Overview of the interrelationships between market segmentation, targeting and positioning, describes the criteria

and bases for identifying and selecting target markets, and concludes with a discussion of targeting individual
customers rather than large segments, which has implications for market segmentation.

Market segmentation is the process of dividing a market into subsets of consumers with common needs or
characteristics that are different from those shared by other groups.

Targeting consists of selecting the segments that the company views as prospective customers and pursuing them.

Product Positioning is the process by which a company creates a distinct image and identity for its products,
services, and brands in consumers’ minds. The image differentiates the company’s offering from competition by
communicating to the target audience that the product, service or brand fulfills their needs better than alternatives.

Segment Characteristics: Behavioral data is evidence-based; it can be determined from direct questioning (or
observation), categorized using objective and measurable criteria, such as demographics, and consists of:

1. Quantitative Factors (numerical)

a. Consumer-intrinsic - Such as a person’s age, gender, marital status, income, and education.
b. Consumption-based - Such as the quantity of product purchased, frequency of leisure activities,
or frequency of buying a given product.
2. Cognitive factors - That “reside” in the consumer’s mind, can be determined only through psychological
and attitudinal questioning, and generally have no single, universal definitions.
a. Consumer-intrinsic - Such as personality traits, cultural values, and attitudes towards politics and
social issues.
b. Consumption-specific - Such as the benefits sought in products and attitudes regarding shopping.

Marketers combine factors that are used to segment audiences. Demographics and psychographics are often used
together. Demographics determine needs for products. Psychographics explain buyers’ purchase decisions and
choices.

Demographic Segmentation: The core of almost all segmentation because they are easy and logical. In addition,
they are a cost-effective way to reach segments and demographic shifts are easier to identify than other types of
shifts. Income, education, and occupation tend to tie together and lead to segmentation based on social class. Age
groups, income brackets, number of years of education, number of family members, and the value of property and
investments.

Age - influences buying priorities, Marketers target age groups, Consumers of different ages have different needs, so
age is important in marketing products and services

 Gender - Even though firms are increasingly blurring the lines between genders, gender is still used as a
way to segment audiences. For example, snacks are packaged differently for women than for men, and
men are sold skin care products differently than women.
 Marital Status
 Household type and Size - Family life cycle blends different things like marital status, the size of the
family, age of family members, and employment status of the head of the household into a composite
variable.
 Income and Wealth; Occupation - Social class divides people into a hierarchy that is related to education,
occupation, and income. When there is a recession, it can affect decision making, even among the most
affluent consumers.
 Geographical location
 Ethnicity - Members of the same culture often share the same values, beliefs, and customs. Marketers may
target culturally distinct segments with the same product using different promotional appeals.

Psychographic Segmentation - Marketers segment consumers based on their lifestyles (activities, interests,
opinions). Psychographic variables cover things related to buying habits and ideas about consumption/social issues,
leisure activities, and other dimensions. Psychographics can provide marketers with really descriptive profiles of
their target markets. Agreement with statements like the ones on this and the previous slide are used in consumer
research.

Geodemographic Segmentation - A hybrid segmentation scheme based on the premise that people who live close
to one another are likely to have similar financial means, tastes, preferences, lifestyles, and consumption habits.

Benefit Segmentation - Benefit segmentation is based on the benefits that consumers seek from products and
services. The benefits that consumers look for represent unfilled needs, whereas buyers’ perceptions that a given
brand delivers a unique and prominent benefit result in loyalty to that brand. Marketers of personal care products,
such as shampoos, soaps, and toothpastes, create different offerings designed to deliver specific benefits.

Product Usage - It is generally more profitable to target heavy users, but they can be hard to reach because
competitors want to reach them as well. In addition to usage, marketers also segment consumers based on their
awareness, involvement, or usage-occasion.

Usage rate segmentation & Usage occasion segmentation

Selecting Target Markets - Consumers are different, differences include needs, wants, desires, backgrounds,
education, and experiences. Marketers need to be able to distinguish between segments, have enough consumers to
target the segment profitably, and be able to communicate with the consumers effectively and economically.

The target segment must be:

• Identifiable - Marketers divide consumers into separate segments on the basis of common or shared needs
by using demographics, lifestyles, and other factors named “bases for segmentation.” Some segmentation
factors (e.g. demographics) are easier to identify than others (e.g. lifestyles).
• Profitable - Companies must be interested in and have the means to reach the segment(s) they select.
• Reachable - Also known as accessible; marketers must be able to communicate with the consumers in the
segment effectively and economically.

Mobile Targeting:

• Showrooming - When consumers go to physical retailers to learn about a product but then use their phones
to check the price online, and order it for a lower price.
• Geofencing - Sends promotions to people who are in the proximity of the location.
• Websites are versatile - Marketers can respond quickly to consumers using online tools

Real time bidding - A technique that allows advertisers to reach the right user, in the right place, at the right time.
Impressions are counted when a consumer is reached. Marketers try to customize things to the extent it is possible.
A real time bidding operation uses an application programming interface to let people know an impression is
available.

Web Crawlers – Programs that capture content across the internet and provide it to data broker servers

Predictive Analysis - Predictive analytics focus on noticing change in buying behavior. Behavioral biometrics
charts unique patterns in the way people perform different activities. Cookies help websites remember information.

Measures that predict consumers’ future purchases on the bases of past buying information and other data, and also
evaluate the impact of personalized promotions stemming from the predictions.

Behavioral Biometrics – Design and Identity verification

Ad-Exchange - Outcomes of bidding on ad exchange impressions can be determined in seconds.

A big pool of ad impressions – websites – paste their ad impressions into the pool, hoping someone will buy them