Marketing: MKT100 Chapter 7 Notes
Ch. 7: Segmentation, Targeting & Positioning
The Segmentation-Targeting-Positioning Process
Step 1: Establish Overall Strategy or Objectives
• Articulate mission and the objectives of the company’s marketing strategy
• Segmentation strategy must be consistent with objectives as wells as current
situation – SWOT Analysis
Step 2: Segmentation Bases
• Formal approach to segment the market
• Organizes consumers into groups of where they live, either by country, region, areas
within a region, climate or topography, etc.
• Marketers sometimes make adjustments to meet needs of smaller geographic
• Grouping of consumers by easily measured, objective characteristics such as age,
gender, income, education, race, occupation, religion, marital status, family size,
family life cycle, and home ownership.
• Delves into how consumers describe themselves; allows people to describe
themselves by using those characteristics that help them choose how they occupy
their time and what underlying psychological reasons determine these choices.
• Marketers determine (through demographics, buying patterns and usage) into which
segment an individual consumer falls
• For example, a person might have a strong need for inclusion or belonging, which
motivates them to seek activities that involve others, which influences the products
they buy • Determining psychographics involves knowing and understanding 3 components:
self-values self-concept, and lifestyles.
• Self-values are life goals, not just goals one wants to accomplish in a day.
• Refers to overriding desires that drive how a person lives his or her life
• Self-concept is the image people have of themselves
• A person who has a goal to belong may see, or want to see themselves as fun-
loving, gregarious type whom people wish to be around.
• Lifestyles are the ways people live to achieve their goals
• Someone with a strong sense of belonging will probably live in a well-populated area
that allows for many activities
• The most widely used psychographic system is the VALS, owned and operated by
Strategic Business Insights (SBI)
• VALS is a tool that classifies consumers into 8 segments: Innovators, Thinkers,
Believers, Achievers, Strivers, Experiencers, Makers or Survivors.
• Groups consumers on the basis of benefits they derive from products or services,
their usage rates, their user status, and their loyalty.
• Benefit segmentation looks at the benefits consumers derive from a product or
• Loyalty segmentation is a strategy of investing in retention to retain most profitable
• Usage rates: heavy users, regular users, light users, occasional users
• User Status: Current users, ex-users, potential users
Using Multiple Segmentation Methods
• A combination of geographic, demographic and lifestyle characteristics is called
• PSYTE cluster is the grouping of all neighbourhoods in Canada into 60 different
lifestyle clusters Step 3: Evaluate Segment Attractiveness
• Firms must determine who is within their market to be able to design products or
service to meet their needs.
• It’s also important to ensure that the segments are distinct from one another
because overlap can cause distinct marketing strategies to become unnecessary.
• The best product or service cannot have any impact if that market cannot be
reached or accessed through persuasive communications and distribution
• Consumers must know the product or service exists, understand what it can do for
them and recognize how to buy it
• For segmentation strategies to be successful, the consumers in the segment must
react similarly and positively to the firm’s offering.
• If through the firm’s competencies cannot provide the product or service to a
segment, it should not target it
Substantial and Profitable
• After target markets are identified, it needs to measure its size and growth potential
• If a market is too small, it won’t generate significant profits.
• Market growth, (current and expected gr