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Chapter 9 - Segmentation, Targeting, and Positioning Marketing 6th
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
1
Chapter 9
Segmentation, Targeting, and Positioning
Tools for Instructors
• Brief Chapter Outline
• Learning Objectives
• Extended Chapter Outline with Teaching Tips
• Answers to End of Chapter Learning Aids
• Chapter Case Study
• Additional Teaching Tips
• Connect Activities
Brief Chapter Outline
The Segmentation, Targeting, and Positioning Process
End of Chapter Learning Aids
Chapter Case Study: Mercedes-Benz
Learning Objectives
LO9-1 Outline the different methods of segmenting a market.
There is really no one “best” method to segment a market. Firms choose from various methods on the
basis of the type of product/service they offer and their goals for the segmentation strategy. For instance,
if the firm wants to identify its customers easily, demographic or geographic segmentation likely will work
LO9-2 Describe how firms determine whether a segment is attractive and therefore worth pursuing.
Marketers use several criteria to assess a segment’s attractiveness. First, the customer should be
identifiable—companies must know what types of people are in the market so they can direct their efforts
appropriately. Second, the market must be substantial enough to be worth pursuing. If relatively few
LO9-3 Articulate the differences among targeting strategies: undifferentiated, differentiated,
concentrated, or micromarketing.
Firms use a targeting strategy after they have identified its segments. An undifferentiated strategy uses
no targeting at all and works only for products or services that most consumers consider to be
commodities. The difference between a differentiated and a concentrated strategy is that the
Chapter 9 - Segmentation, Targeting, and Positioning Marketing 6th
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2
LO9-4 Determine the value proposition.
A firm’s value proposition communicates the customer benefits to be received from a product or service
and thereby provides reasons for wanting to purchase it. It consists of the attributes of a product or
service that are desired by the target market but not available from competitors. Firms could attempt to
LO9-5 Define positioning, and describe how firms do it.
Positioning is the P in the STP (segmentation, targeting, and positioning) process. It refers to how
customers think about a product, service, or brand in the market relative to competitors’ offerings. Firms
position their products and services according to several criteria. Some focus on their offering’s value—
customers get a lot for what the product or service costs. Others determine the most important attributes
monitor the positioning strategy.
Extended Chapter Outline with Teaching Tips
I. The Segmentation, Targeting, Positioning Process
A. Step 1: Establish the Overall Strategy or Objectives
B. Step 2: Use Segmentation Methods
6. Using Multiple Segmentation Methods
Progress Check: Several questions are offered for students to check their understanding of core
concepts.
1. What are the various segmentation methods?
Chapter 9 - Segmentation, Targeting, and Positioning Marketing 6th
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
3
C. Step 3: Evaluate Segment Attractiveness
D. Step 4: Select a Target Market
E. Step 5: Identify and Develop Positioning Strategy
F. Positioning Methods
G. Positioning Using Perceptual Mapping
Progress Check: Several questions are offered for students to check their understanding of core
concepts.
1. What is a perceptual map?
2. Identify the six positioning steps.
Answers to End of Chapter Learning Aids
Marketing Digitally
1 Go to http://www.esri.com/library/fliers/pdfs/tapestry_segmentation.pdf, and identify five
segments that you would expect to find in your zip code. Then go to
http://www.esri.com/data/tapestry/zip-lookup, and type in your zip code. Compare the
segments that are found in your zip code with your initial prediction. Are they similar or
different? Discuss the extent to which you believe these are accurate descriptions of the main
segments of people who reside in your zip code.
Chapter 9 - Segmentation, Targeting, and Positioning Marketing 6th
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
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By looking at their own zip codes, students can get a feel for how accurate Esri is and discover any areas
in which Esri has missed the mark.
2 Go to the VALS website (http://www.strategicbusinessinsights.com/vals/
presurvey.shtml), and click on the link to complete the VALS survey. After you submit your
responses, a screen will display your primary and secondary VALS types. Click on the colored
names of each segment to get additional information about them, and print out your results.
Assess the extent to which these results reflect your lifestyle, and identify which
characteristics accurately reflect your interests and activities and which do not.
Marketing Applications
1 What segmentation methods would you suggest for a small entrepreneur starting her own
business selling gourmet chocolates? Justify why you would recommend those methods.
Students must think about the different benefits and trade-offs of the segmentation methods.
Descriptions of the different segments help firms better understand the customer profiles in each
2 You have been asked to identify various segments in the market and then a potential targeting
strategy. Describe the segments for a pet supply store, and then justify the best targeting
strategy to use.
Students should be able to explain each segmentation strategy and its application.
With an undifferentiated segmentation strategy, the pet supply store would consider everyone a potential
user of the product. This is probably not the best segmentation method for this type of store considering
some people do not have pets.
