Segmenting and Targeting Markets

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Segmenting and Targeting Markets
6
chapter
Prepared by Deborah Baker Texas Christian
University Revised by R. Baur Agricultural
Technical Institute
2
Chapter 5 Review Business Mkting

• What is business marketing.
• Role of Internet in business marketing.
• Relationship marketing strategic alliances
• Four categories of business customers.
• North Am Industry Classification System.
• Differences between business consumer markets.
• Seven types of business goods and services.
• Unique aspects of business buying behavior.

5
chapter
3
BUSINESS MARKETING CONCEPTS

• CH 1 OVERVIEW OF MARKETING
• CH 2 THE MARKETING ENVIROMENT
• CH 3 DEVELOPING A GLOBAL VISION
• CH 4 CONSUMER DECISION MAKING
• CH 5 BUSINESS MARKETING
• CH 6 TARGET MARKETS SEGMENTS
• CH 7 MARKET RESEARCH
• CH 8 PRODUCTS SERVICE CONCEPTS
• CH 9 DEVELOP MANAGE PRODUCTS
• CH 10 MARKETING CHANNELS
• CH 11 RETAILING
• CH 12 MARKETING COM PERS SELLING
• CH 13 ADV, PUBLIC REL, PROMOTION
• CH 15PRICING CONCEPTS

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Chapter 6 Learning Objectives

• 1. Describe characteristics of markets market
  segments.
• 2. Explain importance of market segmentation.
• Discuss criteria for successful market
  segmentation.
• Describe the bases commonly used to segment
  consumer markets.
• Describe the bases for segmenting business
  markets.

6
chapter
5
Learning Objectives (continued)

• List the steps involved in segmenting markets.
• Discuss alternative strategies for selecting
• target markets.
• 8. Explain one to one marketing.
• Discuss forces influencing 1to1 marketing
• Discuss privacy issues of 1to1 marketing.
• Explain implementation of positioning strategies

6
chapter
6
Learning Objective
186
Describe characteristics of markets market
segments.
1
(1)People or organizations with
Market
(2)needs or wants and
(3) have the willingness and
(4) and the ability to buy
Market Segment
A subgroup of people or organizations sharing one
or more characteristics that cause them to have
similar product needs.
Market Segmentation
The process of dividing a market into
meaningful, relatively similar, identifiable
segments or groups.
7
Learning Objective
2
Explain the importance of market segmentation.
187

• Markets have a variety of product needs
  preferences Drinks

Diet vs High Test
Coffee, Tea, Milk, Cola
Caffeine vs None
Marketers can define customer needs more
precisely Mkt Rifle

• Decision makers can define objectives and
  allocate resources more accurately

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A. Segmentation Criteria
Learning Objective
Discuss criteria for successful market
segmentation.
187
3
Characteristics of individuals, groups, or
organizations used to divide a total market
into segments. (variables)
9
Learning Objective
Discuss criteria for successful market
segmentation.
187
3

• B. Reasons for Market Segmentation

1. Identifies Customers with Similar Needs and
the Characteristics of those Customers
2. Provides Information To Build A Marketing Mix
Matched To Those Characteristics
3. Consistent with marketing concept of
satisfying customer needs/wants meeting needs
of the business
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C. Criteria for Segmentation
Learning Objective
Discuss criteria for successful market
segmentation.
3
187
0
1. Substantial
Segment must be large enough to warrant a
special marketing mix.
2. Identifiable Measurable
Segments must be identifiable and their size
measurable.
3. Accessible
Members of targeted segments must be reachable
with marketing mix.
4. Responsive
Unless segment responds to a marketing mix
differently, no separate treatment is needed.
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A. Geographic Segmentation
Learning Objective
Describe the bases commonly used to segment
consumer markets.
4
188

• 1. Region of the country or world

• 2. Market size

• 3. Market density

• 4. Climate

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Benefits of Regional Segmentation
Learning Objective
Describe the bases commonly used to segment
consumer markets.
4
188

• 1. New ways to generate sales in sluggish and
  competitive markets

• 2. Scanner data allow assessment of best selling
  brands in region
• 3. Regional brands appeal to local preferences
• 4. React more quickly to competition

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B. Demographic Segmentation
Learning Objective
Describe the bases commonly used to segment
consumer markets.
189
4

• 1. Age

c. Boomers 38-56 (1) 78 million consumers (2)
175 Billion
a. Gen Y 8-19 (1) 60 million (2) 170 Billion
b. Gen X 20-34 (1) 58 million consumers (2) 125
Billion

• d. Seniors 65
• 68 million consumers
• 115 Billion

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B4. Ethnic Background
Learning Objective
Describe the bases commonly used to segment
consumer markets.
4
192
B2. Gender
B3. Income
Wrenches
Bras
X-over
Dollar General
Target

• African-American 45 mill by 2020
• Hispanic-American 38 million 13 - 531 mill
• Asian-American 10.2 mill better educated
• Will comprise 1/3 of U.S. population by 2010 with
  buying power of a trillion s and will be the
  majority by mid-century

