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LO 9-3 LO 9-2 LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 9, YOU SHOULD BE ABLE TO: LO 9-1 Explain what market segmentation is and when to use it. Identify the five steps involved in segmenting and targeting markets. Recognize the bases used to segment consumer and organizational (business) markets. 9-2

LO 9-5 LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 9, YOU SHOULD BE ABLE TO: LO 9-4 Develop a market-product grid to identify a target market and recommend resulting marketing actions. Explain how marketing managers position products in the marketplace. 9-3

ZAPPOS.COM’S STRATEGY: SEGMENTS + SERVICE = “WOW”  A Clear Market Segmentation Strategy  Delivering WOW Customer Service 9-4

 Product Differentiation  Market Segmentation  Market Segments  Segmentation: Linking Needs to Actions  The Zappos Segmentation Strategy WHY SEGMENT MARKETS? WHAT MARKET SEGMENTATION MEANS LO

FIGURE 9-1 FIGURE 9-1 Market segmentation links market needs to an organization’s marketing program through marketing mix actions 9-6

FIGURE 9-2 FIGURE 9-2 A market-product grid shows the kind of sleeper that is targeted for each of the bed pillows with a different firmness  Using Market-Product Grids 9-7

WHY SEGMENT MARKETS? WHEN AND HOW TO SEGMENT MARKETS LO 9-1  One-Size-Fits-All Mass Markets No Longer Exist  One Product and Multiple Market Segments  Multiple Products and Multiple Market Segments 9-8

Sporting News Baseball Yearbook What market segmentation strategy is used? LO

WHY SEGMENT MARKETS? WHEN AND HOW TO SEGMENT MARKETS LO 9-1  Segments of One Mass Customization Build-to-Order (BTO) 9-10

WHY SEGMENT MARKETS? WHEN AND HOW TO SEGMENT MARKETS LO 9-1  The Segmentation Tradeoff: Synergies vs. Cannibalization “Tiffany/Walmart” Strategies Organizational Synergy Cannibalization 9-11

FIGURE 9-3 FIGURE 9-3 The five key steps in segmenting and targeting markets that link market needs to a firm’s marketing program 9-12

SEGMENTING AND TARGETING MARKETS STEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTS LO 9-2  Criteria to Use in Forming the Segments Similarity of Needs of Potential Buyers within a Segment Potential for Increased Profit Similarity of Needs of Potential Buyers within a Segment 9-13

SEGMENTING AND TARGETING MARKETS STEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTS LO 9-2  Criteria to Use in Forming the Segments Potential of a Marketing Action to Reach a Segment Difference of Needs of Buyers Among Segments 9-14

SEGMENTING AND TARGETING MARKETS STEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTS LO 9-3  Ways to Segment Consumer Markets Geographic Segmentation (88%) Demographic Segmentation (53%) 9-15

SEGMENTING AND TARGETING MARKETS STEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTS LO 9-3  Ways to Segment Consumer Markets Psychographic Segmentation (43%) Behavioral Segmentation (65%)  Product Features  Usage Rate or Frequency Marketing  80/20 Rule 9-16

FIGURE 9-4 FIGURE 9-4 Segmentation bases, variables, and breakdowns for U.S. consumer markets 9-17

MARKETING MATTERS To Which “Flock” Do You Belong? LO

FIGURE 9-5 FIGURE 9-5 Patronage of fast-food restaurants by adults 18 years and older Source: Experian Marketing Services Simmons Winter 2013 Full Year Adult Survey 12-Month OneView SM Crosstabulation Report: Based on Visits within the Past 30 Days 9-19

Source: Experian Marketing Services Simmons Winter 2013 Full Year Adult Survey 12-Month OneView SM Crosstabulation Report: Based on Visits within the Past 30 Days FIGURE 9-6 FIGURE 9-6 Comparison of various kinds of users and nonusers for Wendy’s, Burger King, and McDonald’s fast-food restaurants 9-20

