(Chapter 9) Identifying Market Segments and Selecting

Target Markets

A single product can seldom meet the needs and desires of ___________________

Consumers are too numerous and diverse in their buying requirements

Using Market Segmentation (p. 171)

Markets can be targeted at four levels: segments, niches, local areas, and individuals

Segment marketing:

Market segment: large, groups within a market

Using Market Segmentation

Niche marketing:

: a more narrowly defined group seeking a distinctive mix of benefits; has size, profits, and growth potential

Distinct set of needs

Willing to pay premium

Using Market Segmentation

Local marketing:

Needs and wants of local customer groups (e.g., neighborhood, trade areas)

Individual marketing:

customized marketing; one-to-one marketing

Effective Segmentation (p. 175)

Measurable: the size, purchasing power, and characteristics of the segments can be measured

Substantial: the segments are large and profitable enough to serve; each should be the largest possible homogeneous group worth pursuing with a tailored program

Accessible: The segments can be effectively reached and served

Differentiable: The segments are conceptually distinguishable and respond differently to different market mixes.

Actionable: Effective programs can be formulated for attracting and serving the segments

Effective Segmentation (p. 175)

Substantial/Differentiable

1. How people are in this market?

2. How frequently will they purchase?

3. What market share can we expect?

4. What is the ?

5. How satisfied are current customers with current offerings?

Effective Segmentation (p. 175)

Accessible/Actionable

1. Can this segment be reached with current distribution channels?

2. Can we establish new channels efficiently, if needed?

3. What promotion media does this segment read, listen to, or watch?

4. Can we afford to promote to this segment and is there a media to reach them?

Bases for Segmenting Consumer Markets (p. 175)

Geographic Segmentation: nations, states, regions, counties, etc.

Demographic Segmentation: age, family size, gender, income, etc.

Psychographic Segmentation: lifestyle, personality, values

Bases for Segmenting Consumer Markets (p. 175)

Behavioral Segmentation: buyers segmented on their knowledge of, attitude toward, use of, or response to a product.

User status: regular user, first time user

Usage rate: light, medium, heavy user

Multi-attribute segmentation:

Market Targeting Strategies (p. 181)

Various segments: decide how many and which ones to target

• What makes the segments attractive?

• Consider company resources and objectives

- able or unable to offer superior value

- company objectives

Market Targeting Strategies (p. 181)

Single segment concentration: focus on ____ segment m1 m2 m3

p = product offering p1

m = market segment p2

p3

Porsche (p2) – for sports car market ________

Market Targeting Strategies (p. 181)Selective specialization: select a of segments;

each segment is appealingm1 m2 m3

p1

p2

p3

Truck (p1); economy (p2); luxury (p3);

_______________________________________________

Market Targeting Strategies (p. 181)Product specialization: specialize in making a certain product

for __________________ segments

m1 m2 m3

p1

p2

p3

Microscopes (p2)

____________________________________________________

Market Targeting Strategies (p. 181)

Market specialization: serve many needs of a particular customer group

m1 m2 m3

p1

p2

p3

Microscope (p1); test tubes (p2); chemicals (p3)

________________________________________

Market Targeting Strategies (p. 181)

Full market coverage: serve __ customer groups with ______ the products they might need

Undifferentiated:

Ignore segment differences

Differentiated:

Different offerings

for different segments

Market Segmentation Issues

Increased segmentation allows company to meet needs of more customers; increased profitability

Increased segmentation increases costs

Tradeoff: Will increased segmentation _________ for added costs?

Mass customization: prepare individually designed offerings on a mass basis to meet each customer’s requirements