Marketing
8th Canadian Edition

Powerpoints prepared by:
Victor Bilodeau
Grant MacEwan University - School of Business

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

Market Segmentation,
Targeting, and
Positioning

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

Learning Objectives
After reading this chapter, you should be able to:

1.Explain what market segmentation is and when to use it.
2.Identify the five steps involved in segmenting and targeting markets. 3.Recognize the different factors used to segment consumer and organizational (business) markets.
4.Know how to develop a market-product grid to identify a target market and recommend resulting actions.
5.Explain how marketing managers position products in the marketplace. 6.Describe three approaches to developing a sales forecast for a company. © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

Market Segmentation, Targeting, and
Positioning
‣ Had a good night sleep lately?
‣ 73 percent of people sleep on their side
‣ 22 percent sleep on their back
‣ 5 percent sleep on their stomach
‣ For a simple product like bed pillows, there is not a
“one size/one type fits all”

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

WHY SEGMENT MARKETS?
‣ What Market Segmentation Means
‣ Market segments
‣ Product differentiation

‣ Segmentation: Linking Needs to Actions
‣ Using Market-Product Grids

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

LO 1

FIGURE 9-1 Market segmentation - linking market need to an organization’s marketing program

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

LO 1

FIGURE 9-2 Market-product grid showing the types of bed pillow segments and their relative sizes as percentage of total market

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

LO 1

WHY SEGMENT MARKETS?
‣ When to Segment Markets
‣ One Product and Multiple Market Segments
‣ Multiple Products and Multiple Market Segments
‣ Segments of One: Mass Customization

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

LO 1

FIGURE 9-3 The five key steps in segmenting and targeting markets link market needs of customers to the organization’s marketing program.

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

LO 2

STEPS IN SEGMENTING
AND TARGETING MARKETS
‣ Step 1: Group Potential Buyers into Segments
‣ Criteria to Use in Forming the Segments
‣
‣
‣
‣
‣

Potential for increased profit
Similarity of needs of potential buyers within a segment
Difference of needs of buyers among segments
Potential of a marketing action to reach a segment
Simplicity and cost of assigning potential buyers to segments

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

LO 3

STEPS IN SEGMENTING
AND TARGETING MARKETS
‣ Step 1: Group Potential Buyers into Segments (cont.)
‣ Ways to Segment Consumer Markets
‣
‣
‣
‣

Geographic Segmentation
Demographic Segmentation
Psychographic Segmentation
Behavioural Segmentation
‣ Usage rate
‣ 80/20 rule

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

LO 3

FIGURE 9-4
Segmentation
variables and breakdowns for
Canadian
consumer markets

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

LO 3

STEPS IN SEGMENTING
AND TARGETING MARKETS
‣ Variables to Use in Forming Segments for Wendy’s
‣ Ways to Segment Organizational (Business) Markets
‣ Geographical segmentation
‣ Demographic segmentation
‣ Behavioural segmentation

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

LO 3

FIGURE 9-5 Dimensions used to segment Canadian organizational markets

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

LO 3

STEPS IN SEGMENTING
AND TARGETING MARKETS
‣ Step 2: Group Products to Be Sold into Groups
‣ Step 3: Develop a Market-Product Grid and Estimate
Size of Markets

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

LO 3, 4

FIGURE 9-6 Selecting a target market for your fast-food restaurant next to an urban university (target market is shaded) © 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

LO 4

STEPS IN SEGMENTING