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Market Segmentation

Market Segmentation. Jeremy Kees, Ph.D. Segmentation, Targeting, and Positioning. Market Segmentation Market segment —a group of customers who share a similar set of needs and wants NOT to be confused with targeting and positioning. Our overall intent is to….

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Market Segmentation

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  1. Market Segmentation Jeremy Kees, Ph.D.

  2. Segmentation, Targeting, and Positioning • Market Segmentation • Market segment—a group of customers who share a similar set of needs and wants • NOT to be confused with targeting and positioning

  3. Our overall intent is to… • Identify groups of similar customers and potential customers • Prioritize the groups • Understand their behavior • Respond with appropriate marketing strategies that satisfy the different preferences of each chosen segment

  4. Segmentation, Targeting, and Positioning • The idea is that (typically) we can’t be all things to all people • There is not one product/service that is ideal for all consumers • Gladwell Talk….

  5. We can segment a market by… Geography • Dividing the market into different geographical units such as… • Region of the world or country • City or country size • Climate

  6. We can segment a market by… Demographics • Dividing the market based on… • age • gender • sexual orientation • family size • family life cycle • household type • income/expenditure patterns • occupation • education • socioeconomic status • religion • nationality/race/ethnic group

  7. We can segment a market by… Psychographics • Divide market based on… • Psychological traits • personality • lifestyles • values • attitudes

  8. Tom’s of Maine • Targeting a Specific Marketing Segment • Which segment?

  9. Psychographic Segmentation

  10. We can segment a market by… Product Characteristics / Behavior • Divide market based on knowledge of, attitude toward, use of, or response to a product • benefit sought • product usage rate • brand loyalty • product end use • readiness-to-buy stage

  11. How are these organizations segmenting the market?? • Oxygen.com • Kellogg's • Mabellene • Budweiser

  12. Segmenting based on one variable ….Claritas Example…

  13. Ok, we’ve segmented the market…. Now what? General Strategy Options (as they relate to target marketing) • Undifferentiated Marketing • Differentiated Marketing • Concentrated Marketing • Micromarketing

  14. Patterns of Target Market Selection

  15. Undifferentiated Marketing • Ignore segment differences and go after the whole market with one market offer • 1 Pricing strategy • 1 Promotional program aimed at everybody • 1 Type of product with little/no variation • 1 Distribution system aimed at entire market • What kinds of products can we use this strategy with?

  16. Differentiated Marketing • Operate in several market segments and design different programs for each segment P&G

  17. Multi-Segment Strategy • Perhaps the most effective segmentation strategy • Marriott.com

  18. Product Differentiation Results In… • Reduced Price Sensitivity • Fewer Direct Competitors • Drawbacks / Risks / Ethical Issues?? • Mini Cooper • Norelco

  19. Concentrated Marketing • It allows a firm to specialize because it can focus all energies on satisfying one group's needs • A firm with limited resources can compete with larger organizations • Can you think of when a concentration strategy is appropriate? • example

  20. Micromarketing • Most extreme form of segmentation • Also called one-to-one marketing or mass customization • Examples?

  21. Determinants of Targeting Strategy • Company Resources • Product Homogeneity • Stage in PLC • Competition

  22. Positioning A marketing strategy that emphasizes serving a specific market segment by achieving a certain position in buyers’ minds relative to the competition • Attributes • Price/quality • Competitors • Application • Product user • Product class

  23. Positioning • Oftentimes, positioning focuses on Points-of-difference (PODs) • The act of designing the company’s offering and image to occupy a distinctive place in the minds of the target market • Energizer • Duracell

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