Market Segmentation and Market Targeting

1. Market Segmentation and Market Targeting Introduction

2. Instructional Goals: • To understand what it means to "segment" a market • The basic steps in segmenting a market • How you know if you have done a good job of segmentation • How to evaluate and select segments for targeting of marketing programs

3. Marketers can target their products to customers in four distinct ways • Mass marketing • Segment or product-variety marketing • Target (both niche and local) marketing • Individual marketing

4. Mass Marketing Mass marketing aims to attract all kinds of buyers by producing and distributing the one best product at the lowest possible price

5. Segment Marketing Segment or product-variety marketing aims to serve large identifiable groups by offering a limited array of good products at a variety of prices

6. Target Marketing Target (both niche and local) marketing aims to please identifiable clusters of customers by providing products that are carefully tailored to match group means and tastes

7. Individual Marketing Individual or marketing aims to satisfy individual customers by providing products that are precisely tailored to match individual means and tastes

8. Target marketing is where we are today The key steps in target marketing are • Market segmentation • Market evaluation • Product differentiation and positioning.

9. Market segmentation Market segmentation means dividing mass markets into distinct groups of buyers with relatively homogeneous tastes, preferences, or behaviors that distinguish them from the rest of the market.

10. Market Evaluation Market evaluation = assessing the sales potential of each segment and selecting segments most suitable for exploitation. Sales potential is a function of the number of people in the segment, their disposable incomes, and their willingness to pay for product attributes -- given the organization’s ability to serve them. Indicators: size, growth rate, price sensitivity, current usage in the product category, etc.

11. Market Positioning A product's position is defined by how consumers view it on important attributes -- the "rank" a product holds in the consumer’s mind Marketers can position products by users, by usages, by price and/or quality, according to product attributes or benefits received, against a single competitor, against many competitors, or against an entire product category.

12. Video Case 1: Patagonia • How does Patagonia exemplify the marketing concept? The societal marketing concept? • What type of marketing strategy has Patagonia pursued? • How has Patagonia responded to the forces in the macro-environment? • Are the critics right? Or will Patagonia’s actions help reduce consumption?

13. Buying Power Index: DishwasherManufacturer

14. Index Numbers : • The number of households and appliance sales were given in the Survey of Buying Power data. • The number earning $25,000+ a year was given in percentage form and multiplied by the number of households in each market. • The number aged 25-34 and 35-49 were given in percentage form. These were added for each market and multiplied by population. • Columns b, c, d, and e were added across to get a sum of factors for each market. • The sums of factors were added downward. • Each sum of factor was divided by the total to get an index number (or percent).