5 Marketing Management SECTION 1 7th Edition Market Segmentation menu Chapter Five Market Segmentation Process Meeting the Consumers Needs Consumer Market Segmentation Segmentation Timing Psychographic Segmentation – VALS 2 Geodemographic Segmentation Product Positioning Segmentation Strategies Evaluation of Strategy Target Market Questions The Authors C H A P T E R F I V E Marketing Management 7th Edition J. Paul Peter James H. Donnelly, Jr. 5 Market Segmentation McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.

5 SECTION 1 Market Segmentation DETERMINE CONSUMER NEEDS AND WANTS menu SECTION 1 Chapter Five Market Segmentation Process Meeting the Consumers Needs Consumer Market Segmentation Segmentation Timing Psychographic Segmentation – VALS 2 Geodemographic Segmentation Product Positioning Segmentation Strategies Evaluation of Strategy Target Market Questions The Authors Market Segmentation DETERMINE CONSUMER NEEDS AND WANTS DIVIDE MARKETS ON RELEVANT DIMENSIONS DEVELOP PRODUCE POSITIONING 5 DECIDE SEGMENTATION STRATEGY DESIGN MARKETING MIX STRATEGY

5 SECTION 1 Meeting the Consumer Needs menu SECTION 1 Chapter Five Market Segmentation Process Meeting the Consumers Needs Consumer Market Segmentation Segmentation Timing Psychographic Segmentation – VALS 2 Geodemographic Segmentation Product Positioning Segmentation Strategies Evaluation of Strategy Target Market Questions The Authors Meeting the Consumer Needs Successful marketing strategies depend on meeting consumer needs and wants > Seek to discover broad variety of unmet needs > Operate within your firm’s need satisfaction activities > Need and wants usually are translated into more operational concepts 5

5 SECTION 1 Consumer Market Segmentation Demography Sociography menu SECTION 1 Chapter Five Market Segmentation Process Meeting the Consumers Needs Consumer Market Segmentation Segmentation Timing Psychographic Segmentation – VALS 2 Geodemographic Segmentation Product Positioning Segmentation Strategies Evaluation of Strategy Target Market Questions The Authors Consumer Market Segmentation Customers can be divided or segmented by using . . . Geography Demography Sociography Behavior 5

5 SECTION 1 Segmentation Timing Priority Segmentation menu SECTION 1 Chapter Five Market Segmentation Process Meeting the Consumers Needs Consumer Market Segmentation Segmentation Timing Psychographic Segmentation – VALS 2 Geodemographic Segmentation Product Positioning Segmentation Strategies Evaluation of Strategy Target Market Questions The Authors Segmentation Timing Priority Segmentation Segmentation is decided in advance of doing any research on a market Post hoc Segmentation - People are grouped into segments based on research findings 5

5 SECTION 1 Psychographic Segmentation menu SECTION 1 Chapter Five Market Segmentation Process Meeting the Consumers Needs Consumer Market Segmentation Segmentation Timing Psychographic Segmentation – VALS 2 Geodemographic Segmentation Product Positioning Segmentation Strategies Evaluation of Strategy Target Market Questions The Authors Psychographic Segmentation VALS 2 (“values and lifestyles”) Is based on two national surveys of 2,500 consumers who responded to 43 lifestyle questions. The first survey segmented the population and the second validated it 5

5 SECTION 1 VALS 2 - Eight American Lifestyles Abundant Resources menu SECTION 1 Chapter Five Market Segmentation Process Meeting the Consumers Needs Consumer Market Segmentation Segmentation Timing Psychographic Segmentation – VALS 2 Geodemographic Segmentation Product Positioning Segmentation Strategies Evaluation of Strategy Target Market Questions The Authors VALS 2 - Eight American Lifestyles ACTUALIZERS Abundant Resources Principle Oriented Status Oriented Action Oriented FULFILLEDS ACHIEVERS EXPERIENCERS BELIEVERS STRIVERS MAKERS 5 STRUGGLERS Minimal Resources FIGURE 5-4

5 SECTION 1 Geodemographic Segmentation PRIZM menu SECTION 1 Chapter Five Market Segmentation Process Meeting the Consumers Needs Consumer Market Segmentation Segmentation Timing Psychographic Segmentation – VALS 2 Geodemographic Segmentation Product Positioning Segmentation Strategies Evaluation of Strategy Target Market Questions The Authors Geodemographic Segmentation PRIZM Potential Ranking Index by Zip Markets PRIZM assumes that similar customers live within the same or proximate neighborhood(s) PRIZM classifies every U.S. neighborhood into one of 62 distinct types or clusters of consumers PRIZM helps marketers understand customers in selected markets 5

