Market Segmentation and Targeting

1. Principles of Marketing Unit 4 Market Segmentation and Targeting Instructor: Safaa S. Y. Dalloul

2. Elements of Lecture • Marketing Segmentation • Level of Market Segmentation • Segmenting Consumer Market • Descriptive Characteristics • Behavioral Segmentation • Segmenting Business Market • Market Targeting • Effective Segmentation Criteria • Evaluating and Selecting the Market Segments

3. Marketing Segmentation

4. Marketing Segmentation • Mass marketing is the maximum exposure of product advertising to consumers. It's the opposite of niche marketing. • In mass marketing, the seller engages in the mass production, mass distribution, and mass promotion of one product for all buyers

5. Marketing Segmentation • Micromarketing is a type of marketing strategy that has to do with targeting specific customers within a niche market. • Most companies are turning to micromarketing at one of four levels: segments, niches, local areas, and individuals.

6. Marketing Segmentation • So we distinguish between car buyers who are primarily seeking low-cost basic transportation, those seeking a luxurious driving experience, and those seeking driving thrills and performance.

7. Level of Market Segmentation

8. Level of Market Segmentation • Segment Marketing • Market Segment: consists of a group of customers who share a similar set of needs and wants. • Marketer doesn’t create the segment but identify & target it.

9. Level of Market Segmentation • Segment Marketing Creaminess Sweetness Patterns of Market Segmentation

10. Level of Market Segmentation • Niche Marketing • Group of customers seeking a distinctive mix of benefits who are ready to pay extra premium. • Marketers usually identify niches by dividing a segment into sub segments.

11. Level of Market Segmentation • Niche Marketing • For example, Progressive, a Cleveland auto insurer, sells "nonstandard" auto insurance to risky drivers with a record of auto accidents, charges a high price for coverage and makes a lot of money in the process.

12. Level of Market Segmentation • Niche Marketing Traits • Distinct needs. • Less Competition • Niche has size, profit and growth potential. • Pay Premium ROLLS ROYCE CAR

13. Level of Market Segmentation • Local Marketing • Marketing programs tailored to the needs and wants of local customer groups (trading areas, neighborhoods, even individual stores). • Example: Spiderman Movie Part 3 was released in 5 different language in India.

14. Level of Market Segmentation • Customerization • Ultimate segmentation – segments of 1 or customized marketing or one to one marketing. • Today customers are taking more individual initiative in determining what and how to buy. • HW: Compare between segments of 1, customized marketing and one to one marketing.

15. Level of Market Segmentation • Customerization • Customers log onto the Internet; • Look up information and evaluations of product or service offers. • Dialogue with suppliers, users, and product critics. • Design the product they want.

16. Level of Market Segmentation • Customerization • Customerization empowers consumers to design the product and service offering of their choice.

17. Level of Market Segmentation • Customerization • A company is customized when it is able to respond to individual customers by customizing its products, services, and messages on a one-to-one basis. • Customerization is certainly not for every company: It may be very difficult to implement for complex products such as automobiles. Customierzation can raise the cost of goods by more than the customer is willing to pay.

18. Segmenting Consumer Market

19. Segmenting Consumer Market • Two broad groups of variables are used to segment consumer markets. • Descriptive characteristics: geographic, demographic, and psychographic. • Behavioral considerations, such as consumer responses to benefits, use occasions, or brands.

20. Segmenting Consumer Market • Regardless of which type of segmentation scheme is employed, the key is that the marketing program can be profitably adjusted to recognize customer differences.

21. Segmenting Consumer Market • Descriptive Characteristics • Geographic Segmentation • Demographic Segmentation • Psychographic Segmentation • Behavioral Segmentation

22. Segmenting Consumer Market • Descriptive Characteristics • Geographic Segmentation • Geographic segmentation calls for dividing the market into different geographical units such as nations, states, regions, counties, cities, or neighborhoods.

23. Segmenting Consumer Market • Descriptive Characteristics • Geographic Segmentation • The company can operate in one or a few areas, or operate in all but pay attention to local variations. • Ex.- Mcdonalds globally, sell burgers aimed at local markets, for example, burgers are made from lamb in India rather then beef because of religious issues. In Mexico more chilli sauce is added and so on.

24. Segmenting Consumer Market • Descriptive Characteristics • Geographic Segmentation • Demographic Segmentation • In demographic segmentation, the market is divided into groups on the basis of variables such as age, family size, family life cycle, gender, income, occupation, education, religion, race, generation, nationality, and social class.

25. Segmenting Consumer Market • Descriptive Characteristics • Geographic Segmentation • Demographic Segmentation • There are several reasons for the popularity of demographic variables to distinguish customer groups.

