Segmentation, Targeting &

Positioning

Dr. Keith Niedermeier

MKTG 101

**No laptops or electronic devices allowed during class**

 Segmentation, Targeting &
Positioning
•  Mass Marketing: Same product and marketing mix for
everyone.
•  Efficient

•  Segmentation: Process of dividing markets into distinct

subsets of consumers with common needs and
characteristics.
•  Select one or more segments to target
•  Position with unique marketing mix
Example
 Marriott
•  Marriott Hotels •  TownePlace Suites
•  JW Marriott •  Marriott Vacation Club
•  Renaissance Hotels •  The Ritz-Carlton
•  EDITION Hotels
•  Autograph Collection
•  Courtyard
•  Fairfield Inn
•  Residence Inn
•  Springhill Suites
 Segmentation

•  Allows established companies to expand markets.

•  Allows new companies to find niches.

•  Identify specific wants and needs of groups of

consumers.

•  Reposition existing products

•  Determine appropriate media

 Segmentation Variables
•  Geographic •  Psychological
•  Region •  Need/Motivation
•  City size •  Personality
•  Density •  Perception
•  Climate •  Learning/Involvement
•  Zip Code •  Attitudes
•  Demographic •  Psychographic
•  Age
•  Cohort •  Sociocultural
•  Sex •  Culture/Subculture (Race)
•  Marital Status •  Religion
•  Income •  Social Class
•  Education •  Family Life Cycle
•  Occupation
 Segmentation Variables

•  Use Related •  Benefit

•  Usage rate
•  Awareness status •  Hybrid
•  Brand Loyalty •  Geo-demographic
•  Demographic/ psychographic
•  Use Situation
•  Time
•  Objective
•  Location
•  Person (end user)
Geography
 Segmentation Variables
•  Criteria for good segments
-Homogeneous within
-Heterogeneous between (differentiable)
-Substantial
-Operational (measurable, accessible, actionable)
-Stable
•  Methods
•  Cluster analysis, factor analysis
•  Art and opinion
 Factor Analysis
•  sporty
•  appeals to young people
•  fun to drive
•  attractive looking
•  exciting
•  appeals to women
•  good acceleration
•  touch of class
•  expensive looking
•  handles well
•  car would like to be seen in
•  high quality
•  functional instrumentation
•  classic styling
•  luxurious
•  economical on fuel
•  durable
•  quiet ride
•  reliable
•  comfortable
•  safe
•  good resale value
•  easy to maintain
•  good value for money
•  roomy interior
•  appeals to older people
Customer Variable

1 2 3 4 …
1
2
3
4
…
 Factor Analysis
•  Exciting and Sporty •  Comfortable and
Exciting Luxurious
Sporty Comfortable
Good acceleration Appeals to older people
Handles well Luxurious
Func. instrumentation Roomy interior
Fun to drive Quiet ride
Attractive looking Safe
Car to be seen in
Appeals to women
Appeals to young
 Cluster Analysis
Between group variance

Within group
variance

& between group variance #

max % "
$ within group variance !
 Cluster Analysis

& between group variance #

max % "
$ within group variance !
 4

3.5

2.5

1.5
1.5 2 2.5 3 3.5 4
 •  Choose the centers of the
4
clusters randomly
3.5
•  Allocate each point to its
nearest center
3

2.5
4

2 3.5

1.5
3
1.5 2 2.5 3 3.5 4

2.5

1.5
1.5 2 2.5 3 3.5 4
 •  Choose the centers again
4
as the centroids of the
3.5
clusters from iteration 1.
•  Allocate each point to the
3 centroid that is closest to it
2.5

2 4

1.5 3.5
1.5 2 2.5 3 3.5 4

2.5

1.5
1.5 2 2.5 3 3.5 4
 •  Choose the centers again as
the centroids of the clusters
4 from iteration 2.
•  Allocate each point to the
3.5
centroid that is closest to it
3

2.5
4

2 3.5

1.5
3
1.5 2 2.5 3 3.5 4

2.5

1.5
1.5 2 2.5 3 3.5 4
 4
•  Choose the centers again
as the centroids of the
3.5 clusters from iteration 3.
•  Nothing changed –
3
analysis is complete
2.5

2 4

1.5 3.5
1.5 2 2.5 3 3.5 4

2.5

1.5
1.5 2 2.5 3 3.5 4
 Examples

•  Nielson/Claritas PRIZM system

•  Geo-demographic segmentation
 Examples

•  SBI VALS (Values and Lifestyle System)

•  Psychographic-demographic
•  VALS
 Customer Relationship
Management
•  Micro segmentation - moving toward a segment of
one
•  Creating and maintaining a relationship with an
individual customer to build lifetime value
•  Identify, Differentiate, Interact, Customize
•  CRM Systems
•  Harrahs
•  Amazon
 Targeting

•  Segment Size, Growth, Value, Stability

•  Company Position with Segment
•  Ease of Entry
•  Ability to Reach and Serve Segment

•  Competitors
•  Number and strength
•  Ease of entry

•  Product Life Cycle

 Positioning
•  Influences how a particular segment perceives an
offering in comparison to the competition
•  Using the Marketing Mix
•  Positioning Statement:
•  To (target segment and need) our (brand) is the (concept) that
(point to difference and reasons to believe).
•  For (target), (our brand) of all (product type) delivers (point of
difference) because (our brand) is (reasons to believe).

•  Critical elements: Target, frame of reference, point of

differentiation, reason to believe
Strategic Tactical
 Looking Forward
•  Careers: Brand/Product Management, Marketing
Research, Analyst

•  MKTG 212 Marketing Research

•  MKTG 277 Marketing Strategy

•  Vanguard Case
•  https://personal.vanguard.com/us/content/Home/WhyVanguard/
AboutVanguardOVContent.jsp?fromPage=portal

•  http://www.investopedia.com/university/mutualfunds/
mutualfunds.asp#axzz1Ycog5G3K

•  http://www.youtube.com/watch?v=mJA2bqHLr9k