5 SECTION 1 Product Positioning menu SECTION 1 Chapter Five Market Segmentation Process Meeting the Consumers Needs Consumer Market Segmentation Segmentation Timing Psychographic Segmentation – VALS 2 Geodemographic Segmentation Product Positioning Segmentation Strategies Evaluation of Strategy Target Market Questions The Authors Product Positioning Positioning can be achieved according to selected attributes or functions. Positioned by use or application Positioned in terms of particular types of users Positioned relative to a product class 5

5 SECTION 1 Market Segmentation Strategies menu SECTION 1 Chapter Five Market Segmentation Process Meeting the Consumers Needs Consumer Market Segmentation Segmentation Timing Psychographic Segmentation – VALS 2 Geodemographic Segmentation Product Positioning Segmentation Strategies Evaluation of Strategy Target Market Questions The Authors Market Segmentation Strategies The firm may decide not to enter the market The firm may not decide to segment but to be a mass marketer When? > The market is so small it’s not profitable to market to one portion of it > Heavy users comprise so much of sales they are the only relevant target > Dominant brand does not need segmentation 5

5 SECTION 1 Market Evaluation Measures 3Ms of market evaluation . . . menu SECTION 1 Chapter Five Market Segmentation Process Meeting the Consumers Needs Consumer Market Segmentation Segmentation Timing Psychographic Segmentation – VALS 2 Geodemographic Segmentation Product Positioning Segmentation Strategies Evaluation of Strategy Target Market Questions The Authors Market Evaluation Measures 3Ms of market evaluation . . . Measurable – large enough to measure size and characteristics Meaningful – large enough to deliver sufficient sales and growth potential Marketable – can be reached and served in an efficient manner 5

5 SECTION 1 Market Evaluation Questions Questions MEASURABILITY menu SECTION 1 Chapter Five Market Segmentation Process Meeting the Consumers Needs Consumer Market Segmentation Segmentation Timing Psychographic Segmentation – VALS 2 Geodemographic Segmentation Product Positioning Segmentation Strategies Evaluation of Strategy Target Market Questions The Authors Market Evaluation Questions MEASURABILITY Questions What are the appropriate bases for segmenting this market and can they be measured? Are secondary data available so this can be done inexpensively? If primary data are needed, will there be a return on investment? Are specific names/addresses needed? Can purchases by this segment be measured and tracked? 5

5 SECTION 1 Market Evaluation Questions Questions MEANINGFULNESS menu SECTION 1 Chapter Five Market Segmentation Process Meeting the Consumers Needs Consumer Market Segmentation Segmentation Timing Psychographic Segmentation – VALS 2 Geodemographic Segmentation Product Positioning Segmentation Strategies Evaluation of Strategy Target Market Questions The Authors Market Evaluation Questions MEANINGFULNESS Questions How many people are in this market and how frequently will they purchase the product? What market share can we expect? What is the growth potential How strong is the competition and is it likely to change? How satisfied are the consumers in this market with current offerings? 5

5 SECTION 1 Market Evaluation Questions Questions MARKETABILITY menu SECTION 1 Chapter Five Market Segmentation Process Meeting the Consumers Needs Consumer Market Segmentation Segmentation Timing Psychographic Segmentation – VALS 2 Geodemographic Segmentation Product Positioning Segmentation Strategies Evaluation of Strategy Target Market Questions The Authors Market Evaluation Questions MARKETABILITY Questions Can this segment be reached with current channels of distribution? Can we establish new channels efficiently, if needed? What promotion media does this segment read, listen to, or watch? Can we afford to promote to this segment and is there a media to reach them? Are people in this segment willing to pay a price necessary for profit? Can we produce a product for this market profitably? 5

5 SECTION 1 The Authors menu J. Paul Peter, Ph.D. Chapter Five Market Segmentation Process Meeting the Consumers Needs Consumer Market Segmentation Segmentation Timing Psychographic Segmentation – VALS 2 Geodemographic Segmentation Product Positioning Segmentation Strategies Evaluation of Strategy Target Market Questions The Authors The Authors J. Paul Peter, Ph.D. University of Wisconsin – Madison 3Click image to go to author’s web site James H. Donnelly, Jr., Ph.D. University of Kentucky – Lexington 3Click image to go to author’s web site 5 Marketing Management 7th Edition – McGraw-Hill 3Click on the book to go to the book site PowerPoint design by Lance Fuhrer, MBA PowerPoint content by Larry Fuhrer, MBA, MBA Keller Graduate School of Management of DeVry University