© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 9-1

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 9-2 IDENTIFYING MARKET SEGMENTS AND TARGETS C HAPTER

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 9-3 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 1.Explain what market segmentation is, when to use it. 2.Identify the five steps involved in segmenting and targeting markets. 3.Recognize the different factors used to segment consumer and organizational markets.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 9-4 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 4.Know how to develop a market-product grid to identify a target market and recommend resulting actions. 5.Explain how marketing managers position products in the marketplace. 6.Describe three approaches to developing a sales forecast for a company.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin WHY SEGMENT MARKETS? Slide 9-7 What Market Segmentation Means  Market Segments Market Segments  Product Differentiation Product Differentiation  Segmentation: Linking Needs to Actions

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 9-10 FIGURE 9-2 FIGURE 9-2 Market-product grid showing how different Reebok shoes reach segments of customers with different needs

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Anheuser-Busch Budweiser Family –Budweiser (1876) –Bud Light (1982) –Bud (Light) Ice (1994) –Budweiser Select (2004)

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Anheuser-Busch Michelob Family –Michelob (1896) –Michelob Light (1978) –Michelob Amber Bock (1995) –Michelob Honey Lager (1997) –Michelob Ultra (2002) –Michelob Ultra Amber (2005)

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Anheuser-Busch Busch Family –Busch (1955) –Busch Light (1989) –Busch Ice (1995) Natural Family –Natural Light (1977) –Natural Ice (1995) –Natty Up (2005)

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Anheuser-Busch Non-Alc –O’Doul’s (1989) –O’Doul’s Amber (1998) –Busch NA (1994) Specialty –Bare Knuckle Stout (2003) –Anheuser World Lager (2003) –Tilt, Tequiza, ZiegenBock, malt liquors, energy drinks, Bacardi, etc.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Nissan USA Maxima Altima Sentra Versa Z Quest Armada Pathfinder Murano Titan Frontier Xterra (Infiniti)

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 9-24 FIGURE 9-4 FIGURE 9-4 Segmentation variables and breakdowns for U.S. consumer markets

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 9-30 FIGURE 9-7 FIGURE 9-7 Segmentation variables and breakdowns for U.S. organizational markets

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 9-43 MARKETING NEWSNET Apple’s Segmentation Strategy— Camp Runamok No Longer

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Group Activity Retail Stores that Sell Electronics A store that caters to businesses and organizations A store that caters to home theater enthusiasts A store that caters to mobile audio (auto) enthusiasts A store that caters to college students and young people

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Group Activity Retail Stores that Sell Electronics 1.Come up with a name for each business. 2.Come up with an advertising slogan for the business. 3.Short list of products/services available at each of the businesses.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 9-90 Market Segments Market segments are the relatively homogeneous groups of prospective buyers that result from the market segmentation process.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 9-91 Product Differentiation Product differentiation is a strategy that involves a firm’s using different marketing mix activities to help consumers perceive the product as being different and better than competing products.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 9-92 Market-Product Grid A market-product grid is a framework to relate the market segments of potential buyers to products offered or potential marketing actions by the firm.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 9-93 Synergy Synergy is the increased customer value achieved through performing organizational functions more efficiently.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 9-94 Usage Rate Usage rate is the quantity consumed or patronage (store visits) during a specific period of time.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide /20 Rule The 80/20 rule is a concept that suggests 80 percent of a firm’s sales are obtained from 20 percent of its customers.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 9-96 Product Positioning Product positioning refers to the place an offering occupies in consumers’ minds on important attributes relative to competitive products.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 9-97 Product Repositioning Product repositioning involves changing the place an offering occupies in a consumer’s mind relative to competitive products.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 9-98 Perceptual Map A perceptual map is a means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands relative to its own and then take marketing actions.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide 9-99 Market Potential Market potential is the maximum total sales of a product by all firms to a segment during a specified time period under specified environmental conditions and marketing efforts of the firm. Also called industry potential.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Industry Potential Industry potential is the maximum total sales of a product by all firms to a segment during a specified time period under specified environmental conditions and marketing efforts of the firm. Also called market potential.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Sales Forecast A sales forecast refers to the total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts. Also called company forecast.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Company Forecast A company forecast refers to the total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts. Also called sales forecast.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Direct Forecast A direct forecast involves estimating the value to be forecast without any intervening steps.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Lost-Horse Forecast A lost-horse forecast involves making a forecast using the last known value and modifying it according to positive or negative factors expected in the future.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Survey of Buyers’ Intentions Forecast A survey of buyers’ intentions forecast involves asking prospective customers if they are likely to buy the product during some future time period.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Salesforce Survey Forecast A salesforce survey forecast involves asking the firm’s salespeople to estimate sales during a coming period.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Trend Extrapolation Trend extrapolation involves extending a pattern observed in past data into the future.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinSlide Linear Trend Extrapolation Linear trend extrapolation involves using a straight line to extend a pattern observed in past data into the future.