Identifying Market Segments and Targets 8 Identifying Market Segments and Targets Marketing Management, 13th ed

Chapter Questions What are the different levels of market segmentation? How can a company divide a market into segments? How should a company choose the most attractive target markets? What are the requirements for effective segmentation? Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-2

Effective Targeting Requires… Identify and profile distinct groups of buyers who differ in their needs and preferences Select one or more market segments to enter Establish and communicate the distinctive benefits of the market offering marketing positioning Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-3

Four levels of Micromarketing Segments: a group of customers who share similar needs and wants Niches; narrow customer group seeking a distinctive mix of benefits (Avis) Local Marketing (grassroots marketing); target market is leading to marketing program tailored to the needs and wants of local customers Individuals; customization Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-4

What is a Market Segment? A market segment consists of a group of customers who share a similar set of needs and wants. Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-5

Flexible Marketing Offerings Naked solution: Product and service elements that all segment members value; Airline offer economy passengers soft drink & a seat Discretionary options: Some segment members value options but not all ; but charge for meal ,snakes Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-6

Preference Segments Homogeneous preferences exist when consumers want the same things Diffused preferences exist when consumers want very different things Clustered preferences when natural segments from groups with shared preferences emerged. Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-7

What is Customerization? Customerization combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice. Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-8

Segmenting Consumer Markets Geographic : table 8.1 Demographic: table 8.1 Psychographic Behavioral Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-9

Demographic Segmentation Age and life cycle; Life stage; single ,married, family, Gender; male ; female Income Generation; Social class Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-10

Behavioral Segmentation Behavioral Variables Occasions Benefits User Status Usage Rate Buyer-Readiness aware Loyalty Status; Attitude; positive Decision Roles Initiator Influencer Decider Buyer User Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-11

The Brand Funnel Illustrates Variations in the Buyer-Readiness Stage Aware Ever tried Recent trial Occasional user Regular user Most often used Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-12

Loyalty Status Hard-core: one brand all time Split loyals : loyal to two or three brand Shifting loyals: who shift from one brand to another Switchers: who show no loyalty to any brand Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-13

Figure 8.3 Behavioral Segmentation Breakdown Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-14

Segmenting for Business Markets table 8.2 Demographic; type, size and location Operating variable; technology; capabilities Purchasing approaches; Situational factors; quick; specific or size of order Personal characteristics; similar, taking risk or loyal Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-15

Steps in Segmentation Process Need-based segmentation: group customers based on similarity needs Segment identification: identify the base of segmentation Segment attractiveness: growth, competitive intensely Segment profitability: Segment positioning Segment acid test; test the attractiveness of each segment Market mix strategy; 4ps Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-16

Effective Segmentation Criteria Measurable: size ,purchasing power Substantial: large & profitable Accessible: reached Differentiable: different needs Actionable: effective program can be formulated Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-17

Evaluating Target Market Selection Single –Segment concentration: Volkswagen Selective Specialization : PG Crest for women Product Specialization: Microscopes for Universities laboratories, government and other labs Market Specialization: serving many needs for particular segment Full market coverage: Microsoft ; soft ware market Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-18

Evaluating Target Market Selection Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-19

Evaluating Target Market Selection Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-20

Figure 8.4 Patterns of Target Market Selection Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-21