CHAPTER 9 - Market Segmentation, Targeting &

Positioning

Market

People/institutions with sufficient purchasing power, authority, and willingness to buy.

Market Segmentation

Process of dividing the total market into several homogeneous groups

MARKET CLASSIFICATIONS

1. Consumer Products- goods & services purchased by ultimate consumer

ex. Coat2. Business Products

- products purchased to be used, either directly or indirectly in the production of other goods & services for resale

ex. Cotton for coat

Effective Segmentation1. Must be measurable in terms of both purchasing

power & sizeex. Babyboomers

2. Must be able to effectively promote to & serve a market segment

3. Must be sufficiently large to be potentiallyprofitable

4. The number of market segments must match the firm's capabilities

How to Segment Consumer Markets

1. Geographic Segmentation- divide overall market by location

ex. Texas population, climate

2. Demographic Segmentation- divide overall market by: age, sex, income level,

occupation, education, household size, &/or stage in family life cycle

3. Psychographic Segmentation- divides population into groups that have similar

psychological char., values, and lifestyles

http://www.sric-bi.com/VALS/

*VALS (values, attitudes & life-styles) is a commercially available psychological segmentation system

4. Product-Related Segmentation- divides a population into homogeneous groups

based on char of the consumer's relationship to the product

Several different forms of Product Segments1. By the benefits that people seek when they buy a

productEx. Baking Soda

2. By usage rates for a productEx. 80/20 Principle

3. Degree of brand loyalty that consumers feel toward an item

Ex. frequent flyer programs

4 Strategies for Reaching Target Markets

1. UNDIFFERENTIATED MARKETING (AKA mass marketing)- firms that produce only 1 product or 1 product line

AND market it to all customers

2. DIFFERENTIATED MARKETING - firms that produce numerous products w/ dif marketing mixes designed to satisfy smaller segments

3. CONCENTRATED MARKETING (or niche marketing)

- firm may choose to focus on satisfying a smaller target market rather than attempting to market its product offerings to an entire market

4. MICROMARKETING- targeting potential customers at a very basic level (ie: by zip

codes, specific occupations, lifestyles or indivhouseholds)