Chapter 8

Market Segmentation, Targeting, and Positioning

Three Steps in Target Marketing

1.Market Segmentation

2.Market Targeting

3.Market Positioning

Market Segmentation

Geographic Segmentation

Demographic Segmentation

Psychographic Segmentation

Behavior Segmentation

Geographic Segmentation

Dividing the market into different geographic units

Nations States Regions Counties Cities Neighborhoods

http://www.starwoodhotels.com/

http://www.peedeetourism.com/

Demographic Segmentation

Dividing the market into groups based on demographic variables Age Gender Income Occupation

Most common Life Cycles

http://www.elderlyelder.com/seniors-travel.html

Psychographic Segmentation

Dividing buyers into different groups based on social class, lifestyle, and personality characteristics

Behavior Segmentation Buyers are divided into groups based on their

knowledge, attitude, and use or response to a product

Types Occasion segmentation Benefits sought User status Usage rate Loyalty Status

The source of loyalty is an emotional bond that can’t be bought by points or free stays.

Buyer readiness stage

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

• Segments can be effectively reached and served.

• Segments are large or profitable enough to serve.

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

ActionableActionable

• Effective programs can be designed to attract and serve the segments.

Requirements for Effective Segmentation

2. Market Targeting

Evaluating Market Segments Segment Size and Growth Segment Structural Attractiveness Company Objectives and Resources

Selecting Market Segments Undifferentiated; Bifurcated; Differentiated;

Concentrated

Choosing a Market-Coverage Strategy Company resources ->Degree of product

homogeneity->Market homogeneity ->Competitors’ strategies

Selecting Market Segments

Undifferentiated – Mass marketing e.g. All leisure travelers

Bifurcated – two major market segments (high vs. low end) with no middle segments (Actually a form of differentiated marketing)

Differentiated (multi-target) – target several markets with various offers. Upscale couples leisure, family leisure etc.

Concentrated – target a large share of one or a few small markets.

E.g. pleasure oriented couples – Hedonism http://www.hedonism.com/

Luxury travel: http://www.abercrombiekent.com/

3. Market Positioning Strategies A product's position is the way the product is

defined by c o ns um e rs on important attributes. Products can be positioned:

On specific product attributes. On the needs they fill or the benefits they offer. For certain classes of users Against an existing competitor Against another product class

http://www.youtube.com/watch?v=gnID_bp3yDw

https://www.youtube.com/watch?v=CspdvSNe_Y4&feature=related

Product Differentiation Physical Attribute Differentiation Service Differentiation Personnel Differentiation Location Differentiation Image Differentiation http://www.youtube.com/watch?v=0h73csJxIJA&feature=related

http://www.youtube.com/watch?v=1lXkBpZsz4A&feature=related

Make it… Not easily duplicated (tangible vs.

intangible) Appealing to specific need/want Beyond specific differences

Image Differentiating

Positioning Measurement Perceptual mapping is a research tool used to

measure a brand’s position

Positioning map of

service level versus price.

(From Christopher Lovelock, Services Marketing, Upper Saddle River, NJ:

Prentice Hall, 1996, p.178.)

In-class Activity

Work in a group of 3-4, choose a restaurant you are familiar with in the community, explain some of the possible segments in its overall market, and one of the these segments that it targeted, and how it differentiated itself from its competitors to position itself in the market.