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Identifying Market Segments and Targets

Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

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Page 1: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Identifying Market Segments and Targets

Page 2: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Market Segments:

. Markets are not homogeneous.. A company can’t connect with all customers in large, broad, or diverse markets.. Consumers can be grouped by one or more characteristics.

Page 3: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Market Segments- cont.

A company needs to identify which market segments it can serve effectively.

Page 4: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Levels of Market Segmentation

Mass Marketing Micromarketing in one of

four levels: segments, niches, local areas, and individuals.

Page 5: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Segment Marketing Market segment --a group of

customers who share a similar set of needs and wants.

Segment marketing offers key benefits over mass marketing.

A company can better design, price, promote, and deliver the product to satisfy the target market.

Page 6: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Niche Marketing

A niche is a narrowly defined customer group seeking a distinctive mix of benefits.

We can identity niches by dividing a segment into subsegments.

Page 7: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Customers in the niche market will pay a premium to the firm that best satisfies their needs.

Niches are generally fairly small and attract only one or two competitors.

Globalization has facilitated niche marketing. Low cost of setting up shop on the internet

helps many small startups aimed at niches.

Cont.

Page 8: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Local Marketing

Marketing programs tailored to the needs and wants of local customer groups.

Local marketing reflects a growing trend called “grassroots marketing”.

Page 9: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Local Marketing cont. A large part of local marketing is

“experiential marketing”, which promotes a product or service by connecting it with unique and interesting experiences.

Disney maintains that salable experiences come in four varieties: entertainment, education, esthetic, and escapist.

Page 10: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Customerization The ultimate level of segmentation

leads to “ segments of one’. Customized marketing is “one-to-

one marketing”. Today customers are taking more

individual initiative in determining what and how to buy. Cont.

Page 11: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

More online companies re offering customers a “Choiceboard” that allows customers to design their own product and services.

The firm provides a platform and tools and “rent” out to customers the means to design their own products.

Cont.

Page 12: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Customerization is certainly not for every company, such as automobiles.

Customerization can raise the cost of goods by more than the customers is willing to pay.

Customers can’t cancel the order after the co. has started to work on it.

Page 13: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Segmenting Consumer Markets To form segments by looking at

descriptive characteristics: geographic, demographic, and psychographic.

Or to form segments by looking at “behavioral” aspects.

Page 14: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Geographic Segmentation Dividing the market into different

geographic units, such as nations, states, regions, counties, cities, or neighborhoods.

More and more regional marketing means marketing right down to a specific zip code.

Cont.

Page 15: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Mapping software can be used to show the geographic location of their customers.

Claritas, Inc., has developed a geoclustering approach called PRIZM (Potential Rating Index by ZIP Markets).

Cont.

Page 16: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

PRIZM PRIZM classifies over half a million

U.S. residential neighborhoods into 15 distinct groups and 66 distinct lifestyle segments called PRIZM clusters.

The neighborhoods are broken down by zip code, zip+4, or census tract and block group.

Cont.

Page 17: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

The residents in a cluster tend to lead similar lives, driving similar cars, have similar jobs, and read similar magazines, such as “Beltway Boomers”, “Hometown Retired”,”Latino America”,”The Cosmopolitans”.

Page 18: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Demographic Segmentation The market is divided into groups

on the basis of variables such as age, family size, family life cycles, gender, income, occupation, education, religion, race, nationality, and social class.

Page 19: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Age and Life-cycle Stage Consumer wants and abilities change

with age. Toothpaste brands such as Crest and

Colgate offer 3 main lines of products to target kids, adults, and older consumers.

Persons in the same part of the life cycle may differ in their life stage.

Cont.

Page 20: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Life stage defines a person’s major concern, such as going through a divorce, going through a second marriage, taking care of an older parent, deciding to buy a new home.

They present opportunities for marketers who can help people cope with their major concerns.

Page 21: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Gender Men and women tend to have different

attitudinal and behavioral orientation. Women tend to be more communal-

minded. Men tend to be self-expressive and goal-

directed. Men often like to read product information;

women may relate to a product on a more personal level. Cont.

Page 22: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Gender differentiation has long

been applied in clothing, hairstyling, cosmetics,and magazines.

Now, the auto industries are beginning to recognize gender segmentation, and are changing how they design and sell cars. Cont.

Page 23: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Research suggests that 80% of home improvement projects are initiated by women. Lowe’s designed its stores with wider aisles to make it easier for shopping carts to get around, and include more big-ticket appliances.

Home Depot introduced “Ladies Night at Home Depot” to attract women.

Page 24: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Generation Each generation is profoundly influenced by

the times in which it grows up– the music, movies, politics, and defining events of that period.

Demographers call these groups “cohorts”.

Members of a cohort share the same major cultural, political, and economic experience.

Cont.

Page 25: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Generation Cohorts Silent generation (35 million) Born

1925-1945 Baby boomers (78 million) Born

1946-1965 Gen. X (47 million) Born 1966-1977 Gen. Y (72 million) Born 1978-1994 Millennials (42 million)Born 1995-

2002

Page 26: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Income Income segmentation is a long-

standing practice for such product and service categories as auto, clothing, cosmetics, financial services, and travel.

However, income does not always predict the best customers for a given product.

Page 27: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Psychographic Segmentation Psychographics is the science of

using psychology and demographics to better understand consumers.

Buyers are divided into different groups on the basis of psychographic/personality traits, lifestyle, or values. Cont.

Page 28: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

sta The most popular commercial

pschographic measurements is SRI’s VALS framework.

VALS classifies U.S. adults into eight primary groups based on personality traits and key demographics.

They are innovators, thinkers, achievers, experiencers; believers, strivers, makers, and survivors.

Page 29: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Behavioral Segmentaion Buyers are divided into groups on

the basis of their knowledge of, attitude toward, use of, or response to a product.

People play five different roles in a buying decision: initiator, influencer, decider, buyer, user.

Page 30: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Behavioral Variables Behavioral variables are the best

starting points for constructing market segments– such as occasions, benefits, user status, usage rate, loyalty status, buyer-readiness stage, and attitude.

Page 31: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Market Targeting After identifying its market

segment opportunities, it has to decide how many and which ones to target.

Effective segmentation criteria are: Measurable, substantial,

accessible, differentiable, and actionable.

Page 32: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

Evaluating and Selecting he Market Segments In evaluating different market

segments, the firm must look at two factors: the segment’s overall attractiveness and the company’s objectives and resources.

Cont.

Page 33: Identifying Market Segments and Targets. Market Segments:. Markets are not homogeneous.. A company can t connect with all customers in large, broad, or

The firm can choose five patterns of target market selection:

Single-segment concentration Selective specialization Product specialization Market specialization Full market coverage