Market Targeting and Segmentation

Market Targeting Market Segmentation Definitions Target Market －The group of customers (people or organisations) at whom the seller intends to aim its marketing efforts Market Segmentation Market Segmentation dividing a heterogeneous group of buyers into a more homogeneous group with relatively similar product needs.

Market Segmentation Why segment the market? 1. Better service to meet customer needs 2. Compete more effectively and efficiently 3. Achieve organisational goals

Market Segmentation - 1. Increased production costs What are the disadvantages to Segmentation? - 1. Increased production costs - 2. Increased promotion expenditures - 3. Increased inventory costs - 4. Increased administration costs

Market Segmentation The Keys to Successful Segmentation? - 1. The segment must be Measurable - 2. The segment must be Accessible - 3. The segment must be Responsive - 4. The segment must be Substantial - 5. The segment must be Defensible

Market Targeting Definitions Market Targeting The act of evaluating and selecting segments and positioning your product

Market Targeting Market Positioning Definitions Market Positioning The place the product holds in the mind of the consumer

The Steps in Market Segmentation, Targeting and Positioning

Market Targeting Methods 1. Identify Bases for Segmenting the Market - 1. Geographic - by regional, city, local, density or climate

Market Segmentation Methods - 2. Demographic - age, gender, family size, family life cycle, income, occupation, education, religion, race or nationality

Market Targeting Methods 1. Identify Bases for Segmenting the Market - 3. Psychographic - social class, lifestyle, or personality - 4. Behaviouristic - based on the behaviour of the consumers

Market Targeting Methods 1. Identify Bases for Segmenting the Market 4. Behaviouristic- -Purchase occasion - Regular occasion, special occasion (e.g., flowers) -benefits sought - quality, service, economy e.g.,autos, refrigerators -user status - Non-user,ex-user,potential user,first-time user,e.g.drug rehabilitation -Usage rate - light user, medium user, heavy user, e.e.,beer -loyalty status - none,medium,strong and absolute,e.g.,political parties,Holdens

Market Targeting Methods 1. Identify Bases for Segmenting the Market 4. Behaviouristic - - Readiness Stage - aware, interested, desire, action, - Attitude Toward Product - enthusiastic, positive, indifferent, negative, hostile, e.g., political economic packages

Market Targeting Methods 2. Develop Profiles of the Resulting Segments -A. Attitudes, Interests and Opinions (Cultural, Sports,etc.) -B. Lifestyles Categorisations (Yuppie, DINK, Green) -C. Statistical Clustering Techniques (Math Categories)

Market Targeting Methods 3. Develop Measures of Segment Attractiveness -A. How Many Segments Should be Covered? -i Undifferentiated Marketing- Apply marketing mix to target entire market -ii Concentrated Marketing - Apply marketing mix to one segment -iii Multiple Segmentation Apply various marketing mixes to various market segments

Market Targeting Methods 3. Develop Measures of Segment Attractiveness B. Choosing a Market Coverage Strategy -i. Company Resources -ii. Product homogeneity (Commodities vs. value Added) -iii.Product Stage in Product Life Cycle

Market Targeting Methods 3. Develop Measures of Segment Attractiveness -C. Identifying Attractive Segments -Market Demand = # of buyers x quantity purchased /yr x price

Demand Estimate Normally, to calculate demand a firm must perform market research Use government records to get figures related to population, special interest groups Demand is calculated by using segmentation variables to reduce the number of buyers starting from a population

Demand Estimate Palm VII Personal Assistants

Demand Estimate Palm VII Population of Perth = 1,000,000 X Number of Computer users (.2) Behavioristic variable X Number of Business Professions needing Mobile Organizer (.5) Demographic - occupation X Market Share of Palm VII (.3) Marketing variable X Income large enough to afford (.1) Demographic variable X Price of $1000 = $3,000,000

Market Targeting Methods 4. Select Target Markets -Make selections based on corporate goals(i.e.., high market share, profit, ROI)

Market Targeting Methods 5. Select a Positioning Strategy for Each Target Segment -Multidimensional Scaling - statistical technique for plotting product positioning

MDS Example _____________________________ Economy _____________________________ Toyota Corolla Ford Capri Holden Commodore Sporty __________________________________________________ Conventional Mazda MX5 Saab Mazda RX-7 Volvo Porsche Mercedes Benz High Price

Market Targeting Methods 6. Develop a Marketing Mix for Each Target Segment You will determine what price, promotion method, product configuration and distribution method to use with each profile developed.

Computer Market Segment Description