RETAIL
MARKETING
By Tom Tamale
Segmentation, Targeting,
and Positioning
Designing a Customer-Driven Marketing
Strategy
Major Segmentation Variables for
Consumer Markets
Geographic and
Demographic Segmentation
• Geographic segmentation: Dividing a market
into different geographical units
• Such as nations, states, regions, counties, cities,
or neighborhoods
• Demographic segmentation: Dividing a
market into segments based on variables
• Such as age, life-cycle stage, gender, income,
occupation, education, religion, ethnicity, and
generation
Age and Life-Cycle Segmentation
• Dividing a market
into different age
and life-cycle groups
• Marketers must
guard against using
stereotypes
Gender Segmentation
• Dividing a market
into different
segments based on
gender
Income Segmentation
• Dividing a market into different income
segments
• Some marketers target high-income segments
• Retailers who target low- and middle-income
groups are thriving
Psychographic Segmentation
• Marketers segment
their markets using
variables such as:
• Social class
• Consumer lifestyles
• Consumer personality
• Products people buy
reflect their lifestyles.
Behavioral Segmentation
• Occasion segmentation: Segments divided
according to occasions, when the buyers:
• Get the idea to buy
• Make their purchase
• Use the purchased item
• Benefit segmentation: Segments divided
according to the different benefits that
consumers seek from the product
Occasion Segmentation
• Dividing the market
into segments
according to
occasions when
buyers get the idea
to buy, actually
make their purchase,
or use the
purchased item
Behavioral Segmentation
• User status: Markets can be segmented into
nonusers, ex-users, potential users, first-time
users, and regular users.
• Usage rate: Markets can be segmented into
light, medium, and heavy users.
• Loyalty status: Consumers can be loyal to
brands, stores, and companies.
Loyalty Status
• Buyers can be
divided into groups
according to their
degree of loyalty
Multiple Segmentation Bases
• Segmentation bases help companies to:
• Identify smaller, better-defined target groups
• Identify and understand key customer segments
• Reach customers more efficiently by tailoring
market offerings and messages to customers’
specific needs
• Segmentation systems help marketers
segment people and locations into
marketable groups of like-minded consumers.
Segmenting Business Markets
• Consumer and business markets use many of
the same variables for segmentation.
• Variables used by business marketers for
segmentation include:
• Operating characteristics
• Purchasing approaches
• Situational factors
• Personal characteristics
• Location / Order value / size of firms /Accessibility
* These are additional bases
Segmenting International Markets
• Variables include:
• Geographic location
• Economic factors
• Political and legal factors
• Cultural factors
• Intermarket (cross-market) segmentation:
Grouping consumers with similar needs and
buying behaviors irrespective of their location
Requirements for
Effective Segmentation
Market Targeting
• Evaluating the various segments based on:
• Segment size and growth
• Segment structural attractiveness
• Company objectives and resources
• Selecting target market segments
• Target market: Set of buyers sharing common
needs or characteristics that the company
decides to serve
Market-Targeting Strategies
Undifferentiated Marketing
• A firm decides to ignore market segment
differences and go after the whole market
with one offer
• Focuses on what is common in the needs of
consumers
• Designs a product that will appeal to the
largest number of buyers
Differentiated Marketing
• A firm decides to
target several
market segments
and designs separate
offers for each
Concentrated Marketing
• A firm goes after a
large share of one or
a few segments or
niches
• Can fine-tune its
products, prices, and
programs to the Thanks to the reach and power
of the Web, online nicher Etsy
needs of carefully —sometimes referred to as
defined segments eBay’s funky little sister—is
thriving
Micromarketing
• Tailoring products and marketing programs to
the needs and wants of specific individuals
and local customer segments
Local Marketing
• Tailoring brands and
promotions to the
needs and wants of
local customer
segments—cities,
neighbourhoods,
and even specific
stores.
Individual Marketing
• Tailoring
products and
marketing
programs to
the needs and
preferences of
individual
customers
Choosing a Targeting Strategy
• Factors to consider
• Company resources
• Product variability
• Product’s life-cycle stage
• Market variability
• Competitors’ marketing strategies
Socially Responsible Target Marketing
• Controversy and concern of target marketing
• Vulnerable or disadvantaged consumers are
targeted with controversial or potentially harmful
products.
• Should be done to serve the interests of the
company and the interests of those targeted
Differentiation and Positioning
• Firms must decide
which segments to
target and on the
value proposition.
• Product position:
Way a product is
defined by
consumers on
important attributes
Positioning Map:
Large Luxury SUVs
Choosing a Differentiation
and Positioning Strategy
Identifying Possible Value Differences
and Competitive Advantages
• Competitive advantage: An advantage over
competitors gained by offering greater
customer value either by:
• Having lower prices, or
• Providing more benefits that justify higher prices
• Firms can differentiate in terms of product,
services, channels, people, or image.
Choosing the Right
Competitive Advantages
Possible Value Propositions
Winning Value Propositions
Value proposition Description
More for more • Provides the most upscale product or service
• Charges a higher price to cover the higher costs
More for the same • High quality at lower prices
• Can be used to attack a more-for-more positioning
The same for less • Gives a good deal
• Used by discount stores that offer deep discounts based
on superior purchasing power and lower-cost
operations
Less for much less • Meeting consumers’ lower performance or quality
requirements at a much lower price
More for less • Best winning proposition
• Very difficult for companies to sustain such best-of-both
positioning
Developing a Positioning
Statement
• Positioning statement: Summarizes company
or brand positioning
• Format: To (target segment and need) our (brand)
is (concept) that (point of difference).
Communicating and Delivering
the Chosen Position
• All the company’s marketing mix efforts must
support the positioning strategy.
• Firm must take care to maintain the position
obtained through consistent performance
and communication.
• Product’s position should be monitored and
adapted over time to match changes in
consumer needs and competitors’ strategies.
