IDENTIFYING MARKET SEGMENTS AND TARGETS

1
CHAPTER
IDENTIFYING MARKET SEGMENTSAND TARGETS
Slide 9-2
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SNEAKERS MARKETING WARSHIP-HOP, YAO MING,
ANDTHREE BILLION TRILLION CHOICES

• New Segmentsand Strategies

Slide 9-5
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SNEAKERS MARKETING WARSHIP-HOP, YAO MING,
ANDTHREE BILLION TRILLION CHOICES

• Competitive Trends

• Age Segments

• Gender Segments

• Price Segments

• Sport Segments

• Lifestyle Segments

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WHY SEGMENT MARKETS?

• What Market Segmentation Means

• Market Segments

• Product Differentiation

• Segmentation Linking Needs to Actions

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FIGURE 9-1 Market segmentationlinking market
needs to an organizations marketing program
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WHY SEGMENT MARKETS?

• What Market Segmentation Means

• How Reeboks Segmentation Strategy
• Developed

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FIGURE 9-2 Market-product grid showing how
different Reebok shoes reach segments of
customers with different needs
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FIGURE 9-A Benefits () and drawbacks (-) of a
firms market-product strategies
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WHY SEGMENT MARKETS?

• When to Segment Markets

• One Product and Multiple Market Segments

• Multiple Product and Multiple Market
  Segments

• Segments of One Mass Customization

• Build-to-Order (BTO)

• Synergy

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FIGURE 9-3 The five key steps in segmenting and
targeting markets link market needs of customers
to the organizations marketing program
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STEPS IN SEGMENTING AND TARGETING MARKETS

• Step 1 Group Potential Buyers into Segments

• Criteria to Use in Forming the Segments

• Potential for Increased Profit

• Similarity of Needs of Buyers within a Segment

• Difference of Needs of Buyers Among Segments

• Potential of a Marketing Action to Reach a
  Segment

• Simplicity and Cost of Assigning Buyers to
  Segments

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STEPS IN SEGMENTING AND TARGETING MARKETS

• Step 1 Group Potential Buyers into Segments

• Ways to Segment Consumer Markets

• Customer Characteristics

• Geographic Region

• Demographic Household

• Psychographic Lifestyle

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STEPS IN SEGMENTING AND TARGETING MARKETS

• Step 1 Group Potential Buyers into Segments

• Ways to Segment Consumer Markets

• Buying Situations

• Benefits Sought Product Features

• Patronage Usage Rate

• Frequency Marketing

• 80/20 Rule

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FIGURE 9-4 Segmentation variables and breakdowns
for U.S. consumer markets
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FIGURE 9-5 Patronage of fast-food restaurants by
adults 18 years and older Simmons Market
Research Bureau NCS/NHCS Spring 2004 Adult
Full-Year Choices System Crosstabulation Report
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FIGURE 9-6 Comparison of various kindsof users
and nonusers for Wendys,Burger King, and
McDonalds fast-food restaurants
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STEPS IN SEGMENTING AND TARGETING MARKETS

• Step 1 Group Potential Buyers into Segments

• Variables to use in Forming Segments for
  Wendys

• Students in Dorms

• Faculty/Staff

• Students in Apartments

• People Living in Area

• Day Commuters

• People Working in Area

• Night Commuters

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STEPS IN SEGMENTING AND TARGETING MARKETS

• Step 1 Group Potential Buyers into Segments

• Ways to Segment Organizational Markets

• Customer Characteristics

• Geographic Statistical Area

• Demographic NAICS Code

• Demographic Number of Employees

• Benefits Sought Product Features

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FIGURE 9-7 Segmentation variables and breakdowns
for U.S. organizational markets
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Xerox Phaser 8400 PrinterWhat variables are used
tosegment organizational markets?
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Concept Check
1. The process of segmenting and targeting
markets is a bridge between what two marketing
activities?
A identifying market needs and taking marketing
actions
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Concept Check
2. What are two main ways to segment consumer and
organizational markets?
A customer characteristics and buying situations
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STEPS IN SEGMENTING AND TARGETING MARKETS

• Step 2 Group Products to be Sold into Categories

• Step 3 Develop a Market-Product Grid and
  Estimate Size of Markets

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STEPS IN SEGMENTING AND TARGETING MARKETS

• Step 4 Select Target Markets

• Criteria to Use in Picking the Target Segments

• Market Size

• Cost of Reaching Segment

• Expected Growth

• Compatibility with theOrganizations
  Objectivesand Resources

• Competitive Position

• Choose the Segments

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FIGURE 9-8 Selecting a target market for your
Wendys fast-food restaurant next to an urban
university (target market is shaded)
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STEPS IN SEGMENTING AND TARGETING MARKETS

