McGraw-Hill/Irwin Essentials of Contemporary Advertising Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved. chapter four Segmentation, Targeting, and the Marketing Mix

4-2 Objectives_1  Describe the role of marketing in creating satisfying exchanges  Explain the role of advertising in communicating a product’s utility  Identify the various methods advertisers use to segment and aggregate consumer and business markets

4-3 Objectives_2  Discuss how target marketing affects the firm’s advertising strategy  Describe the elements of the marketing mix and the role of advertising in the mix  Explain the purpose and importance of branding

4-4 Marketing and Exchange The purpose of marketing is to create exchanges that satisfy the perceived needs and wants of individuals and organizations

4-5 Consumer Needs & Product Utility Utility is the product’s ability to satisfy both functional needs and symbolic wants

4-6 Types of Utility Form Task Possession Time Place Psychic

4-7 Market Segmentation  Identifying groups of people with similarities  One or more groups become target market –Hardee’s Thickburger campaign targets young men

4-8 Segmentation Variables Geographic BehavioristicPsychographic Demographic

4-9 Region County size Climate City or SMSA size Density Geographic Segmentation Variables

4-10 Geographic Segmentation

4-11 Behavioristic Segmentation Variables  Purchase Occasion  Benefits Sought  User Status  Usage Rate  Loyalty Status  Readiness Stage  Marketing-Factor Sensitivity

4-12 Exhibit 4-2 Usage Rates Vary For Different Products

4-13 Demographic Segmentation Variables  Age  Gender  Family life cycle  Family size  Education  Religion  Race/Nationality  Income  Occupation

4-14 Exhibit 4-3 Ad Spending Growth in U.S. Hispanic Media

4-15 Psychographics LifestylesPersonality ValuesAttitudes

4-16 Exhibit 4-5 The VALS classification system segments according to resources and decision-making motivation

4-17 Segmenting Business Markets Government agencies Other institutions Wholesalers Manufacturers Retailers Banks

4-18 Exhibit 4-7 Clarita’s PRIZM NE This shows how PRIZM NE classifies prospects in the Chicago area by census tract. Each area is labeled by shared characteristics.

4-19 Product Place Price Promotion The Marketing Mix

4-20 Exhibit 4-8 Product Life Cycle Objectives change as the product proceeds From one state to the next

4-21 Extending the Product Life Cycle

4-22 Exhibit 4-9 Product Classifications By market By consumption rate By purchasing habits By physical description Consumer goods Durable goodsConvenience goods Packaged goods Industrial goods Nondurable goods Shopping goods Hard goods ServicesSpecialty goods Soft goods Unsought goods Services

4-23 Perceptible differences Hidden differences Induced differences Product Differentiation

4-24 Product Branding  Individual brand  Family brand  National brands  Private labels  Licensed brands

4-25 Brand Equity Brand2004 Value (in billions) Coca-Cola$67.39 Microsoft61.37 IBM53.79 GE44.11 Intel33.50 Disney27.11 McDonald’s25.00 Nokia24.04 Toyota22.67

4-26 Distribution Intensive Selective Exclusive

4-27 Marketing Communications Factors important for advertising success –Strong primary demand –Chance for product differentiation –Hidden qualities of high importance to consumers –Opportunity to use strong emotional appeals –Substantial sums available to support advertising

4-28 Key Terms_1  Behavioristic segmentation  Benefits  Benefit segmentation  Brand  Brand equity  Branding  Business markets  Communication element  Cooperative advertising  Copy points  Decline stage  Demographic segmentation  Direct distribution  Distribution channel  Distribution element  Early adopter  Exchange

4-29 Key Terms_2  Exclusive distribution  Family brand  Four Ps  Geodemographic segmentation  Geographic segmentation  Growth stage  Hidden differences  Individual brand  Induced differences  Intensive distribution  Introductory phase  Licensed brand  Market segmentation  Marketing communications  Marketing mix  Maturity stage

4-30 Key Terms_3  National brand  Network marketing  North American Industry Classification System (NAICS) codes  Perceptible differences  Position  Price element  Primary demand  Primary motivation  Private label  Product concept