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Chapter 9

Chapter 9. Market Segmentation, Targeting, and Positioning. Chapter Objectives. Identify the essential components of a market. Outline the role of market segmentation in developing a marketing strategy. Describe the criteria necessary for effective segmentation.

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Chapter 9

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  1. Chapter 9 Market Segmentation, Targeting, and Positioning

  2. Chapter Objectives • Identify the essential components of a market. • Outline the role of market segmentation in developing a marketing strategy. • Describe the criteria necessary for effective segmentation. • Explain each of the four bases for segmenting consumer markets. • Identify the steps in the market segmentation process. • Discuss four basic strategies for reaching target markets. • Summarize the types of positioning strategies. • Explain the reasons for positioning and repositioning products.

  3. Selecting a Target Market • Before a marketing mix strategy can be implemented, the marketer must identify, evaluate, and select a target market. • Market:people or institutions with sufficient purchasing power, authority, and willingness to buy • Target market: specific segment of consumers most likely to purchase a particular product

  4. Types of Markets • Consumer products:goods or services purchased by an ultimate consumer for personal use • Business products:goods or services purchased for use either directly or indirectly in the production of other goods and services for resale • The key to classification is to identify the purchaser and the reasons for buying the goods.

  5. The Role of Market Segmentation • Market SegmentationDivision of the total market into smaller, relatively homogeneous groups • No single marketing mix can satisfy everyone. Therefore, separate marketing mixes should be used for different market segments.

  6. Criteria for Effective Segmentation • The market segments must be measurable in terms of both purchasing power and size. • Marketers must be able to effectively promote to and serve a market segment. • Market segments must be sufficiently large to be potentially profitable. • The number of segments must match the firm’s capabilities.

  7. Segmenting Consumer Markets • Geographic Segmentation: Dividing an overall market into homogeneous groups on the basis of their locations • Urban Data Classified • Core Based Statistical Area (CBSA) • Metropolitan Statistical Area (MSA) • Micropolitan Statistical Area • Consolidated Metropolitan Statistical Area (CMSA) • Primary Metropolitan Statistical Area (PMSA)

  8. 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 factor • Geographic Information Service (GIS):computer technology that records several layers of data on a single map

  9. Demographic Segmentation:dividing consumer groups according to characteristics such as sex, age, income, occupation, education, household size, and stage in the family life cycle • U.S. Census Bureau

  10. Segmenting by Gender • Marketers must ensure that traditional assumptions are not false • Recently, the lines have increasingly blurred • Some companies market successfully to both genders

  11. Segmenting by Age • Identify market segments on the basis of age • Products designed to meet the specific needs of certain age groups • Tweens and Teens • Rapidly growing market • Significant purchasing power • Cohert Effect

  12. Baby Boomers • Born from 1946 until 1965. • Nearly 42 percent of U.S. adults • Values influenced both by the Vietnam War and the career-driven era • Huge disposable income • Seniors • By 2025, 1 in 5 over age 65 • Life expectancy: 74 for men; 79 for women • Heads of households aged 55-plus control about three-quarters of the country’s total financial assets.

  13. Segmenting by Ethnic Group • By 2050, nearly half of the population of the US will belong to nonwhite minority groups • Hispanic • African Americans • Asian Americans • Native Americans • People of Mixed Race

  14. Family Life Cycle Stages Segmentation • The process of family formation and dissolution • Life stage, not age per se, is the primary determinant of many consumer purchases • Segmenting by Household Type • Today’s U.S. households are very diverse • Married couples and their children • Blended by divorce or loss of spouse • Headed by single parent, same-sex parents, grandparents

  15. Segmenting by Income and Expenditure Patterns • Engel’s Laws,as family income increases: • A smaller percentage of expenditures go for food • The percentage spent on housing and household operations and clothing remains constant • The percentage spent on other items (such as recreation and education) increases

  16. Demographic Segmentation Abroad • Obtaining the data necessary for global demographic segmentation is often difficult • Many countries do not operate regularly scheduled census programs • Daily life cycle data is difficult to apply in global demographic segmentation efforts

  17. Psychographic Segmentation • Divides a population into groups that have similar psychological characteristics, values, and lifestyles • Lifestyle: people’s decisions about how to live their daily lives, including family, job, social, and consumer activities • AIO statements • VALS and VALS 2 “Values and Lifestyles”

  18. Psychographic Segmentation of Global Markets • Roper Starch found six psychographic consumer segments that are common to 35 nations • Strivers • Devouts • Altruists • Intimates • Fun seekers • Creatives

  19. Using Psychographic Segmentation • Produce rich descriptions of potential target markets • Aids in matching company’s image and its offerings with the types of consumers who are likely purchasers

  20. Product-Related SegmentationDividing a consumer population into homogeneous groups based on characteristics of their relationships to the product • Can take the form of segmenting based on: • Benefits that people seek when they buy • Usage rates for a product • Consumers’ brand loyalty toward a product

  21. Using Multiple Segmentation Bases • Increase accuracy in reaching the right markets • Combine multiple bases • Geographic and Demographic • Product-related with income and expenditure patterns • Others

  22. The Market Segmentation Process • Develop a profile for each segment • Forecast market potential • Forecast probable market share • Select specific market segments Strategies for Reaching Target Markets • Undifferentiated Marketing • Differentiated Marketing • Concentrated Marketing (niche) • Micromarketing

  23. Selecting and Executing a Strategy • Determinants: • Company resources • Product homogeneity • Stage in the product life-cycle • Competitors’ strategy • Positioning • Attributes • Price/quality, Competitors, Application, Product user, Product class • Reposition

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