• Step 5 Take Marketing Actions to Reach Target
  Markets

• Your Wendys Segmentation Strategy

• Day Commuters

• Between-Meal Snacks

• Dinner to Night Students

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FIGURE 9-9 Advertising actions to reach specific
student segments
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STEPS IN SEGMENTING AND TARGETING MARKETS

• Step 5 Take Marketing Actions to Reach Target
  Markets

• Apples Ever-Changing Segmentation Strategy

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MARKETING NEWSNET
Apples Segmentation StrategyCamp Runamok No
Longer
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STEPS IN SEGMENTING AND TARGETING MARKETS

• Market-Product Synergies A Balancing Act

• Marketing Synergies

• Product Synergies

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POSITIONING THE PRODUCT

• Product Positioning

• Product Repositioning

• Two Approaches to Product Positioning

• Head-to-Head Positioning

• Differentiation Positioning

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POSITIONING THE PRODUCT

• Product Positioning Using Perceptual Maps

• Identify Important Attributes for a Product
  Class

• Judgments of Existing Brands on These
  Important Attributes

• Ratings of an Ideal Brands Attributes

• Perceptual Map

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FIGURE 9-10 Using positioning and perceptual
maps to increase milk sales to children and adults
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POSITIONING THE PRODUCT

• Product Positioning Using Perceptual Maps

• Positioning Milk Drinks for Children

• Finding a Position for Milk Drinks

• Developing the Product and Flavors

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POSITIONING THE PRODUCT

• Product Positioning Using Perceptual Maps

• Repositioning Chocolate Milk for Adults

• Finding a New Position for Chocolate Milk
  in the Minds of Adults

• Packaging Adult Chocolate Milk

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FIGURE 9-11 Strategies for positioning dairy
drinks for kids and repositioning chocolate milk
to reach adults
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SALES FORECASTING TECHNIQUES

• Market Potential or

Industry Potential

• Sales Forecast or

Company Forecast

• Judgments of the Decision Maker

• Direct Forecast

• Lost-Horse Forecast

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SALES FORECASTING TECHNIQUES

• Surveys of Knowledgeable Groups

• Survey of Buyers Intentions Forecast

• Salesforce Survey Forecast

• Statistical Methods

• Trend Extrapolation

• Linear Trend Extrapolation

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FIGURE 9-12 Linear trend extrapolation of sales
revenues of Xerox, made at the start of 2000
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Product Differentiation
Product differentiation is a strategythat
involves a firms using different marketing mix
activities to help consumers perceive the product
asbeing different and better thancompeting
products.
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Market-Product Grid
A market-product grid is a framework to relate
the market segments of potential buyers to
products offered or potential marketing actions
by the firm.
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Synergy
Synergy is the increased customer value achieved
through performing organizational functions more
efficiently.
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Usage Rate
Usage rate is the quantity consumed or patronage
(store visits) during a specific period of time.
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80/20 Rule
The 80/20 rule is a concept that suggests 80
percent of a firms sales are obtained from 20
percent of its customers.
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Product Positioning
Product positioning refers to the place an
offering occupies in consumers minds on
important attributes relative to competitive
products.
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Product Repositioning
Product repositioning involveschanging the place
an offeringoccupies in a consumers
mindrelative to competitive products.
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Perceptual Map
A perceptual map is a means of displaying or
graphing in two dimensions the location of
products or brands in the minds of consumers to
enable a manager to see how consumers perceive
competing products or brands relative to its own
and then take marketing actions.
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Market Potential
Market potential is the maximum total sales of a
product by all firms to a segment during a
specified time period under specified
environmental conditions and marketing efforts of
the firm. Also called industry potential.
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Industry Potential
Industry potential is the maximum total sales of
a product by all firms to a segment during a
specified time period under specified
environmental conditions and marketing efforts of
the firm. Also called market potential.
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Sales Forecast
A sales forecast refers to the total sales of a
product that a firm expects to sell during a
specified time period under specified
environmental conditions and its own marketing
efforts. Also called company forecast.
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Company Forecast
A company forecast refers to the total sales of a
product that a firm expects to sell during a
specified time period under specified
environmental conditions and its own marketing
efforts. Also called sales forecast.
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Direct Forecast
A direct forecast involves estimating the value
to be forecast without any intervening steps.
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Lost-Horse Forecast
A lost-horse forecast involves making a forecast
using the last known value and modifying it
according to positive or negative factors
expected in the future.
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Survey ofBuyers Intentions Forecast
A survey of buyers intentions forecast involves
asking prospective customers if they are likely
to buy the product during some future time period.
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Salesforce Survey Forecast
A salesforce survey forecast involves asking the
firms salespeople to estimate sales during a
coming period.
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Trend Extrapolation
Trend extrapolation involves extending a pattern
observed in past data into the future.
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Linear Trend Extrapolation
Linear trend extrapolation involves using a
straight line to extend a pattern observed in
past data into the future.
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