Chapter 7 Segmenting and Targeting Markets

1
Chapter 7 Segmenting and Targeting Markets
2
What are Markets?

• Market people or institutions with sufficient
  purchasing power, authority, and willingness to
  buy

3
Requirements of a Markets

• Need
• Ability
• Willingness
• Authority

4
What Are Markets?
Types of Markets
Consumer Market
5
What Are Markets?
Types of Markets

• Organizational or Business-to-Business
  Market

6
Role of Market Segmentation

• Market Segmentation division of the total
  market into smaller, relatively homogeneous
  groups
• Why?
• Levels Mass, Segment, and Niche

7
Why segment?
Most efficient
Most effective
Many Groups of One
One Mass Market
8
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.

9
No Market Segmentation
10
Segmented by Gender
11
Segmented by Age
12
Segmentation Process

• 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 users
• Segments are defined by asking customers which
  attributes are important and then clustering the
  responses

13
Criteria for Effective Segmentation
14
Most important point

• In relation to responsiveness to different
  marketing mixes, segments must be
• Homogeneous within
• Heterogeneous between

15
Bases for Segmenting Consumer Markets
LO4
Characteristics of individuals, groups, or
organizations used to divide a total market into
segments. (variables)
16
Bases for Segmentation

• Geographic
• Demographic
• Psychographic
• Benefit
• Usage rate

17
Segmenting Consumer Markets

• Geographic Segmentation Dividing an overall
  market into homogeneous groups on the basis of
  their locations

Metropolitan Statistical Area (MSA)
18
Segmenting Consumer Markets

• 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.

19
Family Life Cycle
20
Psychographic Segmentation

• Psychographic 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

21
Geodemographic Segmentation
LO4
Segmenting potential customers into neighborhood
lifestyle categories. Combines geographic,
demographic, and psychographic segmentation.
22
Benefit Segmentation
LO4
The process of grouping customers into market
segments according to the benefits they seek from
the product.
23
Usage Rate Segmentation
Dividing a market by the amount of product
bought or consumed.
24
Bases for Segmenting Business Markets
Company Characteristics
Buying Processes
25
Steps in Segmenting Markets

• Select a market
• Choose segmentation bases
• Select descriptors
• Profile and analyze segments
• Select target markets
• Design and implement marketing mix

26
Targeting

• Choosing one or more segments for which to design
  your marketing operations

27
Undifferentiated StrategyDifferentiatedCon
centrated
Identify the Appropriate Targeting Strategy
28
Undifferentiated Strategy
Single Marketing Mix
Organization
Target Market
29
Differentiated Strategy
Marketing Mix 1
Marketing Mix 2
Organization
Target Market
30
Cannibalization
31
Concentrated Strategy
Single Marketing Mix
Organization
Target Market
32
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

33
One-to-One Marketing
LO8
34
Definitions
35
(No Transcript)
36
Product Positioning

• 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.
• Al Ries and Jack Trout (1981)

37
Product Positioning Dimensions

• Product Attributes / Differences / Benefits
• Product User / Usage
• By Association
• Problem Solution
• Against a Competitor / Away from Competitors

38
Perceptual Mapping
LO9
39
Perceptual Maps
40
Product Positioning using perceptual maps
41
Repositioning
LO9