Chapter 7 Segmentation, Targeting, and Positioning
Step 1: Establish Overall Strategy or Objectives
The first step is to articulate the mission and the objectives of the company’s
marketing strategy clearly.
The segmentation strategy must then be consistent with and derived from
the firm’s mission and objectives.
Step 2: Segmentation Bases
The second step in the segmentation process is to use a formal approach to
segment the market.
This step develops descriptions of the different situations of the different
segments, their needs, wants, and characteristics.
Four various ways of segmentation:
Geographic Segmentation: the grouping of consumers on the basis of where
Demographic Segmentation: the grouping of consumers according to easily
measured, objective characteristics such as age, gender, income, and education.
Psychographic Segmentation: this segmentation base delves into how
consumers describe themselves; allows people to describe themselves by
using those characteristics that help them choose how they occupy their time
(behaviour) and what underlying psychological reasons determine those
o Self-Values: goals for life, not just goals one wants to accomplish in a day
o Self-Concept: the image a person has of himself or herself
o Lifestyles: the way a person lives his or her life to achieve their goals.
Behavioural Segmentation: groups consumers based on the benefits they derive
from products or services, their usage rate, their user status, and their loyalty.
o Benefit Segmentation: groups together consumers based on the
benefits they derive from products or services.
o Loyalty Segmentation: strategy of investing in retention and loyalty
initiatives to retain the firm’s most profitable customers. Step 3: Evaluate Segment Attractiveness
The third step in the segmentation process involves evaluating the
attractiveness of the various segments.
To undertake this evaluation, marketers first must determine whether the
segment is worth pursuing by using several descriptive criteria:
o Identifiable: firms must determine who is within their market to be
able to design products or services to meet their needs.
o Reachable: consumers must know the product or service exists,
understand what it can do for them, and recognize how to buy it.
o Responsive: the customer on the segment must react similarly and
positively to the firm’s offering.
o Substantial and Profitable: once the firm has identified its potential
target markets, it needs to measure their size, and growth potential.
Step 4: Select Target Market
The fourth step in the STP process is selecting a target market.