[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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Chapter 7 Segmenting and Targeting Markets *What are Markets?Market: people or institutions with sufficient purchasing power, authority, and willingness to buyTypes of Markets*Requirements of a MarketsNeedAbilityWillingnessAuthority+*Role of Market SegmentationMarket Segmentation: division of the total market into smaller, relatively homogeneous groupsWhy? Levels Mass, Segment, and Niche*Why segment?Most efficientMost effectiveOne Mass MarketMany Groups of One*Markets have a variety of product needs and preferences.Marketers can better define customer needs.Decision makers can define objectives and allocate resources more accurately.The Importance of Market Segmentation*No Market Segmentation2.psd*Segmented by Gender 3.psd*Segmented by Age4.psd*Segmentation ProcessMarketers 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*Criteria for Effective Segmentation*Most important pointIn relation to responsiveness to different marketing mixes, segments must be:Homogeneous withinHeterogeneous between*LO4Characteristics of individuals, groups, or organizations used to divide a total market into segments. (variables)Bases for Segmenting Consumer Markets*Bases for SegmentationLO4Chapter 7 Segmenting and Targeting Markets*Notes:One or more of the characteristics listed above is used to segment markets and described on subsequent slides. Segmenting Consumer MarketsGeographic Segmentation: Dividing an overall market into homogeneous groups on the basis of their locationsMetropolitan Statistical Area (MSA)*Segmenting Consumer MarketsDemographic segmentation: dividing consumer groups according to characteristics such as gender, age, income, occupation, education, ethnicity, household size, and stage in the family life cycle.*Family Life Cycle*Psychographic SegmentationPsychographic Segmentation: dividing a population into groups that have similar psychological characteristics, and lifestyles.Lifestyle: peoples decisions about how to live their daily lives, including family, job, social, and consumer activities*LO4Geodemographic SegmentationSegmenting potential customers into neighborhood lifestyle categories. Combines geographic, demographic, and psychographic segmentation.*LO4Benefit SegmentationThe process of grouping customers into market segments according to the benefits they seek from the product.*Usage Rate SegmentationDividing a market by the amount of product bought or consumed.*Bases for Segmenting Business MarketsCompanyCharacteristicsBuyingProcesses*LO6Steps in Segmenting MarketsSelect a market for studyChoosebasesfor segmen-tationSelectdescriptorsProfileandanalyzesegmentsSelecttargetmarketsDesign,implement,maintainmarketingmix123456Note that steps 5 and 6 are actually marketing activities that follow market segmentation (steps 1 through 4).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 market.(1) selecting a market or product category for study; (2) choosing a basis or bases for segmenting the market; (3) selecting segmentation descriptors; (4) profiling and evaluating segments; (5) selecting target markets; and (6) designing, implementing, and maintaining appropriate marketing mixes. 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. TargetingChoosing one or more segments for which to design your marketing operations*Undifferentiated StrategyDifferentiatedConcentratedIdentify the Appropriate Targeting Strategy*Undifferentiated StrategySingle Marketing MixTarget MarketOrganization*Differentiated StrategyOrganizationMarketing Mix 1Target MarketMarketing Mix 2*Concentrated StrategySingle Marketing MixTarget MarketOrganization*CannibalizationCannibalizationChapter 7 Segmenting and Targeting Markets*Notes: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. STRATEGIES FOR REACHING TARGET MARKETSNo single, best choice strategy suits all firmsDeterminants of a market-specific strategy:Company resourcesProduct homogeneityCompetitors strategy*One-to-One Marketing*Product PositioningPositioning 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. Al Ries and Jack Trout (1981)*Positioning of Procter & Gamble DetergentsChapter 7 Segmenting and Targeting Markets*Product Positioning DimensionsProduct Attributes / Differences / BenefitsProduct User / UsageBy Association Problem SolutionAgainst a Competitor / Away from Competitors *Honda Civic -- low price Wal Mart -- low priceArm and Hammer -- deoderizer for referigeratorVISA and American ExpressAvis and Hertz7-up uncolaPerceptual Mapping*Perceptual Maps*Product Positioning using perceptual maps*Repositioning*Positioning and Product DifferentiationChapter 7 Segmenting and Targeting Markets*Notes:In this perceptual map for Cadillac, see how Cadillac is repositioning itself as a car for younger drivers. *************Chapter 7 Segmenting and Targeting Markets*Notes:One or more of the characteristics listed above is used to segment markets and described on subsequent slides. ********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 market.(1) selecting a market or product category for study; (2) choosing a basis or bases for segmenting the market; (3) selecting segmentation descriptors; (4) profiling and evaluating segments; (5) selecting target markets; and (6) designing, implementing, and maintaining appropriate marketing mixes. 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. *****Chapter 7 Segmenting and Targeting Markets*Notes: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. ***Chapter 7 Segmenting and Targeting Markets**Honda Civic -- low price Wal Mart -- low priceArm and Hammer -- deoderizer for referigeratorVISA and American ExpressAvis and Hertz7-up uncola****Chapter 7 Segmenting and Targeting Markets*Notes:In this perceptual map for Cadillac, see how Cadillac is repositioning itself as a car for younger drivers. Undifferentiated StrategyThe undifferentiated targeting strategy is one in which anorganization defines an entire market for a particularproduct as its target market, designs a single marketingmix, and directs it at the entire market.The underlying assumption is that the needs of the targetmarket for specific kinds of product are very similar; thusthe business can satisfy most customers with a singlemarketing mix.There are two requirements for effective use of thisapproach.A homogeneous market is one in which a largeproportion of customers have similar needs for aproduct.The organization must be able to develop andmaintain a single marketing mix that satisfiescustomers needs.Differentiated Strategy Through Market SegmentationDifferentiated targeting strategy is a strategy in which anorganization targets two or more segments by developing amarketing mix for each segment.AdvantagesA business can increase its sales in a total market byfocusing on more than one segment.Sales to additional market segments may absorbexcess production capacity.DisadvantagesA greater number of production processes, materials,and skills means higher production costs.Several distinct promotion plans and distributionmethods are required, resulting in higher marketingcosts.Concentrated Strategy Through Market SegmentationHeterogeneous markets are markets made up ofindividuals or organizations with diverse product needs.Market segmentation is the process of dividing the totalmarket into groups or segments that have relativelysimilar product needs for the purpose of designing amarketing mix that will more precisely match the needs ofindividuals in a selected segment.A market segment consists of individuals, groups, ororganizations with one or more similar characteristics thatcause them to have relatively similar product needs.

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