[PPT]Chapter 8 Market Segmentation, Targeting, and 07.pptWeb viewChapter 7 Segmenting and Targeting Markets * * * * Chapter 7 Segmenting and Targeting Markets * Slide Animation: The purpose of market segment is to identify marketing opportunities. This slide traces the steps in segmenting a

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<ul><li><p>Chapter 7 Segmenting and Targeting Markets </p><p>*</p></li><li><p>What are Markets?</p><p>Market: people or institutions with sufficient purchasing power, authority, and willingness to buyTypes of Markets</p><p>*</p></li><li><p>Requirements of a Markets</p><p>Need</p><p>Ability</p><p>Willingness</p><p>Authority</p><p>+</p><p>*</p></li><li><p>Role of Market Segmentation</p><p>Market Segmentation: division of the total market into smaller, relatively homogeneous groups</p><p>Why? </p><p>Levels Mass, Segment, and Niche</p><p>*</p></li><li><p>Why segment?</p><p>Most efficient</p><p>Most effective</p><p>One Mass </p><p>Market</p><p>Many Groups </p><p>of One</p><p>*</p></li><li><p>Markets have a variety of product needs and preferences.</p><p>Marketers can better define customer needs.</p><p>Decision makers can define objectives and allocate resources more accurately.</p><p>The Importance of Market Segmentation</p><p>*</p></li><li><p>No Market Segmentation</p><p>2.psd</p><p>*</p></li><li><p>Segmented by Gender </p><p>3.psd</p><p>*</p></li><li><p>Segmented by Age</p><p>4.psd</p><p>*</p></li><li><p>Segmentation Process</p><p>Marketers follow two methods to determine the bases on which to identify markets:Segments are predefined by managers based on their observation of the behavioral and demographic characteristics of likely usersSegments are defined by asking customers which attributes are important and then clustering the responses</p><p>*</p></li><li><p>Criteria for Effective Segmentation</p><p>*</p></li><li><p>Most important point</p><p>In relation to responsiveness to different marketing mixes, segments must be:Homogeneous withinHeterogeneous between</p><p>*</p></li><li><p>LO4</p><p>Characteristics of individuals, groups, or organizations used to divide a total market into segments. (variables)</p><p>Bases for Segmenting Consumer Markets</p><p>*</p></li><li><p>Bases for Segmentation</p><p>LO4</p><p>Chapter 7 Segmenting and Targeting Markets</p><p>*</p><p>Notes:</p><p>One or more of the characteristics listed above is used to segment markets and described on subsequent slides. </p></li><li><p>Segmenting Consumer Markets</p><p>Geographic Segmentation: Dividing an overall market into homogeneous groups on the basis of their locations</p><p>Metropolitan Statistical Area (MSA)</p><p>*</p></li><li><p>Segmenting Consumer Markets</p><p>Demographic segmentation: dividing consumer groups according to characteristics such as gender, age, income, occupation, education, ethnicity, household size, and stage in the family life cycle.</p><p>*</p></li><li><p>Family Life Cycle</p><p>*</p></li><li><p>Psychographic Segmentation</p><p>Psychographic Segmentation: dividing a population into groups that have similar psychological characteristics, and lifestyles.</p><p>Lifestyle: peoples decisions about how to live their daily lives, including family, job, social, and consumer activities</p><p>*</p></li><li><p>LO4</p><p>Geodemographic Segmentation</p><p>Segmenting potential customers into neighborhood lifestyle categories. Combines geographic, demographic, and psychographic segmentation.</p><p>*</p></li><li><p>LO4</p><p>Benefit Segmentation</p><p>The process of grouping customers into market segments according to the benefits they seek from the product.</p><p>*</p></li><li><p>Usage Rate Segmentation</p><p>Dividing a market by the amount of product bought or consumed.