MT 219 Marketing Unit Four Segmentation and Targeting Products and Branding Note: This seminar will be recorded by the instructor.

MT 219 Marketing Unit Four Segmentation and Targeting Products and Branding Note: This seminar will be recorded by the instructor.

Review of Unit 3 How did Unit 3 go? Questions or concerns? Instructor suggestions for Unit 4- Pay particular attention to segmentation for the Unit 6 Research Project Questions?

Customer Driven Marketing Strategy Four stage process that segments, targets, differentiates and positions a product Segmentation- Basic Process: Heterogeneous Market  Segmentation  Homogeneous Sub-Markets Targeting- Selecting the best segments to focus on Differentiating- Create unique benefits for target segments Positioning- Placing product into customer’s minds compared to competition.

Unit 4 – Market Segmentation and Targeting

Market Segmentation

Market – The set of actual and potential customers.

Target Market

Target Market Segmentation 1.Identify appropriate strategy 2.Determine segmentation variables 3.Develop segment variables 4.Evaluate segments 5.Select specific segments

Major Segmentation Strategies Undifferentiated – Single product and single strategy for entire market – requires homogeneous market. Differentiated- Two or more segments each with its own marketing mix Concentrated – Single segment, one strategy Micromarketing- products tailored to individuals or smaller local areas

Target Marketing The definition of target marketing is the process of evaluating each market segments attractiveness and selecting one or more segments to enter. Kotler -Differentiated -Concentrated -Undifferentiated

Market Segmentation Our text defines market segmentation, as the process of diving a total market into groups with relatively similar product needs to design a marketing mix that matches those needs.

Why should a business segment a market?

Demographic variables  Age  Occupation  Gender  Family size  Race  Family life cycle  Ethnicity  Religion  Income  Social Class  Education Geographic variables  Region  State size  Urban, suburban,  Market density rural  Climate  City size  Terrain  County size Psychographics variables  Personality attributes  Motives  Lifestyles Behaviorist variables  Volume usage  End use  Benefit expectations  Brand loyalty  Price sensitivity

Geographic Variable Climate Terrain City size Urban/rural values Market Density Geo-demographic Segmentation Micromarketing

Demographic Variables – closely related to needs and measurable Age Gender Race Ethnicity Income Education Occupation Family size Family life cycle Religion Social class Sexual orientation

Psychographic Variables Social class Lifestyle -Achievers -Strivers -Survivors Personality -Compulsive -Romantic -Authoritarian -Enthusiastic

Behavioral Segmentation Variables Most Powerful Variables Underlies all other segmentation variables These relate most directly to consumer desires How the product benefits the consumer directly Examples- -Occasions -Loyalty -Usage rates

Which Segment Variables to Use? Marketers are not likely to use just one segment variable Market segments often combine multiple variables together to create a desirable target segment Which variables might be combined to create a segment for- -Harley Davidson Motorcycles/ -Prada Shoes?

Criteria for Effective Segmentation 1. Measurable- Must be quantifiable 2. Accessible- You must be able to reach them 3. Substantial- Must be large enough so company benefits 4. Differentiable- Segment must respond differently 5. Actionable- Company must be capable of marketing to identified segments

Positioning Where the product lives in the mind of the consumer as it relates to the competition Identify and select appropriate competitive advantages for the product Combine competitive advantages to develop an overall positioning strategy -More for More -More for the same -More for less -The same for less -Less for much less

What is a Product? Anything that is offered to a market to fulfill a need or want good service idea place person

Classifying Consumer Products Convenience – relatively inexpensive, frequently purchased items with many substitutes. Don’t confuse with a convenience store. Shopping – items for which buyers are willing to spend considerable effort to compare and purchase. Don’t confuse with what you buy when just shopping Specialty - products with unique characteristics for which consumers are willing to expend effort Unsought – items people do not know of or do not think about buying. Many times due to emergency needs. Also, many impulse items.

Services Intangible products involving a deed, performance, or effort that cannot be physically possessed -Haircuts -Concerts -Tax preparation -Annual doctors’ physicals

Nature of Services Intangibility Inseparability Variability Perishability Let’s look at these individually

Issues related to service intangibility Difficult for customers to evaluate No physical possession Difficult to advertise and display Pricing is problematical and subjective Service process not always protected by patents

Issues related to service inseparability Does not allow for mass production Customer participation required Other customers can affect process Difficult to distribute

Issues related to variability Quality difficult to control Standardization is a problem Services vary from provider to provider Services can vary from the same provider Reputation is crucial Franchises try to emphasize service homogeneity Reason for grading rubrics

Issues related to service perishability Services cannot be stored or inventoried Unused capacity is lost forever Demand may be time sensitive Balancing supply and demand is difficult

Branding- Brand Equity The marketing and financial value associated with a brand’s strength in a market brand name awareness brand loyalty perceived brand quality brand associations

Selecting a Brand Name Easy to pronounce, spell and remember Trademarkable Distinctive Conveys brand benefits Travels globally- Big concern today

Types of Brands National (Manufacturer’s) brands Store (Private) brands Licensing

Brand Development Line extensions- new forms, sizes, fragrances, etc are created in existing product line Brand extensions – use of existing brand on a new category, such as extending from a rock singer into acting Multibrands- use of different brand names by one company. Nestle or Proctor and Gamble New Brands- Creating entirely new brands

Branding Brand: An identifying name, term, design, or symbol. Before marketing became a household word, branding and advertising were simply ways to publicize and identify one’s products.

Brand loyalty in 3 stages There are several important concepts when talking about branding. Marketers measure brand loyalty in 3 stages: brand recognition, brand preference, and brand insistence.

Brand recognition Brand recognition is consumer awareness and identification of a brand. Brand recognition is important. Advertising is one way to increase brand recognition.

Brand loyalty The second level of brand loyalty is called brand preference. Brand preference is a consumer’s reliance on previous experiences with a product to choose that product again.

Brand Insistence Marketers also measure brand loyalty by “brand insistence”. Brand insistence is a consumer’s refusal for alternatives. This is considered the ultimate stage in brand loyalty.

Packaging and Labeling Packaging and Labeling Functions : Protecting the product, to deter shoplifting, to provide functional convenience, inventory control, and promotion of the product.

Any Questions? Thank you for attending! See you next week! Instructor will post the link to the recording of tonight’s seminar in the course Announcements.