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Chapter 8 Segmenting and Targeting Markets

Chapter 8 Segmenting and Targeting Markets. What are Markets?. Market: people or organizations with (1)…………., (2)…………., and (3)………………………… Types of Markets . Role of Market Segmentation. Market Segmentation: division of the total market into smaller, relatively homogeneous groups

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Chapter 8 Segmenting and Targeting Markets

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  1. Chapter 8Segmenting and Targeting Markets

  2. What are Markets? • Market: people or organizations with (1)…………., (2)…………., and • (3)………………………… • Types of Markets

  3. Role of Market Segmentation • Market Segmentation: division of the total market into smaller, relatively homogeneous groups • Why? • Levels – Mass, Segment, and Niche

  4. Why segment? Most efficient Most effective Many Groups of One One Mass Market

  5. 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.

  6. No Market Segmentation

  7. Segmented by …………..

  8. Segmented by ……..

  9. Segmentation Process • Marketers follow two methods to determine the bases on which to identify markets: • Segments are predefined by managers based on their observation of the behavioral and demographic characteristics of likely users • Segments are defined by asking customers which attributes are important and then clustering the responses

  10. Substantiality Measurability / Identifiability Accessibility Responsiveness Criteria for Effective Segmentation

  11. Most important point • In relation to responsiveness to different marketing mixes, segments must be: • Homogeneous within • Heterogeneous between

  12. Bases for Segmenting Consumer Markets Characteristics of individuals, groups, or organizations used to divide a total market into segments=(variables, bases)

  13. Geography Demographics Psychographics Benefits Sought Usage Rate Bases for Segmentation

  14. Segmenting Consumer Markets • Geographic Segmentation: Dividing an overall market into homogeneous groups on the basis of their locations • www.hawaiiantropic.com • east-west: Skippy, midwest: jif, south:peter pan Metropolitan Statistical Area (MSA)

  15. Segmenting Consumer Markets • ……………….. segmentation: dividing consumer groups according to characteristics such as gender, age, income, occupation, education, ethnicity, household size, and stage in the family life cycle. • Vh1/Mtv, AARP, ivillage, Nike, Latina Style

  16. Age MaritalStatus Children Family Life Cycle

  17. Family Life Cycle

  18. Psychographic Segmentation • Psychographic Segmentation: dividing a population into groups that have similar psychological characteristics and lifestyles. • Lifestyle: people’s decisions about how to live their daily lives, including family, job, social, and consumer activities

  19. Geodemographic Segmentation Segmenting potential customers into neighborhood lifestyle categories. Combines geographic, demographic, and psychographic segmentation.

  20. Benefit Segmentation The process of grouping customers into market segments according to the …………..they seek from the product. Cell phone carriers, L’Oreal, Weight watchers

  21. Usage Rate Segmentation Dividing a market by the ………….of product bought or consumed. Sprint- fired customers for excessive use of CS

  22. Producers Resellers Government Institutions Bases for Segmenting Business Markets Buying Processes (Satisficers/Optimizers) Company Characteristics

  23. Steps in Segmenting Markets 1 4 2 3 5 6 Select a market for study Choosebasesfor segmen-tation Selectdescriptors Profileandanalyzesegments Selecttargetmarkets Design,implement,maintainmarketingmix Note that steps 5 and 6 are actually marketing activities that follow market segmentation (steps 1 through 4).

  24. Targeting • Choosing one or more segments for which to design your marketing operations

  25. Undifferentiated StrategyDifferentiatedConcentrated Identify the Appropriate Targeting Strategy

  26. Undifferentiated Strategy Single Marketing Mix Organization Target Market Sugar, flour, commodities

  27. Differentiated Strategy Marketing Mix 1 Marketing Mix 2 Organization Target Market Best Buy, Walmart, Gap

  28. Concentrated Strategy Single Marketing Mix Organization Target Market http://www.youtube.com/watch?v=4aICIVOl3JU

  29. Situation that occurs when sales of a new product cut into sales of a firm’s existing products. Cannibalization Cannibalization

  30. STRATEGIES FOR REACHING TARGET MARKETS • No single, best choice strategy suits all firms • Determinants of a market-specific strategy: • Company resources • Product homogeneity • Competitors’ strategy

  31. An individualized marketing method that utilizes customer information to build long-term, personalized, and profitable relationships with each customer. - ‘share of customer’ One-to-One Marketing

  32. Product Positioning • Positioning starts with a product. A Piece of merchandise, a service, a company, an institution, or even a person... But positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is, you position the product in the mind of the prospect. Al Ries and Jack Trout (1981)

  33. Brand Positioning MarketShare Tide Tough, powerful cleaning 31.1% Cheer Tough cleaning, color protection 8.2% Bold Detergent plus fabric softener 2.9% Gain Sunshine scent and odor-removing formula 2.6% Era Stain treatment and stain removal 2.2% Dash Value brand 1.8% Oxydol Bleach-boosted formula, whitening 1.4% Solo Detergent and fabric softener in liquid form 1.2% Dreft Outstanding cleaning for baby clothes, safe 1.0% LO9 Ivory Snow Fabric & skin safety on baby clothes 0.7% Ariel Tough cleaner, aimed at Hispanic market 0.1% Positioning of Procter & Gamble Detergents

  34. Product Positioning Dimensions • Product Attributes / Differences / Benefits • Light beer-taste, filling • Toothpaste-mint taste, tartar , whitening, enamel protection • Levi’s- the brand that fits • Product User / Usage • Johnson and Johnson Baby Shampoo-not just for babies, • By Association/Product Class (Amtrack) • Problem Solution (Application, Use)- Arm and Hammer, Made on an Apple • Against a Competitor / Away from Competitors (Avis, BMW-the ultimate driving machine, 7-Up- the Un-Cola)

  35. A means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers’ minds. Perceptual Mapping

  36. Expensive Corolla Celica Avalon Camry Conservative Sporty Inexpensive Perceptual Maps (Price/Quality)

  37. High moisturizing Zest 7 Tone 4 Lever 2000 2 Dove 5 Safeguard Coast 8 Lux Nondeodorant Deodorant 3 1 Dial Lifebuoy Lava 6 Low moisturizing Product Positioning using perceptual maps

  38. Changing consumers’ perceptions of a brand in relation to competing brands. Repositioning

  39. Positioning and Product Differentiation

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