</p><p>*</p></li><li><p>Bases for Segmenting Business Markets</p><p>Company</p><p>Characteristics</p><p>Buying</p><p>Processes</p><p>*</p></li><li><p>LO6</p><p>Steps in Segmenting Markets</p><p>Select a market for study</p><p>Choosebasesfor segmen-tation</p><p>Selectdescriptors</p><p>Profileandanalyzesegments</p><p>Selecttargetmarkets</p><p>Design,implement,maintainmarketingmix</p><p>1</p><p>2</p><p>3</p><p>4</p><p>5</p><p>6</p><p>Note that steps 5 and 6 are actually marketing activities that follow market segmentation (steps 1 through 4).</p><p>Chapter 7 Segmenting and Targeting Markets</p><p>*</p><p>Slide Animation:</p><p>The purpose of market segment is to identify marketing opportunities. This slide traces the steps in segmenting a market.</p><p>(1) selecting a market or product category for study; </p><p>(2) choosing a basis or bases for segmenting the market; </p><p>(3) selecting segmentation descriptors; </p><p>(4) profiling and evaluating segments; </p><p>(5) selecting target markets; and </p><p>(6) designing, implementing, and maintaining appropriate marketing mixes. </p><p>Note that steps 5 and 6 occur after the segmentation scheme is developed. Keep in mind that markets are dynamic and must be monitored proactively for changes in age, etc. Even though the segmentation classifications are static, the customers and prospects are changing. </p></li><li><p>Targeting</p><p>Choosing one or more segments for which to design your marketing operations</p><p>*</p></li><li><p>Undifferentiated Strategy</p><p>Differentiated</p><p>Concentrated</p><p>Identify the Appropriate Targeting Strategy</p><p>*</p></li><li><p>Undifferentiated Strategy</p><p>Single Marketing Mix</p><p>Target Market</p><p>Organization</p><p>*</p></li><li><p>Differentiated Strategy</p><p>Organization</p><p>Marketing Mix 1</p><p>Target Market</p><p>Marketing Mix 2</p><p>*</p></li><li><p>Concentrated Strategy</p><p>Single Marketing Mix</p><p>Target Market</p><p>Organization</p><p>*</p></li><li><p>Cannibalization</p><p>Cannibalization</p><p>Chapter 7 Segmenting and Targeting Markets</p><p>*</p><p>Notes:</p><p>Although introduction of a new product may cut into a firms existing product sales, companies are stealing sales from their own brands rather than lose to a competitor. </p></li><li><p>STRATEGIES FOR REACHING TARGET MARKETS</p><p>No single, best choice strategy suits all firmsDeterminants of a market-specific strategy:Company resourcesProduct homogeneityCompetitors strategy</p><p>*</p></li><li><p>One-to-One Marketing</p><p>*</p></li><li><p>Product Positioning</p><p>Positioning starts with a product. A Piece of merchandise, a service, a company, an institution, or even a person... But positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is, you position the product in the mind of the prospect.</p><p> Al Ries and Jack Trout (1981)</p><p>*</p></li><li><p>Positioning of Procter &amp; Gamble Detergents</p><p>Chapter 7 Segmenting and Targeting Markets</p><p>*</p></li><li><p>Product Positioning Dimensions</p><p>Product Attributes / Differences / BenefitsProduct User / UsageBy Association Problem SolutionAgainst a Competitor / Away from Competitors </p><p>*</p><p>Honda Civic -- low price </p><p>Wal Mart -- low price</p><p>Arm and Hammer -- deoderizer for referigerator</p><p>VISA and American Express</p><p>Avis and Hertz</p><p>7-up uncola</p></li><li><p>Perceptual Mapping</p><p>*</p></li><li><p>Perceptual Maps</p><p>*</p></li><li><p>Product Positioning using perceptual maps</p><p>*</p></li><li><p>Repositioning</p><p>*</p></li><li><p>Positioning and Product Differentiation</p><p>Chapter 7 Segmenting and Targeting Markets</p><p>*</p><p>Notes:</p><p>In this perceptual map for Cadillac, see how Cadillac is repositioning itself as a car for younger drivers. </p><p>*</p><p>*</p><p>*</p><p>*</p><p>*</p><p>*</p><p>*</p><p>*</p><p>*</p><p>*</p><p>*</p><p>*</p><p>*</p><p>Chapter 7 Segmenting and Targeting Markets</p><p>*</p><p>Notes:</p><p>One or more of the characteristics listed above is used to segment markets and described on subsequent slides. </p><p>*</p><p>*</p><p>*</p><p>*</p><p>*</p><p>*</p><p>*</p><p>*</p><p>Chapter 7 Segmenting and Targeting Markets</p><p>*</p><p>Slide Animation:</p><p>The purpose of market segment is to identify marketing opportunities. This slide traces the steps in segmenting a market.