SEGMENTING AND TARGETING MARKETS STEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTS LO 9-3  Variables to Use in Forming Segments Students Nonstudents  Dorms, Sororities, & Fraternities  Faculty & Staff  Apartments  Day Commuters  Night Commuters  Residents in Area  Workers in Area 9-21

SEGMENTING AND TARGETING MARKETS STEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTS LO 9-3  Ways to Segment Organizational Markets Geographic Segmentation Demographic Segmentation Behavioral Segmentation 9-22

FIGURE 9-7 FIGURE 9-7 Segmentation bases, variables, and breakdowns for U.S. organizational markets 9-23

SEGMENTING AND TARGETING MARKETS STEP 2: GROUP PRODUCTS INTO CATEGORIES LO 9-3  Individual Wendy’s Products Breakfast  Groupings of Wendy’s Products: Meals Lunch Between Meal Snack Dinner After Dinner Snack 9-24

FIGURE 9-8 FIGURE 9-8 Wendy’s new products and innovations target specific market segments based on a customer’s gender, needs, or university affiliation 9-25

SEGMENTING AND TARGETING MARKETS STEP 3: DEVELOP A MARKET-PRODUCT GRID AND ESTIMATE THE SIZE OF MARKETS LO 9-4  Forming a Market-Product Grid FIGURE 9-A  Estimating Market Sizes: FIGURE 9-A 9-26

FIGURE 9-9 FIGURE 9-9 Selecting a target market for your Wendy’s fast-food restaurant next to an urban university (target market is shaded) 9-27

SEGMENTING AND TARGETING MARKETS STEP 4: SELECT TARGET MARKETS LO 9-4  Criteria to Use in Selecting Target Markets  Those That Divide a Market into Segments Two Types of Criteria  Those That Actually Pick the Target Segments 9-28

SEGMENTING AND TARGETING MARKETS STEP 4: SELECT TARGET MARKETS LO 9-4  Criteria to Use in Selecting Target Markets Market Size Expected Growth Competitive Position Cost of Reaching the Segment Organizational Compatibility 9-29

SEGMENTING AND TARGETING MARKETS STEP 4: SELECT TARGET MARKETS LO 9-4  Choose the Products & Segments No Breakfast Four Student Segments Only 9-30

SEGMENTING AND TARGETING MARKETS STEP 5: TAKE MARKETING ACTIONS LO 9-4  Wendy’s Segmentation Strategy Now Day Commuters Between-Meal Snacks Dinners to Night Commuters  Future Strategies for Wendy’s  Keeping an Eye on Competition 9-31

FIGURE 9-10 FIGURE 9-10 Advertising actions to market various meals to a range of possible market segments of students 9-32

SEGMENTING AND TARGETING MARKETS STEP 5: TAKE MARKETING ACTIONS LO 9-4  Apple’s Ever-Changing Segmentation Strategy Marketing Synergies  Market-Product Synergies: A Balancing Act Product Synergies Apple’s 1984 Ad 9-33

MARKETING MATTERS Apple’s Segmentation Strategy LO

POSITIONING THE PRODUCT LO 9-5  Product Positioning Head-to-Head Positioning  Product Repositioning  Two Approaches to Product Positioning Differentiation Positioning  Writing a Positioning Statement 9-35

POSITIONING THE PRODUCT LO 9-5 Identify Important Attributes for a Product or Brand Class  Product Positioning w/ Perceptual Maps Customers’ Ratings of Competing Products or Brands on These Attributes Customer’s Ratings of the Company’s Products or Brands on These Attributes Reposition the Company’s Products or Brands in the Minds of Consumers 9-36

POSITIONING THE PRODUCT LO 9-5  Perceptual Map  A Perceptual Map to Reposition Chocolate Milk for Adults Identify Important Attributes for Adult Drinks Discover How Customers See Chocolate Milk Reposition Chocolate Milk to Make It More Appealing to Adults Discover How Adults See Competing Drinks 9-37

FIGURE 9-B FIGURE 9-B A perceptual map of the location of beverages in the minds of American adults 9-38

FIGURE 9-11 FIGURE 9-11 The strategy American dairies are using to reposition chocolate milk to reach adults 9-39

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