.

What did Mobil discover through segmentation?

5 segments including:

• Price Shoppers (20%)

• Generation F3 (27%) – fuel, food, fast (less price conscious)

What did Mobil do after segmentation?

Positioning—designed offerings that fit each segment.

How do Banana Republic, GAP, and Old Navy relate?

They share parent ownership but target different segments with different price levels and lifestyles.

What is positioning?

Creating a specific image of the product in consumers’ minds relative to competitors.

What is a positioning statement structure?

• To (target segment)

• Our product offers (consumer POV benefit)

• Compared to (competitive alternative)

List common positioning strategies.

By:

• Attribute

• Benefit

• Price/quality

• Use/occasion

• Product user

• Product class

• Competitor comparison

What is a perceptual map?

Visual representation of how consumers perceive brands along important attributes.

What does each dot represent on the Perceptual Map? 

A consumer.
Big dot = segment average.

What is regional segmentation?

Segmenting consumers based on geographic location.

What is ZIP clustering?

Categorizing customers by postal code (e.g., M6G 1R8) to predict demographics & behaviour.

What is benefit segmentation?

Segmenting based on what benefits consumers want from a product.

What does benefit segmentation attempt to measure?

• Customer value systems

• Brand perceptions

• Desired benefits

• Buying behaviour

What are behavioural segmentation measures?

• Brand loyalty

• Usage rate

• Purchase frequency

• Brand switching

• 80/20 rule (20% of customers = 80% of revenue)

80/20 Rule

The 80/20 rule states that 80% of a company’s revenue typically comes from 20% of its customers.

It means that a small group of customers (20%) are extremely valuable and contribute most to the company’s success.

What is marketing research?

Defining a marketing problem, collecting & analyzing data, and recommending actions.

What does marketing research monitor?

Customers, competition, context (PEST).

Exploratory Research

Helps generate ideas and insights, not final decisions.

Descriptive Research

Surveys to describe characteristics of a group.

Causal Research

Experiments to test cause–effect relationships.

What are projective techniques?

Indirect, unstructured questions that uncover hidden motivations.

What is observational research?

Systematic recording of consumer behaviour.

Pros: Tracks behaviour people won’t admit.
Cons: Shows behaviour but not motivations.

Segment Profile

A detailed description of the typical customer in a specific segment (age, lifestyle, motivations, spending habits).