The Market Segmentation Process

The Market Segmentation

Process

WTUC

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Importance of Market Segmentation in Advertising

• To find profitable market segments

• Scan marketplace and see what various consumer segments need and want and how they might be better satisfied

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2-Step Strategy

• Identifying groups of people (or organizations) with certain shared needs and characteristics within the broad markets for consumer of business products

• Aggregating (combining) these groups into larger market segments according to their mutual interest ion the product’s utility.

Applying the Strategy

Large market group

Pool them together into one aggregate target market

•These people share the same interests in relation to your product’s utility

Target market- which lays the foundation for developing the proper mix of marketing activities-including advertising

General Population of consumers

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• Markets consists of many segments

• A company differentiate products and marketing strategy for every segment

• Or simply concentrate on one segment

Types of Targets

• Marketing activities are aimed at a particular segment of the population

• Advertising is aimed at a particular group

Target market

Target audience

Types of Markets

Consumer Markets Business Markets

•Most advertising falls under consumer advertising•Ad directed at consumers or people who buy the product for their own or someone else’s personal use

•Companies use business advertising to reach people who buys good ad services for resale or for use in their own business or for manufacturing other products•Also known as BTB

Consumer Markets Business Markets

•Advertising professionals must understand how people act and think, and why they buy what they buy

•Over half of all marketing is BTB•Manufactured goods, raw materials, services for law firms, accountants, airlines, and advertising agencies•Need more specialized product knowledge

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Finding the Right Niche

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Behavioristic Segmentation

• User status

• Usage rate

• Purchase occasion

• Benefits sought

User-Status Variables1. Sole users- most brand loyal, require least amount of advertising an

d promotion

2. Semisole users- typically use Brand A but have an alternate selection if it is not available or if alternate is promoted with a discount

3. Discount users- semisole users of competing Brand B. They don’t buy Brand A at full price

4. Aware Nontriers- use competitive products in the category but haven’t taken a liking to Brand A. These people rarely offer potential

5. Trial/Rejectors- bought Brand A’s advertising but didn’t like the product. Only reformulation of Brand A will bring them back

6. Reportoire users- perceive two or more brands to have superior attributes and will buy at full price. Primary brand switchers and respond to persuasive advertising based on the fluctuating wants and desires

Usage-Rate (Volume) Variables

1. Light users

2. Medium users

3. Heavy users

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Purchase-Occasion Variable

• Buyers are distinguished when they buy or use a product

• Air travelers- may fly for business or vacation• Purchase- affected by frequency of need

(regular/occasional), a fad (computer games), seasons (water skis, raincoats)

• Marketers who discovers common purchase occasions for a group has a potential target segment and can better determine when to run specials and when to promote certain product categories

Benefit-Sought Variable

• Benefits– High quality– Low price– Status– Sex appeal– Good taste– Health conscious– Symbolism- what the brand means to them or to their

friends or some reference group

• Switching occurs in response to different needs

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What’s the User Benefit here?

High-Quality Benefit

What’s the User Benefit here?

Low Price benefit

What’s the User Benefit here?

Status Benefit

What’s the User Benefit here?

Status Benefit

What’s the User Benefit here?

Sex Appeal Benefit

What’s the User Benefit here?

Good Taste Benefit

What’s the User Benefit here?

Health Conscious Benefit

What’s the User Benefit here?

Brand Symbol Benefit

Geographic Segmentation

• Region

• Country size

• City size

• Specific locations

• Types of stores

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Demographic Segmentation

• Sex

• Age

• Ethnicity

• Education

• Occupation

• Income

• And other quantifiable factors

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Geodemographics Segmentation

• Demographics combined with geographic segmentation

• People’s lives are influenced by their environment and ethnicity

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Psychographic Segmentation

• Emotional appeal

• Cultural values

• Attitudes

• Personality

• Lifestyle – View people as individuals with feelings and

inclinations

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Basic principles or values

Tangible markers of success or accomplish-m

ents

Desire for experiences

or risk

Example: Company that markets high-end motorcycles

• A demographic profile might suggest that prospects are males between the ages of 30 and 50

• A psychographic profile could extend the analysis by noting that the best prospects are experiences: Men motivated by self-expressive needs who also have sufficient resources to buy an expensive bike

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What’s the psychographic element here?

What’s the psychographic element here?

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Group discussion

• Hardee’s Thickburger

• Big, premium burgers

Hardee’s Ad: Who’s the Target Market?

Hardee’s Thickburger Target Market

• Young male demographic• ‘real’ men • Meets consumer taste

expectations• Trade on the notion of ‘male

identity’• Paris doesn’t have anything

to do with the burger• Caused buzz among male

demographic

Spicyparis.com’s traffic shot so high that it crashed the server

Another Hardee’s ad

• ‘We could’ve shown you some cowboy, sitting around a campfire, eating a Western Bacon Thickburger…but who’d wanna see that?”

• Hardee’s pays careful attention to the benefits sought by the target demographic and tailors its offering accordingly

• Crafts advertising messages that will grab attention of the young male fast-food eaters

Assignment 1 due Week 5

• Describe an ad that seems to be directed toward a specific target market segment. Define it using behavioristic, demographic, psychographic, and geographic variables.

• See page 91 to read Hardee’s ad example

• Print and submit on 3/16