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Chapter 7. Market Segmentation, Targeting, and Positioning for Competitive Advantage. Steps in Market Segmentation, Targeting, and Positioning (Fig. 7.1). Market Segmentation 1. Identify bases for segmenting the market 2. Develop segment profiles. Market Targeting

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chapter 7

Chapter 7

Market Segmentation, Targeting, and Positioning for Competitive Advantage

steps in market segmentation targeting and positioning fig 7 1
Steps in Market Segmentation, Targeting, and Positioning (Fig. 7.1)

Market Segmentation

1. Identify bases for

segmenting the market

2. Develop segment profiles

Market Targeting

3. Develop measure of

segment attractiveness

4. Select target segments

Market positioning

5. Develop positioning for

target segments

6. Develop a marketing

mix for each segment

step 1 market segmentation levels of market segmentation
Step 1. Market SegmentationLevels of Market Segmentation

Mass Marketing

Same product to all consumers

(no segmentation, i.e Coca-Cola)

Through Market Segmentation, Companies Divide Large, Heterogeneous Markets into Smaller Segments that Can be Reached More Efficiently And Effectively With Products and Services That Match Their Unique Needs.

Segment Marketing

Different products to one or more segments

(some segmentation, i.e. Marriott)

step 1 market segmentation levels of market segmentation1

Niche Marketing

Different products to subgroups within segments

(more segmentation, i.e. Standard or Luxury SUV’s)

Individual Marketing

Tailoring products and programs to the needs of individual customers, i.e. Dell

Local Marketing

Tailoring brands/ promotions to local customer groups, i.e Sears


Products to suit the tastes of individuals and locations

(complete segmentation)

Step 1. Market SegmentationLevels of Market Segmentation
step 1 market segmentation demographic segmentation
Step 1. Market SegmentationDemographic Segmentation
  • Dividing the market into groups based on variables such as:
    • Age
    • Gender
    • Family size or life cycle
    • Income
    • Occupation
    • Education
    • Religion
    • Race
    • Generation
    • Nationality

Most Popular Bases & Easiest to Measure

step 1 market segmentation psychographic segmentation
Step 1. Market SegmentationPsychographic Segmentation

Divides Buyers Into Different Groups Based on:

Social Class



step 1 market segmentation behavioral segmentation
Step 1. Market SegmentationBehavioral Segmentation
  • Dividing the market into groups based on variables such as:
    • Occasions
    • Benefits
    • User status
    • Usage rate
    • Loyalty status
    • Readiness stage
    • Attitude toward product
segmenting business markets


Operating Variables

Business Marketers Use Many of the Same Consumer Variables, Plus:

Purchasing Approaches

Situational Factors

Personal Characteristics

Segmenting Business Markets
segmenting international markets
Segmenting International Markets



Factors Used to Segment International Markets





Political and Legal Factors

step 1 market segmentation requirements for effective segmentation




  • Size, purchasing power, profiles
  • of segments can be measured.


  • Segments can be effectively
  • reached and served.


  • Segments are large or profitable enough to serve.
  • Segments must respond differently to different marketing mix elements & programs.
  • Effective programs can be designed to attract and serve the segments.
Step 1. Market SegmentationRequirements for Effective Segmentation
discussion connections
Discussion Connections
  • Take another look at Figure 7-2. Can you identify specific companies, other than the examples already discussed, that practice each level of segmentation?
  • Using the segmentation bases you’ve just read about, segment the U.S. footwear market.
      • Describe each of the major segments and sub segments.
step 2 market targeting evaluating market segments
Step 2. Market TargetingEvaluating Market Segments
  • Segment Size and Growth
    • Analyze current sales, growth rates and expected profitability for various segments.
  • Segment Structural Attractiveness
    • Consider effects of: competitors, availability of substitute products and, the power of buyers & suppliers.
  • Company Objectives and Resources
    • Company skills & resources needed to succeed in that segment(s).
    • Look for Competitive Advantages.
step 2 market targeting market coverage strategies
Step 2. Market TargetingMarket Coverage Strategies






Marketing Mix 1

Segment 1


Marketing Mix 2

Segment 2

A. Undifferentiated Marketing

Segment 3


Marketing Mix 3

Segment 1




Segment 2

B. Differentiated Marketing

Segment 3

C. Concentrated Marketing

step 2 market targeting choosing a market coverage strategy
Step 2. Market TargetingChoosing a Market-Coverage Strategy

Company Resources

Product Variability

Product’s Stage in the Life Cycle

Market Variability

Competitor’s Marketing Strategies

socially responsible target marketing
Socially Responsible Target Marketing
  • Smart targeting helps companies and consumers alike.
  • Target marketing sometimes generates controversy and concern.
    • Disadvantaged and vulnerable can be targeted.
    • Cigarette, beer, and fast-food marketers have received criticism in the past.
    • Internet has come under attack because of the loose boundaries and lack of control in marketing practices.
discussion connection
Discussion Connection
  • At the last Discussion Connection, you segmented the U.S. footwear market.
    • Now, pick two companies that serve this market and describe their segmentation and targeting strategies.
    • Can you come up with one that targets many different segments versus another that focuses on only one or a few segments?
  • How does each company you choose differentiate its marketing offer and image?
  • How has each done a good job of establishing this differentiation in the minds of targeted consumers?
step 3 choosing a positioning strategy
Step 3. Choosing a Positioning Strategy
  • Product’s Position - the way the product is defined by consumers on important attributes - the place the product occupies in consumers’ minds relative to competing products.
  • Marketers must:
    • Plan positions to give their products the greatest advantage in selected target markets,
    • Design marketing mixes to create these planned positions.
step 3 choosing a positioning strategy1
Step 3. Choosing a Positioning Strategy

Step 1. Identifying Possible Competitive Advantages

Step 2. Selecting the Right Competitive Advantage

Step 3. Communicating and Delivering the Chosen Position

identifying possible competitive advantages
Identifying Possible Competitive Advantages
  • Key to winning and keeping customers is to understand their needs and buying processes better than competitors do and deliver more value.
  • Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits, that justify competitive advantage,
identifying possible competitive advantages1
Identifying Possible Competitive Advantages



i.e. Features, Performance, Style & Design, or Attributes



i.e. Delivery, Installation,

Repair Services, Customer

Training Services



i.e. Symbols, Atmospheres, Events



i.e. Hiring, Training Better People Than Competitors Do

choosing the right competitive advantages
Choosing the Right CompetitiveAdvantages





For Determining

Which Differences

To Promote




Unique Selling Proposition


selecting an overall positioning strategy fig 7 4
Selecting an Overall Positioning Strategy (Fig. 7.4)


More The same Less


The Same









for the



The same



Less for



communicating and delivering the chosen position
Communicating and Delivering the Chosen Position
  • Once position is chosen, company must take strong steps to deliver and communicate the desired position to target consumers.
  • All the company’s marketing mix must support the positioning strategy.
  • Positioning strategy must be monitored and adapted over time to match changes in consumer needs and competitor’s strategies.
review of concept connections
Review of Concept Connections
  • Define the three steps of target marketing: market segmentation, market targeting, and market positioning.
  • List and discuss the major levels of market segmentation and bases for segmenting consumer and business markets.
  • Explain how companies identify attractive market segments and choose a market-coverage strategy.
  • Discuss how companies can position their products for maximum competitive advantage in the marketplace.