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    What are Markets?

    Market:people or organizations with

    (1)., (2)., and

    (3)

    Types of Markets

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    Role of Market Segmentation

    Market Segm entat ion :division of the totalmarket into smaller, relatively homogeneous

    groups

    Why?

    Levels Mass, Segment, and Niche

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    Why segment?

    Most

    efficient

    Most

    effective

    One Mass

    Market

    Many Groups

    of One

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    Markets have a variety of product

    needs and preferences.

    Marketers can better define

    customer needs.

    Decision makers can define objectives

    and allocate resources more accurately.

    The Importance of Market

    Segmentation

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    No Market Segmentation

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    Segmented by ..

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    Segmented by ..

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    Segmentation Process

    Marketers follow two methods to determine the bases on

    which to identify markets:

    Segments are predefined by managers based on theirobservation of the behavioral and demographic

    characteristics of likely users

    Segments are defined by asking customers whichattributes are important and then clustering the

    responses

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    r er a or ec veSegmentation

    Substantiality

    Measurability /

    Identifiability

    Accessibility

    Responsiveness

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    Most important point

    In relation to responsiveness to differentmarketing mixes, segments must be:

    Homogeneous within

    Heterogeneous between

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    Characteristics of individuals, groups, or

    organizations used to divide a total market

    into segments=(variables, bases)

    Bases for Segmenting Consumer

    Markets

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    Bases for Segmentation

    Usage Rate

    Benefits Sought

    Psychographics

    Demographics

    Geography

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    Segmenting Consumer Markets

    Geog raph ic Segmentat ion :Dividing

    an overall market into homogeneous

    groups on the basis of their locations www.hawaiiantropic.com

    east-west: Skippy, midwest: jif,

    south:peter pan

    Metropolitan Statistical

    Area (MSA)

    http://www.hawaiiantropic.com/http://www.hawaiiantropic.com/
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    Segmenting Consumer Markets

    .. segmentation: dividing

    consumer groups according to

    characteristics such as gender, age,

    income, occupation, education, ethnicity,

    household size, and stage in the family

    life cycle. Vh1/Mtv, AARP, ivillage, Nike, Latina

    Style

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    Age

    Marital

    StatusChildren

    Family Life Cycle

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    Family Life Cycle

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    Psychographic Segmentation

    Psychograph ic Segmentat ion:dividing apopulation into groups that have similarpsychological characteristics and lifestyles.

    Lifestyle: peoples decisions about how to live

    their daily lives, including family, job, social, andconsumer activities

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    Geodemographic Segmentation

    Segmenting potential customers into

    neighborhood lifestyle categories.

    Combines geographic, demographic,

    and psychographic segmentation.

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    Benefit Segmentation

    The process of grouping customers

    into market segments according to

    the ..they seek from the

    product.

    Cell phone carriers, LOreal, Weight

    watchers

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    Usage Rate Segmentation

    Dividing a market by the

    .of product boughtor consumed.

    Sprint- fired customers for excessive use of CS

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    Bases for Segmenting Business

    Markets

    CompanyCharacteristics

    BuyingProcesses

    (Satisficers/Optimizers)

    Producers

    Resellers

    Government

    Institutions

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    Steps in Segmenting Markets

    Selecta market

    forstudy

    Choosebases

    forsegmen-

    tation

    Selectdescriptors

    Profileand

    analyzesegments

    Selecttarget

    markets

    Design,implement,

    maintainmarketing

    mix

    1 2 3 4 5 6

    Note that steps 5 and 6 are actually marketing activities that follow market segmentation (steps 1 through 4).

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    Targeting

    Choosing one or more segments for which todesign your marketing operations

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    Undifferentiated Strategy

    Differentiated

    Concentrated

    Identify the Appropriate Targeting Strategy

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    Undifferentiated Strategy

    Single

    Marketing

    Mix

    Target Market

    Organization

    Sugar, flour, commodities

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    Differentiated Strategy

    Organization

    Marketing Mix 1

    Target Market

    Marketing Mix 2

    Best Buy, Walmart, Gap

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    Concentrated Strategy

    Single

    Marketing

    Mix

    Target Market

    Organization

    http://www.youtube.com/watch?v=4aICIVOl3JU

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    Cannibalization

    Situation that occurs when

    sales of a new product cut into

    sales of a firms existing

    products.

    Cannibalization

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    STRATEGIES FOR REACHING

    TARGET MARKETS No single, best choice strategy suits all

    firms

    Determinants of a market-specific

    strategy:

    Company resources

    Product homogeneity

    Competitors strategy

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    One-to-One Marketing

    An individualized marketing method

    that utilizes customer information tobuild long-term, personalized, and

    profitable relationships with each

    customer.- share of customer

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    Product Positioning

    Positioning starts with a product. A Piece ofmerchandise, a service, a company, an institution, oreven a person... But positioning is not what you doto a product. Positioning is what you do to the mind

    of the prospect. That is, you position the product inthe mind of the prospect.

    Al Ries and Jack Trout (1981)

    f

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    LO9 0.7%Fabric & skin safety on baby clothesIvory Snow

    0.1%Tough cleaner, aimed at Hispanic marketAriel

    1.0%Outstanding cleaning for baby clothes, safeDreft

    1.2%Detergent and fabric softener in liquid formSolo1.4%Bleach-boosted formula, whiteningOxydol

    1.8%Value brandDash

    2.2%Stain treatment and stain removalEra

    2.6%Sunshine scent and odor-removing formulaGain

    2.9%Detergent plus fabric softenerBold

    8.2%Tough cleaning, color protectionCheer

    31.1%Tough, powerful cleaningTide

    Market

    SharePositioningBrand

    Positioning of

    Procter & Gamble

    Detergents

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    Product Positioning Dimensions

    Product Attributes / Differences / Benefits Light beer-taste, filling

    Toothpaste-mint taste, tartar , whitening, enamel protection

    Levis- the brand that fits

    Product User / Usage

    Johnson and Johnson Baby Shampoo-not just for babies,

    By Association/Product Class (Amtrack)

    Problem Solution (Application, Use)- Arm and Hammer, Made on an Apple

    Against a Competitor / Away from Competitors (Avis, BMW-the ultimate

    driving machine, 7-Up- the Un-Cola)

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    Perceptual Mapping

    A means of displaying or graphing, in two

    or more dimensions, the location ofproducts, brands, or groups of products in

    customers minds.

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    Perceptual Maps (Price/Quality)

    Expensive

    Inexpensive

    ConservativeSporty

    Celica CamryCorolla Avalon

    Product Positioning using perceptual

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    High moisturizing

    Low moisturizing

    Nondeodorant Deodorant

    1

    2

    3

    4

    5

    7

    6

    8

    Safeguard

    Lever 2000

    Zest

    CoastLux

    Dove

    Tone

    LavaLifebuoy

    Dial

    Product Positioning using perceptual

    maps

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    Repositioning

    Changing consumers

    perceptions of a brand in relation

    to competing brands.

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    Positioning and Product Differentiation

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