</p><p>(1) selecting a market or product category for study; </p><p>(2) choosing a basis or bases for segmenting the market; </p><p>(3) selecting segmentation descriptors; </p><p>(4) profiling and evaluating segments; </p><p>(5) selecting target markets; and </p><p>(6) designing, implementing, and maintaining appropriate marketing mixes. </p><p>Note that steps 5 and 6 occur after the segmentation scheme is developed. Keep in mind that markets are dynamic and must be monitored proactively for changes in age, etc. Even though the segmentation classifications are static, the customers and prospects are changing. </p><p>*</p><p>*</p><p>*</p><p>*</p><p>*</p><p>Chapter 7 Segmenting and Targeting Markets</p><p>*</p><p>Notes:</p><p>Although introduction of a new product may cut into a firms existing product sales, companies are stealing sales from their own brands rather than lose to a competitor. </p><p>*</p><p>*</p><p>*</p><p>Chapter 7 Segmenting and Targeting Markets</p><p>*</p><p>*</p><p>Honda Civic -- low price </p><p>Wal Mart -- low price</p><p>Arm and Hammer -- deoderizer for referigerator</p><p>VISA and American Express</p><p>Avis and Hertz</p><p>7-up uncola</p><p>*</p><p>*</p><p>*</p><p>*</p><p>Chapter 7 Segmenting and Targeting Markets</p><p>*</p><p>Notes:</p><p>In this perceptual map for Cadillac, see how Cadillac is repositioning itself as a car for younger drivers. </p><p>Undifferentiated Strategy</p><p>The </p><p>undifferentiated targeting strategy</p><p> is one in which an</p><p>organization defines an entire market for a particular</p><p>product as its target market, designs a single marketing</p><p>mix, and directs it at the entire market.</p><p>The underlying assumption is that the needs of the target</p><p>market for specific kinds of product are very similar; thus</p><p>the business can satisfy most customers with a single</p><p>marketing mix.</p><p>There are two requirements for effective use of this</p><p>approach.</p><p>A </p><p>homogeneous market</p><p> is one in which a large</p><p>proportion of customers have similar needs for a</p><p>product.</p><p>The organization must be able to develop and</p><p>maintain a single marketing mix that satisfies</p><p>customers needs.</p><p>Differentiated Strategy Through Market Segmentation</p><p>Differentiated targeting strategy</p><p> is a strategy in which an</p><p>organization targets two or more segments by developing a</p><p>marketing mix for each segment.</p><p>Advantages</p><p>A business can increase its sales in a total market by</p><p>focusing on more than one segment.</p><p>Sales to additional market segments may absorb</p><p>excess production capacity.</p><p>Disadvantages</p><p>A greater number of production processes, materials,</p><p>and skills means higher production costs.</p><p>Several distinct promotion plans and distribution</p><p>methods are required, resulting in higher marketing</p><p>costs.</p><p>Concentrated Strategy Through Market Segmentation</p><p>Heterogeneous markets</p><p> are markets made up of</p><p>individuals or organizations with diverse product needs.</p><p>Market segmentation</p><p> is the process of dividing the total</p><p>market into groups or segments that have relatively</p><p>similar product needs for the purpose of designing a</p><p>marketing mix that will more precisely match the needs of</p><p>individuals in a selected segment.</p><p>A </p><p>market segment</p><p> consists of individuals, groups, or</p><p>organizations with one or more similar characteristics that</p><p>cause them to have relatively similar product needs.</p></li></ul>