1 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 Prepared by Deborah Baker Texas Christian University 7 Segmenting and Targeting Markets

2 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 Learning Objectives 1.Describe the characteristics of markets and market segments 2. Explain the importance of market segmentation 3. Discuss criteria for successful market segmentation

3 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 Learning Objectives (continued) 4. Describe the bases commonly used to segment consumer markets 5. Describe the bases for segmenting business markets 6. List the steps involved in segmenting markets

4 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 Learning Objectives (continued) 7. Discuss alternative strategies for selecting target markets 8.Explain one-to-one marketing 9.Discuss the forces that have influenced the emergence of one-to-one marketing

5 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 Learning Objectives (continued) 10. Discuss privacy issues related to one-to-one marketing 11.Explain how and why firms implement positioning strategies and how product differentiation plays a role

6 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 Market Segmentation Market Segment Market Segment Market Segmentation Market Segmentation People or organizations with needs or wants and the ability and willingness to buy A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. The process of dividing a market into meaningful, relatively similar, identifiable segments or groups. 1

7 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 A Market Is... (1) people or organizations with (2) needs or wants, and with (3) the ability and (4) the willingness to buy. A group of people that lacks any one of these characteristics is not a market. 1

8 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 The Importance of Market Segmentation 2 Market segmentation Market segmentation More precise definition of customers needs and wants More accurate marketing objectives Improved resource allocation Better marketing results

9 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 Criteria for Segmentation Substantiality Identifiability/ Measurability Identifiability/ Measurability Accessibility Responsiveness 8

10 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 Bases for Segmentation Usage Rate Benefits Sought Psychographics Demographics Geography Online 4

11 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 Family Life Cycle Age Marital Status Children 4

12 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 Bases for Psychographic Segmentation Personality Motives Lifestyles Geodemographics Online 4

13 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 Business Marketing Segmentation Company Characteristics Company Characteristics Buying Processes Buying Processes Customer Relationship Customer Relationship Segmentation Bases Online 5

14 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 Steps in Segmenting a Market Select a market for study Choose bases for segmen- tation Select descrip- tors Profile and analyze segments Select target markets Design, imple- ment, maintain mkting mix 6

15 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 Strategies for Selecting Target Markets Concentrated Strategy Undifferentiated Strategy Multisegment Strategy Online 7

16 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 What Is One-to-One Marketing? 8 Information-Intensive Long-Term Oriented One-to-One Marketing is... One-to-One Individualized Strong Relationships With a Goal of… Cost Reduction Profitability Personalized Customer loyalty

17 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 Forces Influencing One-to-One Marketing Demand for marketing accountability Emergence of new media alternatives Emergence of new media alternatives Declining brand loyalty More demanding, time-poor consumers More demanding, time-poor consumers More diverse society 9 Online

18 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 Effective Positioning 1.Assess the positions occupied by competing products 2.Determine the dimensions of these positions 3.Choose an effective market position Online 11

19 Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 7 Positioning Bases 11 Attribute Price and Quality Use or Application Product User Product Class Competitor Emotion