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B5. Family Life Cycle
Learning Objective
Describe the bases commonly used to segment
consumer markets.
193
4
MIDDLE AGE
YOUNG
OLDER
Age
NEVER MARRIED
WITH
MaritalStatus
MARRIED
Children
UNMARRIED
WITHOUT
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Learning Objective
Describe the bases commonly used to segment
consumer markets.
4
195
C. Psychographic Segmentation
1. Personality
Traits, Habits, Etc
Prosche
PsychographicSegmentation
2. Motives
Caring
Baby Products
Economy
Alidi
Status
Cadillac
3. Lifestyles
Explorers
Builders
Achievers
Masters
4. Geodemographics
Segmenting customers into neighborhood lifestyle
categories.
Stocking ethnic foods
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D. Benefit Segmentation
Learning Objective
Describe the bases commonly used to segment
consumer markets.
4
196
E. Usage-Rate Segmentation
The process of dividing a market by amt of
product bought or consumed.
The process of grouping customers into market
segments according to the benefits they seek
from the product .
The 80/20 Principle
20 of customers buy 80 of the product.
Snack Foods
20 of Fast Food Customers Generate 60 of the
visits
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Learning Objective
198
Describe the bases for segmenting business
markets.
5
0
A
Company Characteristics
1. Location
2. Customer Type
3. Customer Size
Business Markets
4. Product Use
1. Purchasing Criteria
B
Buying Process
2. Purchasing Strategy
3. Personal Characteristics
C
Customer Relationships
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Steps in Segmenting a Market
Learning Objective
List The Steps Involved In Segmenting Markets.
6
200
1
2
3
4
5
6
Design,imple-ment,maintainmktingmix
Select a market for study
Choosebasesfor segmen-tation
Selectdescrip-tors
Selecttargetmarkets
Profileandanalyzesegments
GeographicDemographicIncomeEthnicLife
CycleBenefitUsage
AgeJobIncome
SizeGrowthFreqUsageProfit?Brand
RichWidowsin North
ProductPlacePricePromo
-Salt-BirdFeed
NonLightHeavy
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Target Market
Learning Objective
Discuss alternative strategies for selecting
target markets.
200
7
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.
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A. Undifferentiated Targeting Strategy
Learning Objective
Discuss alternative strategies for selecting
target markets.
201
7
Marketing approach that views a market as one big
market with no individual segments thus
requires a single marketing mix.
Shot Gun Approach
...any color as long as it is black.
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A. Undifferentiated Targeting Strategy
Learning Objective
Discuss alternative strategies for selecting
target markets.
7
202
1. Advantages
Potential savings on production and marketing
costs

• 2. Disadvantages
• Unimaginative product offerings
• Company more susceptible to competition

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B. Concentrated Targeting Strategy
Learning Objective
202
Discuss alternative strategies for selecting
target markets.
7
Rifle Approach
A strategy used to select one segment of a
market for targeting marketing efforts.
Niche
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B. Concentrated Targeting Strategy
202
Learning Objective
Discuss alternative strategies for selecting
target markets.
7

• 1. Advantages
• Concentration of resources
• Meets narrowly defined segment
• Small firms can compete
• Strong positioning
• 2. Disadvantages
• Segments too small, or changing
• Large competitors may market to niche segment

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C. Multisegment Targeting Strategy
203
Learning Objective
Discuss alternative strategies for selecting
target markets.
7
A strategy that chooses two or more well-defined
market segments develops a distinct marketing
mix for each.

• 1. Advantages
• Greater financial success
• Economies of scale
• 2. Disadvantages
• High costs
• Cannibalization

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Costs of Multisegment Targeting
203
Learning Objective
Discuss alternative strategies for selecting
target markets.
7

• Product design costs

• Production costs

• Promotion costs

• Inventory costs

• Marketing research costs

• Management costs

• Cannibalization

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Learning Objective
8
204
Explain One To One Marketing
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Learning Objective
9
205
Forces Influencing 1 To 1 Marketing
1. Increasing Diversity
2. More time poor Customers
3. Decreasing Brand Loyality
4. New Media Alternatives
5. Demand for Accountability
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Learning Objective
Privacy Concerns With One To One Marketing
10
204
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Positioning
Learning Objective
Explain How Why Firms Implement Positioning
Strategies How Product Differentiation Plays A
Role.
209
11
Position
The place a product, brand, or group of products
occupies in consumers minds relative to
competing offerings.
Developing a specific marketing mix to influence
potential customers overall perception of a
brand, product line, or organization in general.
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Effective Positioning
Learning Objective
Explain How Why Firms Implement Positioning
Strategies How Product Differentiation Plays A
Role.
209
11

• Assess the positions of competing products
  Pontiac vs. Buick vs. Ford
• Determine dimensions of these positions
• Choose an effective market position
• Product Differentiation

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Perceptual Mapping
210
Learning Objective
Explain How Why Firms Implement Positioning
Strategies How Product Differentiation Plays A
Role.
11
Displaying in 2 or more dimensions, the location
of products, brands, or groups of products in
customers minds.
-Levis
Red TabBasics
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Positioning Bases
Explain How Why Firms Implement Positioning
Strategies How Product Differentiation Plays A
Role.
2010
Learning Objective
0
11
Attribute
Positioning Bases
Toro Mowers
1 Pull Starting
Price and Quality
Walmart
Low Price
Use or Application
Miracle Knife
HotelsgtResorts
Product User
Marriot
Product Class
Smart Balance Spread
Competitor
Avis
Were 2
Emotion
Family Fun
Kodak
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Repositioning
212
Explain how why firms implement positioning
strategies how product differentiation plays a
role.
Learning Objective
11
Changing consumers perceptions of a brand in
relation to competing brands.
10 yr., 100000 miles
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Chapter 6 Summary

• 1. Characteristics of mkts market segments.
• 2. Importance of market segmentation.
• Criteria for successful market segmentation.
• Consumer market segmentation criteria
• Business market segmentation criteria
• Steps involved in segmenting markets.
• Strategies for selecting target markets.
• implement positioning strategies
• Global market segmentation and targeting

6
chapter
36
NEXT TOPIC
CHAPTER SEVEN
DECISION SUPPORT SYSTEMS AND MARKETING RESEARCH