IDENTIFYING MARKET SEGMENTS & TARGET Prepared for: Universitas Ciputra IDENTIFYING MARKET SEGMENTS & TARGET CHAPTER 8 PHILLIP KOTLER & KEVIN LANE KELLER

Marketing Process

Steps in Target Marketing Market Segmentation 1. Identify bases for segmenting the market 2. Develop segment profiles Market Targeting 3. Develop measure of segment attractiveness 4. Select target market Market Positioning 5. Develop positioning for target segment 6. Develop a marketing mix for each segment Market Segmentation: Dividing a market into distinct groups of buyers on the basis of needs, characteristics, or behavior who might require separate products of marketing mixes Market Targeting: The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter Market Positioning: Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumer; eg. 7-up the Uncola Positioning: customers’perception about a brand or how marketer wants its customers think about them Example: Seven Up, in competing with string brands in soft drink market (Coca Cola and Pepsi) positioned it self as the uncola through its tagline “Seven-up: the uncola”. Position is not only about something shown in tagline or slogan, but it can in term of action marketer takes. Positioning needs to be supported by a solid differentiation. Positioning is not only about promise but also gaining customers' trust PDB (position differentiation brand) Brand needs to be clearly positioned in customers’mind hence the brand has a clear brand identity. Positioning yang didukung oleh diferensiasi yang solid akan menghasilkan brand integrity yang kuat. Brand integrity yang kuat ini pada gilirannya, akan menghasilkan brand image yang kuat. Dan pada akhirnya, brand image yang kuat akan memperkuat Brand itu sendiri. New wave marketing by hermawan kartajaya p. 140

Level of Market Segmentation Mass Marketing (no segmentation) Segment Marketing Niche Marketing Micro Marketing (Complete Segmentation)

Segmenting Consumer Market World region, Country region, City or metro size, Density, Climate Geographic Age and life cycle, Life stage, Gender, Family size, Family life-cycle, Income, Occupation, Education, Generation, Nationality, Social class Demographic Lifestyle, Personality, Values Psychographic Occasions, Benefits, User status, Usage rate, Loyalty Status, Readiness status, Attitude toward product Behavioral

Behavioral Segmentation Breakdown Target Market Unaware Aware Not Tried Negative Opinion Neutral Favorable Opinion Tried Rejector Not yet repeated Repeated Loyal to other brand Switcher Loyal to brand Light user Regular user Heavy user

Segmenting Business Market [1] Demographic Industry Industry to serve Company Size Size of company to serve Location Geographic area to serve Operating Variables Technology Customer technology should we focus on User-nonuser status Serve heavy, medium, light or non-user Customer capability Serve customer needing many or few services Purchasing Approaches Purchasing function organization Serve companies with highly centralized or decentralized purchasing organization? Power structure Serve companies that are engineering dominated, financing dominated, or so on? Nature of existing relationship Serve companies with which we have strong relationship or simply go after the most desirable one? General purchase policies Serve company that prefers leasing, service contract, system purchased, sealed bidding (tender) Purchasing criteria Serve company that focus oriented to quality? service? price?

Segmenting Business Market [2] Situational factors Urgency Focus on company that needs quick and sudden delivery or service Specific application Focus on company that prefer certain application of our product or all application Size of order Focus on company with small or large orders Personal characteristics Buyer-seller similarity Focus on company which people and values are similar to ours Attitude toward risk Focus on company that is risk-taking or risk-averse Loyalty Focus on company that shows high loyalty to their suppliers

Step in Segmentation Process Needs-based segmentation Segment identification Segment attractiveness Segment profitability Segment positioning Segment “Acid Test” Marketing-mix strategy Group customers into segments based on similar needs Determine which demographics, lifestyle, and usage behavior make the segment distinct and identifiable Determine the overall attractiveness of each segment (market growth, market access, etc) Determine segment profitability Create segment storyboard to test the attractiveness of each segment positioning strategy Create a value proposition& product-price positioning strategy Expand segment positioning strategy to include all aspects of the marketing mix

Effective Segmentation Criteria Measurable Substantial Accessible Differentiable Actionable Measurable: the size, purchasing power, characteristic can be measured Substantial: the segment is large and profitable enough to be served Accessible: it is easy for the company for entering the segment market Differentiable: the segment’s are conceptually distinguishable and respond differently to different marketing mix elements and program Actionable: attractive program can be formulated for attracting and serving the segment

Selecting and Evaluating Market Segment P1 P2 P3 M1 M2 M3 P1 P2 P3 M1 M2 M3 P1 P2 P3 Single-segment concentration Selective specialization Product specialization M1 M2 M3 P1 P2 P3 M1 M2 M3 P1 P2 P3 Market specialization Full-market Coverage

Additional Consideration Ethical choice of market target Segment-by- segment invasion plan Intersegment cooperation