Segmenting and targeting markets

Copyright ©2009, Cengage Learning. All rights reserved Chapter 7

Segmentation & Target Marketing


Learning OutcomesDescribe the characteristics of markets and market segments

Explain the importance of market segmentation

Discuss criteria for successful market segmentation

Describe the bases commonly used to segment consumer markets


Learning Outcomes List the steps involved in segmenting markets

Discuss alternative strategies for selecting target markets

Explain one-to-one marketing

Explain how and why firms implement positioning strategies and how product differentiation plays a role


Describe the characteristics of markets

and market segments

Market SegmentationLOI

Copyright ©2009, Cengage Learning. All rights reserved Chapter 7 5

(1) people or organizations with

(2) needs or wants, and with

(3) the ability and

(4) the willingness to buy.

A group of people that lacks any one of these characteristics is not a market.

What is a Market...


Market Segmentation

MarketPeople or organizations with needs or wants and the ability and willingness to buy.

MarketSegment

A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs.

MarketSegmentation

The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.


Segmentation Exercise


Explain the importance of market segmentation

The Importance of Market Segmentation


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

http://www.coca-colacompany.com/brands/the-coca-cola-company

http://www.coca-colacompany.com/brands/the-coca-cola-company


Discuss criteria for successful market

segmentation

Criteria for Successful Segmentation


SubstantialitySegment must be large

enough to warrant a special marketing mix.

Identifiabilityand

MeasurabilitySegments must be identifiable and

their size measurable.

AccessibilityMembers of targeted segments

must be reachable with marketing mix.

Criteria for Segmentation


Describe the bases commonly used to

segment consumer markets

Bases for Segmenting Consumer Markets


Usage Rate

Benefits Sought

Psychographics

Demographics

Geography

Bases for Segmentation


LO4 Geographic Segmentation

Region of the country or world

Market size

Market density

Climate


LO4 Demographic Segmentation

Age

Gender

Income

Ethnic background

Family life cycle


LO4 Family Life Cycle


Family Life Cycle Exercise

http://www.greatideasforteachingmarketing.com/wp-content/uploads/2012/07/family_life_cycle.png


LO4

Personality

Motives

Lifestyles

Geodemographics

Online

http://

Bases for Psychographic Segmentation

http://www.marthastewart.com/


LO4

BenefitSegmentation

Benefit Segmentation

The process of grouping customers into market segments according to the benefits they seek from the product.


LO4 Benefit Segmentation

Usage-RateSegmentation

Dividing a market by the amount of product bought or consumed.

80/20Principle

A principle holding that 20 percent of all customers generate 80 percent of the demand.


REVIEW LEARNING OUTCOMEBases for Segmenting Consumer Markets

LO4

Geography Demographics Psychographics Benefits Usage Rate

• Region• Market size• Market

density• Climate

• Age• Gender• Income• Race/ethnicity• Family life

cycle

• Personality• Motives• Lifestyle• Geodemo-

graphics

• Benefitssought

• Former• Potential• 1st time• Light or

irregular• Medium• Heavy


List the steps involved in segmenting markets

Steps in Segmenting a MarketLO6


REVIEW LEARNING OUTCOMESteps in Segmenting MarketsLO6

Select a market

for study

Choosebases

for segmen-

tation

Selectdescriptors

Profileand

analyzesegments

Selecttarget

markets

Design,implement,

maintainmarketing

mix

1 53 42 6


Discuss alternative strategies for selecting target markets

Strategies for Selecting Target MarketsLO7


LO7

A group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges.

Strategies for Selecting Target Markets

TargetMarket


LO7

ConcentratedStrategy

UndifferentiatedStrategy

MultisegmentStrategy

Strategies for Selecting Target Markets


LO7 Undifferentiated Targeting Strategy

A marketing approach that views the market as one big market with no individual segments and thus requires a single marketing mix.

UndifferentiatedTargetingStrategy


LO7

UndifferentiatedStrategy

Undifferentiated Targeting Strategy

Advantage:

Potential savings on production and marketing costs

Disadvantages:

Unimaginative product offerings

Company more susceptible to competition


ConcentratedTargeting Strategy

LO7 Concentrated Targeting StrategyA strategy used to select one segment of a market for targeting marketing efforts.

NicheOne segment of a market.


LO7 Concentrated Targeting Strategy

ConcentratedStrategy

Advantages: Concentration of resources Meets narrowly defined

segment Small firms can compete Strong positioning

Disadvantages: Segments too small, or

changing Large competitors may

market to niche segment


LO7 Multisegment Targeting Strategy

A strategy that chooses two or more well-defined market segments and develops a distinct marketing mix for each.

MultisegmentTargetingStrategy


LO7 Multisegment Targeting Strategy

MultisegmentStrategy

Advantages: Greater financial success Economies of scale

Disadvantages: High costs Cannibalization


LO7

Product design costs

Production costs Promotion costs Inventory costs Marketing research costs Management costs Cannibalization

Costs of Multisegment Targeting


Explain how and why firms implement positioning

strategies and how product differentiation

plays a role

PositioningLO9


Positioning

LO9 Positioning

Developing a specific marketing mix to influence potential customers’ overall perception of a brand, product line, or organization in general.


LO9Positioning of Procter & Gamble Detergents

Brand Positioning MarketShare

Tide Tough, powerful cleaning 31.1%

Cheer Tough cleaning, color protection 8.2%

Bold Detergent plus fabric softener 2.9%

Gain Sunshine scent and odor-removing formula 2.6%

Era Stain treatment and stain removal 2.2%

Dash Value brand 1.8%

Oxydol Bleach-boosted formula, whitening 1.4%

Solo Detergent and fabric softener in liquid form 1.2%

Dreft Outstanding cleaning for baby clothes, safe 1.0%

Ivory Snow Fabric & skin safety on baby clothes 0.7%

Ariel Tough cleaner, aimed at Hispanic market 0.1%


PerceptualMapping

LO9 Perceptual Mapping

A means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers’ minds.

Copyright ©2009, Cengage Learning. All rights reserved Chapter 7 38

Perceptual Mapping

LO9


Positioning BasesLO9

Attribute

Price and Quality

Use or Application

Product User

Product Class

Competitor

Emotion


Repositioning

LO9 Repositioning

Changing consumers’ perceptions of a brand in relation to competing brands.