Market Segmentation and Market Targeting

1
Market Segmentation and Market Targeting

• Introduction

2
Instructional Goals

• To understand what it means to "segment" a
  market
• The basic steps in segmenting a market
• How you know if you have done a good job of
  segmentation
• How to evaluate and select segments for
  targeting of marketing programs

3
Marketers can target their products to customers
in four distinct ways

• Mass marketing
• Segment or product-variety marketing
• Target (both niche and local) marketing
• Individual marketing

4
Mass Marketing

• Mass marketing aims to attract all kinds of
  buyers by producing and distributing the one best
  product at the lowest possible price

5
Segment Marketing

• Segment or product-variety marketing aims to
  serve large identifiable groups by offering a
  limited array of good products at a variety of
  prices

6
Target Marketing

• Target (both niche and local) marketing aims to
  please identifiable clusters of customers by
  providing products that are carefully tailored to
  match group means and tastes

7
Individual Marketing

• Individual or marketing aims to satisfy
  individual customers by providing products that
  are precisely tailored to match individual means
  and tastes

8
Target marketing is where we are today

• The key steps in target marketing are
• Market segmentation
• Market evaluation
• Product differentiation and positioning.

9
Market segmentation

• Market segmentation means dividing mass markets
  into distinct groups of buyers with relatively
  homogeneous tastes, preferences, or behaviors
  that distinguish them from the rest of the market.

10
Market Evaluation

• Market evaluation assessing the sales potential
  of each segment and selecting segments most
  suitable for exploitation.
• Sales potential is a function of the number of
  people in the segment, their disposable incomes,
  and their willingness to pay for product
  attributes -- given the organizations ability to
  serve them.
• Indicators size, growth rate, price sensitivity,
  current usage in the product category, etc.

11
Market Positioning

• A product's position is defined by how consumers
  view it on important attributes -- the "rank" a
  product holds in the consumers mind
• Marketers can position products by users, by
  usages, by price and/or quality, according to
  product attributes or benefits received, against
  a single competitor, against many competitors, or
  against an entire product category.

12
Video Case 1 Patagonia

• How does Patagonia exemplify the marketing
  concept? The societal marketing concept?
• What type of marketing strategy has Patagonia
  pursued?
• How has Patagonia responded to the forces in the
  macro-environment?
• Are the critics right? Or will Patagonias
  actions help reduce consumption?

13
Buying Power Index DishwasherManufacturer
14
Index Numbers

• The number of households and appliance sales were
  given in the Survey of Buying Power data.
• The number earning 25,000 a year was given in
  percentage form and multiplied by the number of
  households in each market.
• The number aged 25-34 and 35-49 were given in
  percentage form. These were added for each market
  and multiplied by population.
• Columns b, c, d, and e were added across to get
  a sum of factors for each market.
• The sums of factors were added downward.
• Each sum of factor was divided by the total to
  get an index number (or percent).