Market SegmentationJeremy Kees, Ph.D.
Segmentation, Targeting, and PositioningMarket SegmentationMarket segmenta group of customers who share a similar set of needs and wantsNOT to be confused with targeting and positioning
Our overall intent is toIdentify groups of similar customers and potential customersPrioritize the groupsUnderstand their behaviorRespond with appropriate marketing strategies that satisfy the different preferences of each chosen segment
Segmentation, Targeting, and PositioningThe idea is that (typically) we cant be all things to all peopleThere is not one product/service that is ideal for all consumers
We can segment a market byGeographyDividing the market into different geographical units such asRegion of the world or country City or country size Climate
We can segment a market byDemographicsDividing the market based onage gender sexual orientation family size family life cyclehousehold type income/expenditure patterns occupation education socioeconomic status religionnationality/race/ethnic group
We can segment a market byPsychographicsDivide market based onPsychological traitspersonality lifestyles valuesattitudes
Toms of MaineTargeting a Specific Marketing Segment
We can segment a market byProduct Characteristics / BehaviorDivide market based on knowledge of, attitude toward, use of, or response to a productbenefit sought product usage ratebrand loyalty product end use readiness-to-buy stage
How are these organizations segmenting the market??Oxygen.comKellogg'sMabelleneBudweiser
Segmenting based on one variable .
Ok, weve segmented the market. Now what?
General Strategy Options (as they relate to target marketing)
Undifferentiated MarketingDifferentiated MarketingConcentrated MarketingMicromarketing
Patterns of Target Market Selection
Undifferentiated MarketingIgnore segment differences and go after the whole market with one market offer1 Pricing strategy 1 Promotional program aimed at everybody 1 Type of product with little/no variation 1 Distribution system aimed at entire market What kinds of products can we use this strategy with?
Differentiated MarketingOperate in several market segments and design different programs for each segmentP&G
Multi-Segment StrategyPerhaps the most effective segmentation strategy
Product Differentiation Results InReduced Price SensitivityFewer Direct CompetitorsDrawbacks / Risks / Ethical Issues??Mini CooperNorelco
Concentrated MarketingIt allows a firm to specialize because it can focus all energies on satisfying one group's needs A firm with limited resources can compete with larger organizations
Can you think of when a concentration strategy is appropriate?example
MicromarketingMost extreme form of segmentationAlso called one-to-one marketing or mass customizationExamples?
Determinants of Targeting StrategyCompany ResourcesProduct HomogeneityStage in PLCCompetition
PositioningA marketing strategy that emphasizes serving a specific market segment by achieving a certain position in buyers minds relative to the competitionAttributesPrice/qualityCompetitorsApplicationProduct userProduct class
PositioningOftentimes, positioning focuses on Points-of-difference (PODs)The act of designing the companys offering and image to occupy a distinctive place in the minds of the target marketEnergizerDuracell