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What are Markets?
Market:people or organizations with
(1)., (2)., and
(3)
Types of Markets
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Role of Market Segmentation
Market Segm entat ion :division of the totalmarket into smaller, relatively homogeneous
groups
Why?
Levels Mass, Segment, and Niche
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Why segment?
Most
efficient
Most
effective
One Mass
Market
Many Groups
of One
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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
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No Market Segmentation
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Segmented by ..
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Segmented by ..
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Segmentation Process
Marketers follow two methods to determine the bases on
which to identify markets:
Segments are predefined by managers based on theirobservation of the behavioral and demographic
characteristics of likely users
Segments are defined by asking customers whichattributes are important and then clustering the
responses
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r er a or ec veSegmentation
Substantiality
Measurability /
Identifiability
Accessibility
Responsiveness
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Most important point
In relation to responsiveness to differentmarketing mixes, segments must be:
Homogeneous within
Heterogeneous between
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Characteristics of individuals, groups, or
organizations used to divide a total market
into segments=(variables, bases)
Bases for Segmenting Consumer
Markets
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Bases for Segmentation
Usage Rate
Benefits Sought
Psychographics
Demographics
Geography
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Segmenting Consumer Markets
Geog raph ic Segmentat ion :Dividing
an overall market into homogeneous
groups on the basis of their locations www.hawaiiantropic.com
east-west: Skippy, midwest: jif,
south:peter pan
Metropolitan Statistical
Area (MSA)
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Segmenting Consumer Markets
.. segmentation: dividing
consumer groups according to
characteristics such as gender, age,
income, occupation, education, ethnicity,
household size, and stage in the family
life cycle. Vh1/Mtv, AARP, ivillage, Nike, Latina
Style
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Age
Marital
StatusChildren
Family Life Cycle
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Family Life Cycle
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Psychographic Segmentation
Psychograph ic Segmentat ion:dividing apopulation into groups that have similarpsychological characteristics and lifestyles.
Lifestyle: peoples decisions about how to live
their daily lives, including family, job, social, andconsumer activities
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Geodemographic Segmentation
Segmenting potential customers into
neighborhood lifestyle categories.
Combines geographic, demographic,
and psychographic segmentation.
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Benefit Segmentation
The process of grouping customers
into market segments according to
the ..they seek from the
product.
Cell phone carriers, LOreal, Weight
watchers
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Usage Rate Segmentation
Dividing a market by the
.of product boughtor consumed.
Sprint- fired customers for excessive use of CS
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Bases for Segmenting Business
Markets
CompanyCharacteristics
BuyingProcesses
(Satisficers/Optimizers)
Producers
Resellers
Government
Institutions
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Steps in Segmenting Markets
Selecta market
forstudy
Choosebases
forsegmen-
tation
Selectdescriptors
Profileand
analyzesegments
Selecttarget
markets
Design,implement,
maintainmarketing
mix
1 2 3 4 5 6
Note that steps 5 and 6 are actually marketing activities that follow market segmentation (steps 1 through 4).
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Targeting
Choosing one or more segments for which todesign your marketing operations
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Undifferentiated Strategy
Differentiated
Concentrated
Identify the Appropriate Targeting Strategy
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Undifferentiated Strategy
Single
Marketing
Mix
Target Market
Organization
Sugar, flour, commodities
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Differentiated Strategy
Organization
Marketing Mix 1
Target Market
Marketing Mix 2
Best Buy, Walmart, Gap
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Concentrated Strategy
Single
Marketing
Mix
Target Market
Organization
http://www.youtube.com/watch?v=4aICIVOl3JU
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Cannibalization
Situation that occurs when
sales of a new product cut into
sales of a firms existing
products.
Cannibalization
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STRATEGIES FOR REACHING
TARGET MARKETS No single, best choice strategy suits all
firms
Determinants of a market-specific
strategy:
Company resources
Product homogeneity
Competitors strategy
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One-to-One Marketing
An individualized marketing method
that utilizes customer information tobuild long-term, personalized, and
profitable relationships with each
customer.- share of customer
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Product Positioning
Positioning starts with a product. A Piece ofmerchandise, a service, a company, an institution, oreven a person... But positioning is not what you doto a product. Positioning is what you do to the mind
of the prospect. That is, you position the product inthe mind of the prospect.
Al Ries and Jack Trout (1981)
f
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LO9 0.7%Fabric & skin safety on baby clothesIvory Snow
0.1%Tough cleaner, aimed at Hispanic marketAriel
1.0%Outstanding cleaning for baby clothes, safeDreft
1.2%Detergent and fabric softener in liquid formSolo1.4%Bleach-boosted formula, whiteningOxydol
1.8%Value brandDash
2.2%Stain treatment and stain removalEra
2.6%Sunshine scent and odor-removing formulaGain
2.9%Detergent plus fabric softenerBold
8.2%Tough cleaning, color protectionCheer
31.1%Tough, powerful cleaningTide
Market
SharePositioningBrand
Positioning of
Procter & Gamble
Detergents
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Product Positioning Dimensions
Product Attributes / Differences / Benefits Light beer-taste, filling
Toothpaste-mint taste, tartar , whitening, enamel protection
Levis- the brand that fits
Product User / Usage
Johnson and Johnson Baby Shampoo-not just for babies,
By Association/Product Class (Amtrack)
Problem Solution (Application, Use)- Arm and Hammer, Made on an Apple
Against a Competitor / Away from Competitors (Avis, BMW-the ultimate
driving machine, 7-Up- the Un-Cola)
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Perceptual Mapping
A means of displaying or graphing, in two
or more dimensions, the location ofproducts, brands, or groups of products in
customers minds.
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Perceptual Maps (Price/Quality)
Expensive
Inexpensive
ConservativeSporty
Celica CamryCorolla Avalon
Product Positioning using perceptual
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High moisturizing
Low moisturizing
Nondeodorant Deodorant
1
2
3
4
5
7
6
8
Safeguard
Lever 2000
Zest
CoastLux
Dove
Tone
LavaLifebuoy
Dial
Product Positioning using perceptual
maps
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Repositioning
Changing consumers
perceptions of a brand in relation
to competing brands.
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Positioning and Product Differentiation