Part 3 Designing a Customer-Driven Marketing Strategy and Marketing Mix
SEGMENTATION, TARGETING, AND POSITIONING
PREVIEWING THE CONCEPTS – CHAPTER OBJECTIVES
1. define the four major steps in designing a customer-driven marketing strategy: market
segmentation, market targeting, differentiation, and positioning
2. list and discuss the major bases for segmenting consumer and business markets
3. explain how companies identify attractive market segments and choose a market targeting
4. discuss how companies differentiate and position their products for maximum competitive
JUST THE BASICS
This chapter looks further into key customer-driven marketing strategy decisions—how to divide
up markets into meaningful customer groups (segmentation), choose which customer groups to
serve (targeting), create market offerings that best serve targeted customers (differentiation),
and positioning the offerings in the minds of consumers (positioning).
Then, the chapters that follow explore the tactical marketing tools—the Four Ps—by which
marketers bring these strategies to life.
ANNOTATED CHAPTER NOTES/OUTLINE
Biotherm Homme: Targeting a New Market Segment
Male grooming is a booming market. The category has seen 25 to 30 percent growth per year,
reaching $2.7 billion in Canada in 2009.
Founded in France in 1985, Biotherm Homme is the pioneer and world-leading men’s skin-care
brand, known for breaking barriers and eliminating taboos while standing by men and helping
them feel comfortable about taking care of their skin to look and feel better.
The Biotherm Homme brand strives to develop close relationships with men by communicating an
in-depth understanding of their skin, and challenging men—in a friendly manner—to change their
habits without challenging who they are.
Today, Biotherm Homme products are available in over 70 countries, and include fulllines of:
• anti-aging creams
• eye creams Part 3 Designing a Customer-Driven Marketing Strategy and Marketing Mix
Though Biotherm Homme was a pioneering brand in men’s skin care, nearly every major
cosmetics brand has since entered the market:
• Unilever Canada recently launched a new line of products called Dove Men + Care.
• Nivea for Men offers a website called The Groom Room.
At Biotherm Homme, the future of men’s skin care is high-precision, high-tech instruments and
formulations, dedicated to making men look good with minimum time wasted in front of the
Figure 7.1 shows the four major steps in designing a customer-driven marketing strategy.
Market segmentation involves dividing a market into smaller groups of buyers with distinct
needs, characteristics, or behaviours that might require separate marketing strategies or mixes.
Market targeting (or targeting) consists of evaluating each market segment’s attractiveness and
selecting one or more market segments to enter.
Differentiation involves actually differentiating the firm’s market offering to create superior
Positioning consists of arranging for a market offering to occupy a clear, distinctive, and
desirable place relative to competing products in the minds of target consumers.
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.
Segmenting Consumer Markets
Table 7.1 outlines the major variables that might be used in segmenting consumer markets.
Geographic segmentation calls for dividing the market into different geographical units such as
global regions, countries, regions within a country, provinces, cities, or even neighbourhoods.
Demographic segmentation divides the market into groups based on variables such as age,
gender, family size, family life cycle, income, occupation, education, religion, race, generation,
and nationality. Chapter 7: Segmentation, Targeting, and Positioning
Demographic factors are the most popular bases for segmenting customer groups.
Age and Life-Cycle Stage is offering different products or using different marketing approaches
for different age and life-cycle groups.
Gender segmentation has long been used in clothing, cosmetics, toiletries, and magazines.
Household Income (HHI) segmentation has long been used by the marketers of products and
services such as automobiles, clothing, cosmetics, financial services, and travel.
Ethnic or Cultural Group
Statistics Canada compiles census data about Canadians, and makes it available to marketers. It’s
fairly easy to identify markets in Canada with high numbers of Chinese-speaking consumers, and
place your advertising accordingly.
Quebec is a large market segment of its own, defined by geography, but more importantly by
ethnicity and language.
Psychographic segmentation divides buyers into different groups based on social class, lifestyle,
or personality characteristics.
Marketers use personality variables to segment markets.
Behavioural segmentation divides buyers into groups based on their knowledge, attitudes, uses,
or responses to a product.
Occasion segmentation is grouping buyers according to occasions when they get the idea to buy,
actuallymake their purchase, or use the purchased item.
Benefit segmentation is grouping buyers according to the different benefits that they seek from
User Status is segmenting markets into nonusers, ex-users, potential users, first-time users, and
regular users of a product.
Usage Rate is grouping markets into light, medium, and heavy product users. Part 3 Designing a Customer-Driven Marketing Strategy and Marketing Mix
Loyalty Status is dividing buyers into groups according to their degree of loyalty.
Using Multiple Segmentation Bases
Marketers rarely limit their segmentation analysis to only one or a few variables.
PRIZM NE (one of the leading segmentation systems) classifies households based on a host of
Segmenting Business Markets
Consumer and business marketers use many of the same variables to segment their markets.
Business marketers also use some additional variables, such as customer operating
characteristics, purchasing approaches, situational factors, and personal characteristics.
Many marketers believe that buying behaviour and benefits provide the best basis for segmenting
Segmenting International Markets
Companies can segment international markets using one or a combination of several variables.
• Geographic factors: Nations close to one another will have many common traits and
• Economic factors: Countries may be grouped by population income levels or by their
overall level of economic development.
• Political and legal factors: Type and stability of government, receptivity to foreign firms,
monetary regulations, and the amount of bureaucracy.
• Cultural factors: Grouping markets according to common languages, religions, values
and attitudes, customs, and behavioural patterns.
Intermarket segmentation is segmenting of consumers who have similar needs and buying
behaviour even though they are located in different countries.
Requirements for Effective Segmentation
To be useful, market segments must be:
• Measurable: The size, purchasing power, and profiles of the segments can be
• Accessible: The market segments can be effectivelyreached and served.
• Substantial: The market segments are large or profitable enough to serve.
• Differentiable: The segments are conceptually distinguishable and res