McGraw-Hill/IrwinEssentials of Contemporary Advertising Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

chapter fourSegmentation,

Targeting,

and the

Marketing Mix

4-2

Objectives_1

Describe the role of marketing in creating satisfying exchanges

Explain the role of advertising in communicating a product’s utility

Identify the various methods advertisers use to segment and aggregate consumer and business markets

4-3

Objectives_2

Discuss how target marketing affects the firm’s advertising strategy

Describe the elements of the marketing mix and the role of advertising in the mix

Explain the purpose and importance of branding

4-4

Marketing and Exchange

The purpose of marketing is to create exchanges that satisfy the perceived needs and wants of individuals and organizations

4-5

Consumer Needs & Product Utility

Utility is the product’s ability to satisfy both functional needs and symbolic wants

4-6

Types of Utility

Form

Task

Possession

Time

Place

Psychic

4-7

Market Segmentation

Identifying groups of people with similarities

One or more groups become target market– Hardee’s

Thickburger campaign targets young men

4-8

Segmentation Variables

Geographic

Behavioristic Psychographic

Demographic

4-9

RegionRegion

County sizeCounty size

ClimateClimate

City or SMSA sizeCity or SMSA size

DensityDensity

Geographic Segmentation Variables

4-10

Geographic Segmentation

4-11

Behavioristic Segmentation Variables

Purchase Occasion Benefits Sought User Status Usage Rate

Loyalty Status Readiness Stage Marketing-Factor

Sensitivity

4-12

Exhibit 4-2 Usage Rates Vary For Different Products

4-13

Demographic Segmentation Variables

Age Gender Family life cycle Family size Education

Religion Race/Nationality Income Occupation

4-14

Exhibit 4-3 Ad Spending Growth in U.S. Hispanic Media

4-15

Psychographics

Lifestyles Personality

Values Attitudes

4-16

Exhibit 4-5

The VALS classification

system segments according to

resources and decision-making

motivation

4-17

Segmenting Business Markets

Governmentagencies

Other institutions

Wholesalers

Manufacturers

Retailers

Banks

4-18

Exhibit 4-7 Clarita’s PRIZM NE

This shows how PRIZM NE

classifies prospects in the Chicago area by census

tract. Each area is labeled by

shared characteristics.

4-19

ProductProduct

PlacePlace

PricePrice

PromotionPromotion

The Marketing Mix

4-20

Exhibit 4-8 Product Life Cycle

Objectives change

as the product proceeds

From one state to the next

4-21

Extending the Product Life Cycle

4-22

Exhibit 4-9 Product Classifications

By

market

By consumption

rate

By purchasing

habits

By

physical description

Consumer goods

Durable goods Convenience goods

Packaged goods

Industrial goods

Nondurable goods

Shopping goods

Hard goods

Services Specialty goods

Soft goods

Unsought goods

Services

4-23

Perceptible differencesPerceptible differences

Hidden differencesHidden differences

Induced differencesInduced differences

Product Differentiation

4-24

Product Branding

Individual brand Family brand National brands Private labels Licensed brands

4-25

Brand Equity

Brand 2004 Value (in billions)

Coca-Cola $67.39

Microsoft 61.37

IBM 53.79

GE 44.11

Intel 33.50

Disney 27.11

McDonald’s 25.00

Nokia 24.04

Toyota 22.67

4-26

Distribution

Intensive

Selective

Exclusive

4-27

Marketing Communications

Factors important for advertising success– Strong primary demand– Chance for product differentiation– Hidden qualities of high importance to

consumers– Opportunity to use strong emotional

appeals– Substantial sums available to support

advertising

4-28

Key Terms_1

Behavioristic segmentation

Benefits Benefit segmentation Brand Brand equity Branding Business markets Communication

element

Cooperative advertising Copy points Decline stage Demographic

segmentation Direct distribution Distribution channel Distribution element Early adopter Exchange

4-29

Key Terms_2

Exclusive distribution Family brand Four Ps Geodemographic

segmentation Geographic

segmentation Growth stage Hidden differences

Individual brand Induced differences Intensive distribution Introductory phase Licensed brand Market segmentation Marketing

communications Marketing mix Maturity stage

4-30

Key Terms_3

National brand Network marketing North American

Industry Classification System (NAICS) codes

Perceptible differences

Position Price element Primary demand Primary motivation Private label Product concept