A differentiated segmentation strategy uses several market segments to obtain a bigger share of the
market. The pet supply store might consider this option if it sells supplies for cats and dogs, as well as
3 What types of products would you use demographic segmentation for? How about
psychographic segmentation? Explain how these products differ.
Chapter 9 - Segmentation, Targeting, and Positioning Marketing 6th
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
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Products where gender plays a very important role in how the firm markets are great for demographic
segmentation.
4 You have been asked to evaluate the attractiveness of a group of identified potential market
segments. What criteria will you use to evaluate those segments? Why are these appropriate
criteria?
The third step in the segmentation process involves evaluating the attractiveness of market segments. To
undertake this evaluation, marketers first must determine whether the segment is worth pursuing, using
several descriptive criteria: is the segment identifiable, substantial, reachable, responsive, and profitable.
If a firm can determine who appears in the market and thus design products or services to meet their
5 A small-business owner is trying to evaluate the profitability of different segments. What are
the key factors you would recommend she consider? Over what period of time would you
recommend she evaluate?
At a different level than that in the previous question, students must suggest ways to determine
profitability.
The business owner should consider the following key factors: market growth (current size, expected
6 Think about the various soft drinks that you know (e.g., Coca-Cola, Pepsi, 7-Up, Gatorade,
Powerade). How do those various brands position themselves in the market?
Students will choose different beverages and should discuss which of the positioning tools the different
soft drinks use to differentiate themselves from competitors. Positioning strategies focus on either how
7 Put yourself in the position of an entrepreneur who is developing a new product to introduce
into the market. Briefly describe the product. Then, develop the segmentation, targeting, and
positioning strategy for marketing the new product. Be sure to discuss (a) the overall strategy,
Chapter 9 - Segmentation, Targeting, and Positioning Marketing 6th
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
6
(b) characteristics of the target market, (c) why that target market is attractive, and (d) the
positioning strategy. Provide justifications for your decisions.
This exercise challenges students to proceed through the entire segmentation, targeting, and positioning
process described in the chapter.
For example, the new product is a self-propelled, robotic lawn mower, similar to the robotic vacuum
cleaner that is on the market today.
• Overall strategy: Segment the market into those consumers who own homes with lawns and
those who do not. Segment those with lawns into geodemographic markets to identify the
8 Think of a specific company or organization that uses various types of promotional material to
market its offerings. The web, magazine ads, newspaper ads, catalogs, newspaper inserts,
direct-mail pieces, and flyers might all be sources for a variety of promotional materials.
Locate two or three promotional pieces for the company and use them as a basis to analyze
the segments being targeted. Describe the methods used for segmenting the market reflected
in these materials, and describe characteristics of the target market according to the
materials. Be sure to include a copy of all the materials used in the analysis.
This exercise takes the examination of segmentation, targeting, and positioning one step further to the
actual implementation of the entire process of marketing materials.
A company like Pillsbury uses a variety of promotional materials to sell its products. Three common types
are newspaper coupon inserts, magazine advertisements, and its web site. According to these
9 You have been hired recently by a large bank in its credit card marketing division. The bank
has relationships with a large number of colleges and prints a wide variety of credit cards
featuring college logos, images, and the like. You have been asked to oversee the
implementation of a new program targeting first-year college students at the schools with
which the bank has a relationship. The bank has already purchased the names and home
addresses of the incoming class. You have been told that no credit checks will be required for
these cards as long as the student is over 18 years of age. The bank plans a first-day-of-
school marketing blitz that includes free hats, T-shirts, and book promotions, as well as free
pizza, if the students simply fill out an application. Do you think it is a good idea to target this
program to these new students?
What ethical issues might arise from the situation outlined, and to what degree do these issues violate
students’ own ethical standards? Using the ethical decision-making framework discussed in Chapter 4,
Chapter 9 - Segmentation, Targeting, and Positioning Marketing 6th
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
7
students should evaluate their opinion of the practice of marketing credit cards to college freshmen and
thus determine an appropriate course of action.
In applying the ethical decision-making framework:
• “Have you thought broadly of any ethical issues associated with the decision to be made?” I have
thought broadly about the ethical issues and have concerns about targeting a market segment of
young consumers who lack jobs and are just learning how to manage their own finances. Such
targeting could breed a population of students who run up credit card bills to the point that it
affects their ability to buy a car or house a few years down the line.
• “Have you involved as many possible people who might have a right to offer input into or have
Quiz Yourself
1 For the ______ criteria to be met when evaluating segment attractiveness, the consumer must know
the product or service exists, understand what it can do for him or her, and recognize how to buy it.
a. substantial
b. identifiable
c. reachable
d. responsive
e. profitable
2 Which step in the STP process develops descriptions of the different segments, which in turn helps
firms better understand the customer profiles in each segment?
a. Establish overall strategy or objectives.
b. Select segmentation method.
c. Develop positioning strategy.
d. Evaluate segment attractiveness.
e. Select target market.
