Market Segmentation, Targeting, and Positioning Strategies in Marketing

Geodemographics

A hybrid of geographic and demographic segmentation, exemplified by the PRIZM-NE Database which profiles every U.S. ZIP code via demographic and psychographic data.

Steps in Target Marketing

Analyze market segments, develop profiles for each target, and select an approach.

User Status

Categorization of customers as former, current, potential, first-time, or regular users.

Usage Rate

Classification of customers based on their consumption frequency, often represented by the 80/20 Rule.

Loyalty Status

Classification of customers based on their loyalty to a brand, which can inform loyalty program development.

Multiple Segmentation Approaches

Combining geographic, demographic, psychographic, and behavioral factors for precision in targeting.

Differentiation

Communicating & delivering value in different ways to different groups.

Benefits Sought

Core value-adding properties that customers look for in products or services.

Positioning

Creating, communicating, and delivering value to target markets; it involves what a company does to the customer's mind, not the product.

Key Variables in Segmenting Business Markets

Demographic (Industry, Company Size, Location), Operating Variables (Technology, User Status, Customer Capabilities), Purchasing Approaches (Power Structure, Policies, Criteria), Situational Factors (Urgency, Order Size, Application), Personal Characteristics (Buyer-Seller Similarity, Risk Attitudes, Loyalty).

Positioning Research

Involves focus groups, attribute lists, surveys, and gap analysis to identify gaps between importance vs delivery and vs competitors.

Usage Patterns

Patterns of consumption categorized by occasions, usage rate (light/medium/heavy), loyalty status, and user status.

Demographic Segmentation

Segmentation based on age, generation, gender, family & household structure, race & ethnicity, income, occupation, education, and social class.

Geographic Segmentation

Segmentation based on location variables such as region, climate, and density.

Psychographic Segmentation

Segmentation based on personality, lifestyle, and values, often measured by AIO (Attitudes, Interests, Opinions) or VALS™ (based on resources & primary motivation).

Behavioral Segmentation

Segmentation that groups customers by benefits sought or usage patterns, including occasions, usage rate, loyalty status, and user status.

Occasions

Special events that influence customer purchasing behavior.

Criteria for effective segmentation

Sufficient size, readily identifiable & measurable, clearly differentiated on important dimensions, reachable to deliver value.

Market Segmentation

The process of dividing heterogeneous markets into homogeneous subgroups to develop distinct strategies for each segment.

Approaches to Target Marketing

Undifferentiated (single mix for entire market), differentiated (different mix for each segment), concentrated (focus on one niche), customized (tailored to individuals).

Perceptual Maps

Visual tools showing customer perceptions of brands across attributes such as price and quality, used to identify competitive gaps and reposition brands.