26. Segmenting Consumer Market • Descriptive Characteristics • Geographic Segmentation • Demographic Segmentation • One reason is that consumer needs, wants, and usage rates and product and brand preferences are often associated with demographic variables. Another is that demographic variables are easier to measure.

27. Segmenting Consumer Market Income Age Generation Life Stage Gender Demographic Variables Social Class

28. Segmenting Consumer Market Age Social Class

29. Segmenting Consumer Market Life Stage Social Class

30. Segmenting Consumer Market Gender Social Class

31. Segmenting Consumer Market Income Social Class

32. Segmenting Consumer Market Generation

33. Segmenting Consumer Market Social Class Social Class

34. Segmenting Consumer Market • Descriptive Characteristics • Geographic Segmentation • Demographic Segmentation • Psychographic Segmentation • Psychographics is the science of using psychology and demographics to better understand consumers. • In psychographic segmentation, buyers are divided into different groups on the basis of psychological/personality traits, lifestyle, or values.

35. Segmenting Consumer Market • Descriptive Characteristics • Geographic Segmentation • Demographic Segmentation • Psychographic Segmentation • People within the same demographic group can exhibit very different psychographic profiles.

36. Segmenting Consumer Market • Behavioral Segmentation: In behavioral segmentation, buyers are divided into groups on the basis of their knowledge of, attitude toward, use of, or response to a product. • Decision Roles: It is easy to identify the buyer for many products.

37. Segmenting Consumer Market • People play five roles in a buying decision: Initiator, Influencer, Decider, Buyer, Users. • Different people are playing different roles, but all are crucial in the decision process and ultimate consumer satisfaction. HW: Explain the five roles that people play in a buying decision?

38. Segmenting Consumer Market • Behavioral Variables • Many marketers believe that behavioral variables- occasions, benefits, user status, usage rate, loyalty status, buyer-readiness stage, and attitude-are the best starting points for constructing market segments.

39. Segmenting Consumer Market • Behavioral Variables | Occasions • Occasions can be defined in terms of the time of day, week, month, year, or in terms of other well-defined temporal aspects of a consumer's life. • Marketers also can try to extend activities associated with certain holidays to other times of the year.

40. Segmenting Consumer Market • Behavioral Variables | Occasions • For instance, while Christmas, Mother's Day, and Valentine's Day are the three major gift-giving holidays, these and other holidays account for just over half of the gifters' budgets. • That leaves the rest available throughout the year for occasion-driven gift-giving: birthdays, weddings, anniversaries, housewarming, and new babies.

41. Segmenting Consumer Market • Behavioral Variables | Benefits • Buyers can be classified according to the benefits they seek. Even car drivers who want to stop for gas may seek different benefits.

42. Segmenting Consumer Market • Behavioral Variables | User Status • Markets can be segmented into nonusers, ex-users, potential users, first-time users, and regular users of a product. • Blood banks cannot rely only on regular donors to supply blood; they must also recruit new first-time donors and contact ex-donors.

43. Segmenting Consumer Market • Behavioral Variables | Usage Rate • Markets can be segmented into light, medium, and heavy product users. Heavy users are often a small percentage of the market but account for a high percentage of total consumption.

44. Segmenting Consumer Market • Behavioral Variables | Buyer- Readiness Stage • A market consists of people in different stages of readiness to buy a product. Some are unaware of the product, some are aware, some are informed, some are interested, some desire the product, and some intend to buy. The relative numbers make a big difference in designing the marketing program.

45. Segmenting Consumer Market • Behavioral Variables | Loyalty Status • Buyers can be divided into four groups according to brand loyalty status: • Hard-core loyals - Consumers who buy only one brand all the time. • Split loyals - Consumers who are loyal to two or three brands. • Shifting loyals - Consumers who shift loyalty from one brand to another. • Switchers - Consumers who show no loyalty to any brand.

46. Segmenting Consumer Market • Behavioral Variables | Attitude • Five attitude groups can be found in a market: enthusiastic, positive, indifferent, negative, and hostile.

47. Segmenting Business Market • Bases for Segmenting Business Markets • Business markets can be segmented with some of the same variables used in consumer market segmentation, such as geography, benefits sought, and usage rate, but business marketers also use other variables.

48. Segmenting Business Market • Demographic • Industry: Which industries should we serve? • Company size: What size companies should we serve? • Location: What geographical areas should we serve?

49. Segmenting Business Market • Operating Variables • Technology: What customer technologies should we focus on? • User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers? • Customer capabilities: Should we serve customers needing many or few services?

50. Segmenting Business Market • Purchasing Approaches • Purchasing-function organization: Should we serve companies with highly centralized or decentralized purchasing organizations? • Power structure: Should we serve companies that are engineering dominated, financially dominated, and soon?