MKTG 1030 Lecture 2 Notes

Lecture 2: Market Segmentation, Targeting and Positioning

Segmentation

MARKETING SEGMENTS

• Dividing or segmenting people and organizations into different groups of potential buyers with similar characteristics.

• Use marketing mix to tailor products for the different groups

TARGETING SEGMENTS

• Selecting market segments to pursue with plans.

POSITIONING

• Creating a preferred position of the company’s products in the minds of consumers.

Segmentation Bases

• These are the criteria used to classify and divide buyers into different groups.

• These help a firm in getting a fuller picture of its customers and create real value for the.

Types of Segmentation Bases

BEHAVIORAL

• What benefits do customers want?

• How do they use the product?

DEMOGRAPHIC

• Profile of customers

• Age, gender, income, race, ethnicity

GEOGRAPHIC

• Where are customers located?

• How can they be reached?

PSYCHOGRAPHIC

• What do our customers think about and value?

• How do they live their lives?

Segmentation by Behavior

Benefits: segmenting buyers by the benefits that they seek from the product.

Usage: segmenting buyers by the frequency that they use/buy products.

Application: segmenting buyers by the way in which they use products.

Marketers can tailor products to consumers for optimum results if they know:

• The benefits that consumers seek

• How often they purchase the product

• Usage situation (daily, weekly, monthly, holiday, etc.)

• The manner in which the product is used

Segmentation by Demographics

• Demographics are used to segment markets because demographic information is publicly available in databases around the world.

• The most popular type of segmentation.

Includes:

– Age

– Gender

– Occupation

– Income

– Social class

• Demographics are used to segment markets because demographic information is publicly available in databases around the world.

• The most popular type of segmentation.

Includes:

– Education

– Ethnicity

– Family life cycle and family size

– Nationality

– Religion

Geographic segmentation divides buyers by where they are located.

• World Region or Country: North America, Western Europe, European Union, Pacific Rim, Mexico, etc.

• Country Region: Pacific, Mountain, Eastern, etc.

• City or Metro Size: New York, Mexico City, São Paulo

• Population Density: Urban, Suburban, Rural

• Climate: northern, southern, tropical, semi-tropical, desert Copyright Flatworld 2023

• Geocoding is the process of plotting geographic marketing information on a map.

• Geodemographics (or neighborhood geography) combines both demographic and geographic information for marketing purposes

Proximity marketing: an interesting new technology firms are using to segment and target buyers geographically within a few hundred feet of their businesses using wireless technology.

Psychographic information is frequently gathered via extensive surveys that ask people about their:

– Activities

– Interests

– Opinions

– Attitudes

– Values

– Lifestyles

The VALS Types

• Innovators: successful, sophisticated, take-charge people

• Thinkers: mature, satisfied, comfortable, well educated

• Achievers: goal oriented, conservative, predictable, stable

• Experiencers: young, enthusiastic, seek variety and excitement

• Believers: conservative, conventional, believe in established codes

• Strivers: trendy, fun loving, seek approval, job vs. career

• Makers: practical, self sufficient, suspicious of large institutions

• Survivors: few resources, concerned with safety, low motivation

Segmentation in B2B Markets

There are fewer behavioral and needs-based segments in B2B markets than in

business-to-consumer (B2C) markets for two reasons:

• Business markets are made up of a few hundred customers whereas consumer markets can be made up of hundreds of thousands of customers.

• Businesses aren’t as fickle as consumers.

The behavioral segments in B2B markets include the following:

• A price-focused segment—small companies that have low profit margins

• A quality and brand-focused segment—firms that want the best possible products and are prepared to pay for them.

• A service-focused segment—firms that demand high-quality products and have top-notch delivery and service requirements.

• A partnership-focused segment—firms that seek trust and reliability on the part of

their suppliers

Segmentation bases are criteria used to classify buyers. The main types of buyer characteristics used to segment consumer markets are behavioral, demographic, geographic, and psychographic.

• Behavioral segmentation divides people and organization into groups according to how they behave with or toward products.

• Segmenting buyers by personal characteristics such as their age, income, ethnicity, family size, and so forth is called demographic segmentation.

• Geographic segmentation involves segmenting buyers based on where they live.

• Psychographic segmentation seeks to differentiate buyers based on their activities, interests, opinions, attitudes, values, and lifestyles

• Oftentimes a firm uses multiple bases to get a fuller picture of its customers and create value for them. Marketing professionals develop consumer insight when they gather both quantitative and qualitative information about their customers.

• Many of the same bases used to segment consumer markets are used to segment business-to-business (B2B) markets. However, there are generally fewer behavioral-based segments in B2B markets