FIGURE 9-1 FIGURE 9-1 Market segmentation—linking market needs to an organization’s marketing program

WHY SEGMENT MARKETS? What Market Segmentation Means  How Reebok’s Segmentation Strategy Developed  Using Market-Product Grids Using Market-Product Grids

FIGURE 9-2 FIGURE 9-2 Market-product grid showing how different Reebok shoes reach segments of customers with different needs

FIGURE 9-3 FIGURE 9-3 The five key steps in segmenting and targeting markets link market needs of customers to the organization’s marketing program

STEPS IN SEGMENTING AND TARGETING MARKETS Step 1: Group Potential Buyers into Segments Potential for Increased Profit  Criteria to Use in Forming the Segments Similarity of Needs of Buyers within a Segment Simplicity and Cost of Assigning Buyers to Segments Difference of Needs of Buyers Among Segments Potential of a Marketing Action to Reach a Segment

STEPS IN SEGMENTING AND TARGETING MARKETS Step 1: Group Potential Buyers into Segments  Ways to Segment Consumer Markets Customer Characteristics  Geographic: Region  Demographic: Household  Psychographic: Lifestyle

STEPS IN SEGMENTING AND TARGETING MARKETS Step 1: Group Potential Buyers into Segments  Ways to Segment Consumer Markets Buying Situations Frequency Marketing 80/20 Rule 80/20 Rule  Benefits Sought: Product Features  Usage/Patronage: Usage Rate Usage/Patronage: Usage Rate

FIGURE 9-B FIGURE 9-B Segmentation variables and breakdowns for U.S. consumer markets

FIGURE 9-C FIGURE 9-C Patronage of fast-food restaurants by adults 18 years and older: Simmons Market Research Bureau NCS/NHCS Spring 2004 Adult Full-Year Choices System Crosstabulation Report

STEPS IN SEGMENTING AND TARGETING MARKETS Step 1: Group Potential Buyers into Segments  Variables to use in Forming Segments Students in Dorms Students in Apartments Day Commuters Night Commuters Faculty/Staff People Living in Area People Working in Area

STEPS IN SEGMENTING AND TARGETING MARKETS Step 2: Group Products to be Sold into Categories Step 3: Develop a Market-Product Grid and Estimate Size of Markets

FIGURE 9-5 FIGURE 9-5 Selecting a target market for your Wendy’s fast-food restaurant next to an urban university (target market is shaded)

STEPS IN SEGMENTING AND TARGETING MARKETS Step 4: Select Target Markets  Criteria to Use in Picking the Target Segments Market Size Expected Growth Cost of Reaching Segment Compatibility with the Organization’s Objectives and Resources Competitive Position  Choose the Segments

STEPS IN SEGMENTING AND TARGETING MARKETS  Your Wendy’s Segmentation Strategy Day Commuters Between-Meal Snacks Dinner to Night Students Step 5: Take Marketing Actions to Reach Target Markets

Wendy’s How can Wendy’s target different market segments with different advertising programs?

FIGURE 9-6 FIGURE 9-6 Advertising actions to reach specific student segments