To accompany A Framework for Marketing Management, 2nd Edition Slide 1 in Chapter 9©2003 Prentice Hall, Inc.

Chapter 9Chapter 9

Identifying Market Identifying Market Segments and Selecting Segments and Selecting

Target MarketsTarget Markets

PowerPoint by Karen E. JamesPowerPoint by Karen E. JamesLouisiana State University - ShreveportLouisiana State University - Shreveport

To accompany A Framework for Marketing Management, 2nd Edition Slide 2 in Chapter 9©2003 Prentice Hall, Inc.

ObjectivesObjectives

Learn how companies identify the segments that make up a market.

Understand the criteria companies use to choose the most attractive market segments.

To accompany A Framework for Marketing Management, 2nd Edition Slide 3 in Chapter 9©2003 Prentice Hall, Inc.

Target MarketingTarget Marketing

Target marketing requires marketers to take three major steps:– Market segmentation: Identifying and profiling

distinct groups of buyers who differ in their needs and preferences.

– Market targeting: Selecting one or more market segments to enter.

– Market positioning: Establishing and communicating the key distinctive benefit(s) of the company’s market offering to each target.

To accompany A Framework for Marketing Management, 2nd Edition Slide 4 in Chapter 9©2003 Prentice Hall, Inc.

Using Market SegmentationUsing Market Segmentation

Mass marketing is losing popularity

Micromarketing can be undertaken at four levels:

– Segment marketing– Niche marketing– Local marketing– Individual marketing

To accompany A Framework for Marketing Management, 2nd Edition Slide 5 in Chapter 9©2003 Prentice Hall, Inc.

Using Market SegmentationUsing Market Segmentation

Three patterns of preference segments are typically identified:

– Homogeneous preferences– Diffused preferences– Clustered preferences

To accompany A Framework for Marketing Management, 2nd Edition Slide 6 in Chapter 9©2003 Prentice Hall, Inc.

Using Market SegmentationUsing Market Segmentation

Needs-based segmentation

Segment identification

Segment attractiveness

Segment profitability

Segment positioning

Segment “acid test”

Marketing-mix strategy

Needs-based Segmentation Process

To accompany A Framework for Marketing Management, 2nd Edition Slide 7 in Chapter 9©2003 Prentice Hall, Inc.

Using Market SegmentationUsing Market Segmentation

Useful market segments share certain characteristics:

– Measurable– Substantial– Accessible– Differentiable– Actionable

To accompany A Framework for Marketing Management, 2nd Edition Slide 8 in Chapter 9©2003 Prentice Hall, Inc.

Segmenting Consumer Segmenting Consumer MarketsMarkets

Bases for Segmentation

Geographic

Demographic

Psychographic

Behavioral

Nation or country

State or region

City or metro size

Density

Climate

To accompany A Framework for Marketing Management, 2nd Edition Slide 9 in Chapter 9©2003 Prentice Hall, Inc.

Segmenting Consumer Segmenting Consumer MarketsMarkets

Bases for Segmentation

Geographic

Demographic

Psychographic

Behavioral

Age, race, gender

Income, education

Family size

Family life cycle

Occupation

Religion, nationality

Generation

Social class

To accompany A Framework for Marketing Management, 2nd Edition Slide 10 in Chapter 9©2003 Prentice Hall, Inc.

Segmenting Consumer Segmenting Consumer MarketsMarkets

Bases for Segmentation

Geographic

Demographic

Psychographic

Behavioral

Lifestyle

– Activities– Interests– Opinions

Personality

Core values

To accompany A Framework for Marketing Management, 2nd Edition Slide 11 in Chapter 9©2003 Prentice Hall, Inc.

Segmenting Consumer Segmenting Consumer MarketsMarkets

Bases for Segmentation

Geographic

Demographic

Psychographic

Behavioral

Occasions

Benefits

User status

Usage rate

Loyalty status

Buyer-readiness

Attitude

To accompany A Framework for Marketing Management, 2nd Edition Slide 12 in Chapter 9©2003 Prentice Hall, Inc.

Segmenting Consumer Segmenting Consumer MarketsMarkets

Multi-attribute segmentation via geoclustering combines multiple variables to identify smaller, better-defined target groups

– PRIZM Geoclustering system uses demographic, geographic, lifestyle, and behavioral characteristics

To accompany A Framework for Marketing Management, 2nd Edition Slide 13 in Chapter 9©2003 Prentice Hall, Inc.

Segmenting Business Segmenting Business MarketsMarkets

Operating variables

Purchasing approaches

Situational factors

Personal characteristics

Bases for Segmentation

Demographic variables

To accompany A Framework for Marketing Management, 2nd Edition Slide 14 in Chapter 9©2003 Prentice Hall, Inc.

Segmenting Business Segmenting Business MarketsMarkets

Rackman and Vincentis proposed a segmentation scheme that classifies business buyers into three groups:

– Price-oriented customers: best served via transactional selling

– Solution-oriented customers: best served by means of consultative selling

– Strategic-value customers: best served by means of enterprise selling

To accompany A Framework for Marketing Management, 2nd Edition Slide 15 in Chapter 9©2003 Prentice Hall, Inc.

Market Targeting StrategiesMarket Targeting Strategies

Evaluating and selecting market segments requires assessing the segment’s overall attractiveness in light of company’s objectives and resources.

Five patterns of target market selection can then be considered.

To accompany A Framework for Marketing Management, 2nd Edition Slide 16 in Chapter 9©2003 Prentice Hall, Inc.

Market Targeting StrategiesMarket Targeting Strategies

Single-segment concentration

Selective specialization

Product specialization

Market specialization

Patterns of Target Market Selection

Full market coverage

To accompany A Framework for Marketing Management, 2nd Edition Slide 17 in Chapter 9©2003 Prentice Hall, Inc.

Market Targeting StrategiesMarket Targeting Strategies

Targeting multiple segments may result in cost economies

Supersegment targeting may be appropriate

Blocked markets often require megamarketing countermeasures

Be aware of ethical concerns