Segmentation

Chapter 8 is entitled Segmentation, Targeting, and Positioning and focuses on how companies divide their markets, how they choose which markets to pursue, and how they position their products to make them more attractive to consumers. The chapter starts of by detailing the five levels of the Segmentation, Targeting, and Positioning Process. The first two steps are a part of Segmentation and they are developing the strategies or objectives and segmentation methods. The next two steps, evaluating the segment attractiveness and selecting a target market are a part of Targeting. The last step is a part of the Positioning step and it consists of identifying and developing a positioning strategy.
In developing the objectives, companies articulate their vision based on results received through a SWOT Analysis and the company objectives. The segmentation methods allows the company to divide their market into various segments in order to understand the needs of customers who are alike based on geographic, demographic, psychographic, geodemographic, benefits, and behavioral factors. The geographic segmentation divides customers in groups determined by where they live. Demographic segmentation divides customers in groups based on age, gender, income, and education. Demographic segmentation is probably the best type of segmentation to use because consumers are easiest to reach. Psychographic views how customers actually view themselves. Geodemographic uses parts of both the geographic and demographic types to determine what consumers may be interested in. Benefits segment divides customers based on the benefits they receive as a result of using the product of service. Behavioral separates customers based on how they would use the product or service.
When evaluating the segment attractiveness, companies determine if certain segments are even worth pursuing. There are five different types of evaluation: identifiable, substantial, reachable, responsive, and