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Segmenting and Targeting Markets

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Title: Segmenting and Targeting Markets


1
Segmenting and Targeting Markets
2
Market Segmentation
3
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

Competitive Advantage
4
No Market Segmentation
5
Segmented by Sex
6
Segmented by Age
7
The Basis of Market Segmentation
  • Geographic the study of the market based on
    where customers live
  • Region, city, area, county, state, country

8
Segmenting Consumer Markets
  • Geographic Segmentation Dividing an overall
    market into homogeneous groups on the basis of
    their locations
  • Does not ensure that all consumers in a location
    will make the same buying decision.
  • Help in identifying some general patterns.

9
  • Using Geographic Segmentation
  • Demand for some goods and services can vary
    according to the geographic region
  • Most major brands get 40-80 percent of their
    sales from what are called core regions
  • Climate is another important segmentation factor
  • Northern consumers, for example, eat more soup
    than Southerners
  • Southerners use more chlorine for their swimming
    pools than Northern residents

10
Demographic- personal characteristics of a
population
  • Age,
  • Gender
  • Family size
  • Marital Status
  • Family life cycle
  • Household income
  • Occupation
  • Education
  • Religion
  • Nationality, social class
  • Home Value
  • Social Class
  • Geographic Region(s)

11
Demographics, cont
  • Age Cohorts
  • Baby Boom generation 1946 - 1964
  • Generation X Baby Bust generation
  • Generation Y Echo Boomers or Millennium
    Generation
  • Ethnic Segmentation ethnic makeup cultural
    tastes
  • Socioeconomic social status or economic
    position
  • Income, Occupation, Class or social position

12
  • Demographics, cont
  • Marital Status household all those living
    together under one roof
  • Family Life Cycle reflects the family
    characteristics, age of parents, age of children,
    whether children are living at home

13
Young couple (no children
Young couple with children
Bachelor
Family Life Cycle
Middle aged couple with children
Single again Death or divorce
Middle aged couple with no children
Older couple
14
Psychographics
  • What makes them tick?
  • What's their lifestyle
  • Likes
  • Dislikes
  • Values
  • Attitudes

15
Psychographic Characteristics
16
Psychographics
  • Study of consumers based on social and
    psychological characteristics
  • Personality, values, opinions, beliefs,
    motivations, attitudes,
  • Lifestyle elements including activities and
    interests
  • Need for status Role of money (does it buy
    material things, self-esteem, etc?)
  • Ethics/"moral compass
  • Risk-taker vs. conservative
  • Spendthrift vs. hoarder of money

17
Psychographics, cont
  • Activities
  • Different magazines represent market segment

18
  • Attitudes
  • Eating healthy, becoming physically fit
  • Personality values
  • Personality characteristics values

19
Psychographic Profile
  • The F3 Gang fuel, food, and fast
  • One-stop wonders
  • Saving Sams Samanthas
  • Earth Worshippers

20
Behavioral Analysis
  • Segmenting the market based on product-related
    behavior
  • What specific benefits are customers seeking?
  • What motivates this group to purchase?
  • What are the purchasing trends of this group?

21
http//www.sric-bi.com/VALS/presurvey.shtml
22
Target Market
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.
23
Undifferentiated Targeting Strategy
Marketing approach that views the market as one
big market with no individual segments and thus
requires a single marketing mix.
24
Niche
One segment of a market.
25
Behavior/Usage Segmentation
  • Markets can be segmented by how often or how
    heavily consumers use a specific product
  • 80/20 Principle - 80 of revenue generated by 20
    of customers

Light Users 80
Heavy Users 20
26
The 80/20 Principle
A principle holding that 20 percent of all
customers generate 80 percent of the demand.
80/20
27
Cannibalization
Situation that occurs when sales of a new product
cut into sales of a firms existing products.
28
Toothpaste Segmentation
Benefit Segment Psychographics Favored Brands
Economy (low price) Value oriented Brands on sale
Medicinal (decay prevention) Hypochondriac Conservative Crest
Cosmetic High sociability active Aqua-Fresh Ultra Brite
Taste (good tasting) High self-involvement Colgate
29
Toothpaste Segmentation
Benefit Segment Demographics Behavior
Economy (low price) Men Heavy users
Medicinal (decay prevention) Large families Heavy users
Cosmetic Teens, young adults Smokers
Taste (good tasting) Children Spearmint lovers
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