Target Marketing

1. 6 Target Marketing Chapter What’s a market? Three definitions . . . • A geographic area • A place where buyer and seller meet • The demand for a product class

2. 6 Target Marketing Chapter What’s the criteria for a Target Market? A group of people, businesses and/or institutions with • Similar needs and wantsthat your product satisfies. • The willingness and ability topay your price. • Accessibilityto your product. • Sufficient sizeto be profitable. • A desire for yourcompetitive advantage.

3. Finding and Exploiting the Target Market • Step One:Segment the Market • Take a large group of people or businesses with different wants and needs; then divide them into smaller groups with similar wants and needs. • Segmentation is necessary because groups of customers in a market have: • Differences in buying habits. • Differences in usage patterns • Different motives for buying.

4. Finding and Exploiting the Target Market • Step Two:Evaluate each segment in terms of the Target Market Criteria • Similar needs and wants that your product satisfies. • Willingness and ability to pay your price. • Accessibility to your product. • Sufficient size to be profitable. • A desire for your competitive advantage. • Step Three:Select Target Market(s) and develop a Marketing Mix(es)

5. Target Market Strategies • Market aggregation—treat the total market as a single segment. Employ one Marketing Mix to capture everyone. • Single-segmenttarget—focus on only one particular segment- a niche market. • Multiple-segmenttargets—select two or more segments and devise different marketing mixes for each.

6. The most basic (‘first cut’) segmentation divides prospects into: • Ultimate consumerswho buy goods or services for their own personal or household use. • Business userswho buy goods and services to use in their businesses and institutions, to make other products and services, or to resell to other business users or consumers.

7. Consumer Markets are commonly further segmented on the basis of: • Geography • Demographics • Psychographics • Buying Behavior • Note: Thus we can express our Target Market Profiles • Single men, age 34-49, with incomes of $50K+, living in greater Atlanta, who actively date, and are appearance conscience.

8. Table 6-1 - Segmentation Bases for Consumer Markets Typical Market Segments Geographic: Region New England, Middle Atlantic, and other census regions City or MSA size Under 25,000; 25,001-100,000; 100,001- 500,000; 500,001-1,000,000; etc. Urban-rural Urban, suburban, rural Climate Hot, cold, sunny, rainy, cloudy Demographic: Income Under $10,000; $10,001-$25,000; $25,001- $35,000; $35,001-$50,000; over $50,000 Age Under 6, 6-12, 13-19, 20-34, 35-49, 50-64, 65 and over Gender Male, female Family life cycle Young, single; young, married, no children, etc. Social class Upper class, upper middle, lower middle, upper lower, etc.

9. Table 6-1 - Segmentation Bases for Consumer Markets (Con’t.) Typical Market Segments Demographic (cont.): Education Grade school only, high school graduate, college graduate Occupation Professional, manager, clerical, sales, student, homemaker, unemployed Ethnic background African, Asian, European, Hispanic, Middle Eastern, etc. Psychographic: Personality Ambitious, self-confident, aggressive, introverted, extroverted, sociable Life-style (AIO)Activities (golf, travel); Interests (politics, modern art); Opinions (conservation, capitalism) Values Values and Life-Styles 2 (VALS2) Benefits desired Purchase motives: appliance — cost, quality, durability; toothpaste —cavities, plaque, bright teeth, taste, price Behavioral: Usage rate Nonuser, light user, heavy user

10. Business markets are often segmented on the basis of: • Customer location. • Type of business customer,including: • Industry • Size • Purchase organization structure • Purchase criteria/motivation

11. Table 6-2 - Segmentation Bases for Business Markets Customer location: Typical market segments Region Southeast Asia, Central America, Upper Midwest, Atlantic Seaboard Locations Single buying site, multiple buying sites Customer type: Size Sales volume, number of employees Industry SIC code Organization structure Centralized or decentralized; group or individual decision Purchase criteria Quality, price, durability, lead time Type of use Resale, component part, ornamental Transaction conditions: Buying situation Straight rebuy, modified rebuy, new buy Usage rate Nonuser, light user, heavy user Purchasing procedure Competitive bidding, lease, svc. contracts Order size Small, medium, large Service requirements Light, moderate, heavy

12. A Segmentation Example Female department store shoppers have been classified into 5 types, based on demographics, values, and attitudes. The groups and their descriptive names are: • 1. Fashion Statements—most affluent and educated, use credit cards, expect to be treated well by retail personnel. • 2. Wanna-buys—similar to Fashion Statements but with less income. Enjoy buying on impulse. • 3. Family Values—represent large families, often are professionals, buying focuses on children or the home. • 4. Down to Basics—most likely to have children, not college educated, careful spenders, prefer not to use credit, like coupons. • 5. Matriarchs—older, often retired, they like department stores but are risk averse and have few purchase plans.

13. SOCIAL AND GROUP FORCES Culture Subculture Social class Reference groups Family and households PSYCHOLOGICAL FORCES Motivation Perception Learning Personality Attitude INFORMATION Commercial sources Social sources SITUATIONAL FACTORS When consumers buy Where consumers buy Why consumers buy Conditions under which consumers buy BUYING-DECISION PROCESS Need recognition Identification of alternatives Evaluation of alternatives Purchase and related decisions Postpurchase behavior

14. Buying Behavior • Buying Decision • Influencers • Decision-makers • Payers • Users • Buying Habits • When they buy • Where they buy--Patronage motive • How they buy

15. Table 5-1 - Value of family purchases influenced by children aged 4-12 Category Millions of dollars Food & beverages $110,320 Entertainment 25,260 Clothing 17,540 Automobiles 17,740 Electronics 6,400 Health & beauty 3,500 Other 5,570 Total 187,740 Source: James U. McNeal, “Tapping the Three Kids’ Markets,” American Demographics, April, 1998, pp. 37-41.

16. For many purchases the most important decision is selecting a retail store. The choice is based on patronage motives that are determined by factors such as: • Merchandise assortment • Services offered • Store appearance • Sales personnel • Mix of other shoppers • Location convenience • Service speed • Merchandise availability • Crowding • Prices

17. Maslow’s Hierarchy of Needs/Motives SELF-ACTUALIZATION Needs for self-fulfillment ESTEEM Needs for self-respect, reputation, prestige, and status BELONGING AND LOVE Needs for affection, belonging to a group, and acceptance SAFETY Needs for security, protection, and order PHYSIOLOGICAL Needs for food, drink, sex, and shelter

18. Positioning • Positioning is how the company/product is to be perceived versus competition. • There are three steps in the positioning process: • Select The Story. • Identify the Competitive Advantage that most effectively conveys the position. • Coordinate the marketing mix components to convey a consistent position. • Perception: How people think about our company/product. Is it what we want it to be? • Examples: Movado, BMW, IBM, Wal-Mart, Bill Clinton

19. Perceptual MapHow Customers Think About Your Product “When people buy my product, it gives them the feeling of ______?” Status/Expensive Calvin Klein Gap Comfortable Durable Levi Unoccupied position Wrangler Practical/Inexpensive

20. The Competitive Advantage • The Competitive Advantage is the basis upon which companies and products compete. • It explains how your company/product is different/better than the competition • Strong brands have a strong Competitive Advantage

21. Finding Competitive Advantages Areas to create/search for Competitive Advantage Price Place Promotion Product Brand Story Execution