Marketing

Strategy &
Management
© Diane M. Phillips
 Chapter 7

Target markets: Identifying

and targeting those
individuals most likely to
respond to the marketing
strategy
 Learning objectives

1. Describe the 3-step process of segmentation,

targeting and positioning.
2. Distinguish between the 4 methods of segmentation
and describe the benefits of a layered segmentation
strategy.
3. Explain the concept of positioning and why
repositioning is often difficult.
4. Create an argument for why it makes sense to
discard the four key assumptions from traditional
marketing thought when it comes to the sustainability
market.

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 Segmentation process
• The segmentation process describes the 3-step process by which
the target market is identified and selected through segmentation,
targeting and positioning.

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 Segmentation process

a. Segmentation - the entire

market is broken up into
smaller groups using criteria
that make sense for the
product.

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 Segmentation process
a. Segmentation (cont):
1) Demographic criteria – the market is broken up according to
demographic characteristics like age, gender, income, education,
family size or ethnicity.
– Bottom of the pyramid customers – individuals who survive on
less than $2/day. Approximately 4 billion people. Marketers can
address the needs of these consumers, while doing so in
culturally appropriate and environmentally sensitive ways.

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 Segmentation process
a. Segmentation (cont):
2) Psychographic criteria – the market is broken up according to
criteria such as consumer attitudes, interests or lifestyles.
– Examples:
o LOHAS Consumers – Lifestyles of health and sustainability.
These consumers don’t just talk about their concern for the
environment, they also act on those concerns.

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 Segmentation process
a. Segmentation (cont):
3) Geographic criteria – the market is broken up according to
regions, countries, states, cities, neighbourhoods or postal codes.
– Examples:
o Global food companies that alter their flavour profiles for different
parts of the world.

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 Segmentation process
a. Segmentation (cont):
4) Behavioural criteria – uses the consumer’s
purchase and consumption behaviour to
segment the market.
– Purchase volume
– User status
– Consumer needs
• Example:
– Carhartt consumers use the brand for 2 unique
needs: function and fashion

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 Segmentation process
a. Segmentation (cont):
5) Layered criteria – occurs when several different types of
criteria are used to segment the market.
– There are countless ways to layer criteria to create customer
segments.
– Example:
– A London African-Caribbean radio station used three
separate layers to segment its market:
o People living in London (geographic)
o Church goers (psychographic)
o Members of the African Caribbean community
(demographic)

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 Segmentation process
b. Selecting the Ideal Group of Consumers: Targeting
– Targeting – the selection of 1-2 segments that the
marketing team believes is most likely to respond in a
favourable way to our offering.
o Target market – the group of individuals that the
marketing team wishes to pursue. It is made up of
individuals that have similar needs and wants, and will
likely respond in a similar fashion to marketing efforts.

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 Segmentation process
b. Selecting the Ideal Group of Consumers: Targeting
– Targeting (cont):
1) Criteria for selecting the target market:
o How well will the new market segment fit with our existing
target markets?
o Is it possible to take advantage of any synergies?
o How easy will it be for our organization to satisfy the needs
of this target?
o Will this market segment have a potential for long-term
growth?

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 Segmentation process
b. Selecting the Ideal Group of Consumers: Targeting
– Targeting (cont):
1) Criteria for selecting the target market:
o From a competitive standpoint, will it be a good move to
serve this target market?
o Is the target market big enough to produce a profit?
o Is the target market easy to reach?
2) Selecting niche markets – target markets that are created
from very narrowly defined segments.
o Example: H&M’s pursuit of the sustainably-minded, Gen Z
gamer market.

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 Segmentation process
b. Selecting the Ideal Group of Consumers: Targeting
– Targeting (cont):
3) Creating new markets – perhaps the marketing team can identify a new
Blue Ocean opportunity, where organization can meet consumer needs
with very little or no competitive pressure.
4) Market retreat – the act of ceding control to another firm in order to
focus attention on another target market.

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Market Targeting Strategies

• https://www.youtube.com/watch?v=SBVoME8hZ-I

• Discussion Questions:
• Rivian has two clear target markets: the B2B market and the
B2C market. Describe each one in detail.
• How has Rivian altered its marketing mix to appeal to each
target? Be specific.
• In the future, what other target markets should Rivian
pursue?
 Segmentation process
c. Differentiating your product from the competition: positioning
– Positioning – the process of creating a distinct set of meanings in
the minds of consumers that sets the product apart from the
competition.
1) Positioning map – a 2 or 3-dimensionsl representation of the
position of the organization’s products and those of its
competition. A useful tool to identify opportunities.

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 Segmentation process
c. Differentiating your product from the competition: positioning
– Positioning (cont):
2) Positioning statement – a brief description of what the product
or service will do for the target market and how it will solve a
problem consumers might have.
o Example: for budget-conscious business travelers within
Europe, Lufthansa offers reliable service, business-focused
amenities, and more on-time arrivals than any other carrier. We
can do this because we have access to more gates in more
cities than anyone else.

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 Segmentation process
c. Differentiating your product from the competition: positioning
– Positioning (cont):
3) Consumer personas – a fictional character created by the
marketing team that represents the demographic,
psychographic, geographic, behavioural, and layered
characteristics of the target market.
o Personalizes and reminds the marketing team about the target
market.

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 Segmentation process
c. Differentiating your product from the competition: positioning
– Positioning (cont):
4) Repositioning – occurs when the organization works to shift
the brand or product’s existing position to a new position.
Because the marketing team has already invested significant
effort in positioning the offering, it can be particularly difficult to
reposition.
o Why reposition?
• New innovations or technologies.
• Over time, markets shift.
• Sometimes, bad things happen and we need to shift away
from negative brand associations.

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 Segmentation process
c. Differentiating your product from the competition: positioning
– Positioning (cont):
5) Blue Ocean Positioning – a unique opportunity with a new
segment and new market in which a timely, relevant,
innovative and effective value proposition is created.
o The potential to set new standards for product performance
and consumer expectations.
• Now that the target market is identified, the marketing team now
works to adjust the 4 elements of the marketing mix – product,
price, place and promotion – to the specific needs of the target
market.
– Example:
Diagnostic telemedicine platforms have several different target
markets. One of them is emergency first responders. When
targeting this market, the marketing team must create a
marketing strategy unique to this market’s needs.
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 The sustainability market

• In order to successfully target the sustainability market, marketers must

first discard some old assumptions about how markets work.
a. Crushing Traditional Market Assumptions
1) The sanctity of markets – in fact, if markets are permitted to work with
perfect efficiency (unregulated and unrestricted), they will not
necessarily sort out disparities in supply, demand and wealth.
2) The sovereignty of consumers – the idea that the customer is always
right is hopelessly myopic.
3) The satisfaction of needs – after their basic needs are satisfied, any
additional consumption does not necessarily make consumers more
satisfied or better off.
4) The peripheral nature of nature – failure to recognize the primacy of
nature blinds decision-makers to the impact of climate and other
ecological disruptions.

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 Chapter summary
• The 3 main steps of segmentation, targeting and
positioning result in a clearly-defined group of
individuals that is likely to positively respond to your
value proposition.
• Segmentation can be accomplished using
demographic, psychographic, geographic,
behavioural and layered criteria.
• Positioning is accomplished by carefully creating
meaning for your offering in the minds of consumers.
• The traditional assumptions about how markets work
are no longer relevant in today’s sustainably-focused
world.
Marketing Strategy & Management | © Diane M.
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Phillips 2023 | SAGE Publishing