1. McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.

2. Explain what market segmentation is and when to use it.
LEARNING OBJECTIVES (LO) After reading Chapter 9, you should be able to:
LO1
Explain what market segmentation is and when to use it.
Identify the five steps involved in segmenting and targeting markets.
LO2
Recognize the factors used to segment consumer and organizational markets.
LO3
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Market Segmentation

3. Explain how marketing managers position products in the marketplace.
LEARNING OBJECTIVES (LO) After reading Chapter 9, you should be able to:
Develop a market-product grid to identify a target market and recommend resulting actions.
LO4
LO5
Explain how marketing managers position products in the marketplace.
Describe three approaches to developing a sales forecast for an organization.
LO6
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Market Segmentation

4. The Affluent Asian Adult
The Multiple Faces
Five distinct groups of affluent adults in ten Asian countries today
“Work to lives” (28%)
“Gimmes” (25%)
“Executive Warriors” (21%)
“HUMmers (15%)
“Luxury Loyalist” (12%)
Source: Synovate Survey
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Opening Story – Market Segmentation

5. The Affluent Asian Adult The “Executive Warriors”
Executive Warriors are frequent users of , instant messaging, and blackberry products
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Opening Story – Market Segmentation

6. Product Differentiation
Market Segmentation
Nature & Meaning
Market Segmentation
Market Segments
Product Differentiation
Segmentation: Linking Needs to Actions
LO1
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What is Market Segmentation

7. FIGURE 9-1 Market segmentation links market needs to an organization’s marketing program through marketing mix actions
LO1
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What is Market Segmentation

8. FIGURE 9-2 Market-product grid showing how different pillows reach different segment of sleepers
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What is Market Segmentation

9. When & How to Segment Markets
Market Segmentation
When & How to Segment Markets
1. One Product and Multiple Market Segments
2. Multiple Products and Multiple Market Segments
3. Segments of One: Mass Customization
LO1
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What is Market Segmentation

10. Harry Potter One Product and Multiple Market Segments LO1
What Market Segmentation is this?
One Product and Multiple Market Segments
LO1
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What is Market Segmentation

11. When & How to Segment Markets
Market Segmentation
When & How to Segment Markets
Segments of One: Mass Customization
Customer Relationship Management (CRM)
Mass Customization
Build-to-Order (BTO)
LO1
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What is Market Segmentation

12. What Market Segmentation is this? Segments of One: Mass CustomizationLG
What Market Segmentation is this?
Segments of One: Mass Customization
LO1
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What is Market Segmentation

13. Segmenting & Targeting Markets
A Five-Step Approach
FIGURE 9-3 The five key steps in segmenting and targeting markets that link market needs to a firm’s marketing program
LO2
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Five Steps in Segmenting & Targeting Markets

14. Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments
Simplicity and Cost-Effectiveness of Assigning Potential Buyers to Segments
Potential for Increased Profit
Similarity of Needs of Potential Buyers Within a Segment
Difference of Needs of Buyers Among Segments
Potential of a Marketing Action to Reach a Segment
LO3
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Factors used to segment consumer & organisational markets

15. FIGURE 9-4 Segmentation variables and breakdowns for consumer markets
Customer Characteristics
Buying Responses
LO3
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Factors used to segment consumer & organisational markets

16. Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments
Ways to Segment Consumer Markets – Customer Characteristics
Geographic customer characteristic
Demographic customer characteristic
Psychographic customer characteristic
LO3
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Factors used to segment consumer & organisational markets

17. Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments
Ways to Segment Consumer Markets – Buying Responses
Product Features
Usage Rate or Frequency Marketing
80/20 Rule
LO3
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Factors used to segment consumer & organisational markets

18. FIGURE 9-5 Patronage of fast-food restaurants by adults 18 years and older
LO3
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Factors used to segment consumer & organisational markets

19. FIGURE 9-6 Comparison of various kinds of users and nonusers for Wendy’s, Burger King, and McDonald’s fast-food restaurants
LO3
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Factors used to segment consumer & organisational markets

20. Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments
Behavioral Variables to Use in Forming Segments
Students
Dorms, Sororities, & Fraternities
Day Commuters
Apartments
Night Commuters
Nonstudents
Faculty & Staff
Workers in Area
Residents in Area
Visitors
LO3
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Factors used to segment consumer & organisational markets

21. Firms’ Colour Copying Problems
What variables can Xerox use for segmentation?
LO3
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Factors used to segment consumer & organisational markets

22. FIGURE 9-7 Segmentation variables and breakdowns for organizational markets
LO3
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Factors used to segment consumer & organisational markets

23. Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments
Ways to Segment Organizational Markets
Geographic customer characteristic
Statistical Areas
LO3
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Factors used to segment consumer & organisational markets

24. Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments
Ways to Segment Organizational Markets
Demographic customer characteristic
SICS Code
Number of employees
LO3
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Factors used to segment consumer & organisational markets

25. Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments
Ways to Segment Organizational Markets
Benefits sought
product features
LO3
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Factors used to segment consumer & organisational markets

26. Segmenting & Targeting Markets
Step 2: Grouping Products into Categories
So that buyers can relate to them
Product groups/lines
E.g. Aisles in supermarkets
LO3
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Factors used to segment consumer & organisational markets

27. Segmenting & Targeting Markets
Step 3: Market-Product Grid & Size of Markets
Market-Product Grid
Forming a Market-Product Grid
Estimating Market Sizes
LO4
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Developing a Market-Product Grid and marketing actions for a target market

28. Segmenting & Targeting Markets
Step 3: Market-Product Grid & Size of Markets
FIGURE 9-8 Selecting a target market for your restaurant next to an urban university (target market is shaded)
LO4
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Developing a Market-Product Grid and marketing actions for a target market

29. Segmenting & Targeting Markets Step 4: Selecting a Target Market
Criteria to Use in Selecting Target Markets
Market Size
Expected Growth
Competitive Position
Cost of Reaching Segment
Compatibility with Organizational Goals and Resources
LO4
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Developing a Market-Product Grid and marketing actions for a target market

30. Segmenting & Targeting Markets
Step 4: Selecting a Target Market
Note the 2 different sets of criteria
in market segmentation process:
Criteria for Segmenting Market
(Step 1)
Criteria for Targeting
Market
(Step 4)
LO4
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Developing a Market-Product Grid and marketing actions for a target market

31. Segmenting & Targeting Markets Step 4: Selecting a Target Market
Choose the Products & Segments
No Breakfast
Four Student Segments Only
LO4
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Developing a Market-Product Grid and marketing actions for a target market

32. Segmenting & Targeting Markets
Step 5: Taking Marketing Actions to reach Target Market
Your restaurant’s segmentation strategy
Day Commuters
Between-Meal Snacks
Dinners to Night Commuters
LO4
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Developing a Market-Product Grid and marketing actions for a target market

33. FIGURE 9-9 Advertising actions to reach specific student segments (an entire market segment vs. a narrow niche)
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Developing a Market-Product Grid and marketing actions for a target market

34. Segmenting & Targeting Markets
Step 5: Taking Marketing Actions to reach Target Market
Apple’s Ever-Changing
Segmentation Strategy
Market-Product Synergies: A Balancing Act
Marketing Synergies
Product Synergies
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Developing a Market-Product Grid and marketing actions for a target market

35. Apple’s Segmentation Strategy
Marketing Matters
Apple’s Segmentation Strategy
From an unfocused, disorganised ‘camp runamok’ to a superbly segmented market strategy
LO4
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Developing a Market-Product Grid and marketing actions for a target market

36. Product Repositioning
Product Positioning
Two Approaches
Product Positioning
Product Repositioning
Two Approaches to Product Positioning
Head-to-Head Positioning
Differentiation Positioning
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Positioning Products in the Marketplace

37. Product Positioning Product Positioning
Two Approaches
Product Positioning
Identify Important Attributes for a Product Class
Judgments of Existing Brands on These Important Attributes
Ratings of an Ideal Product’s or Brand’s Attributes
LO5
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Positioning Products in the Marketplace

38. How can dairies put more zip into chocolate milk sales?
Product Positioning
Two Approaches
Perceptual Map
Repositioning Chocolate Milk for Adults
How can dairies put more zip into chocolate milk sales?
LO5
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Positioning Products in the Marketplace

39. FIGURE 9-10 Using positioning and perceptual map to increase milk sales to children and adult
Nutrition, premium, and indulgence are used to position chocolate milk to adults
LO5
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Positioning Products in the Marketplace

40. Sales Forecasting Sales Forecast Market Potential Industry Potential
Three Approaches
Market Potential
Sales Forecast
Industry Potential
Company Forecast
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Three Approaches to developing a Sales Forecast

41. Judgments of the Decision Maker
Sales Forecasting
Three Approaches
Judgments of the Decision Maker
Direct Forecast
Lost-Horse Forecast
Surveys of Knowledgeable Groups
Lost-Horse Forecast: Curiously named. In order to find a lost horse, you would go to the last known location, assess options, and move towards where you think it may go. For the lost-horse forecast, you use the last known sales numbers of the product, list some factors/events which may affect the number, and decide whether numbers will improve or degrade, and by how much.
Survey of Buyers’ Intentions Forecast
Salesforce Survey Forecast
LO6
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Three Approaches to developing a Sales Forecast

42. Sales Forecasting Statistical Methods Trend Extrapolation
Three Approaches
Statistical Methods
Trend Extrapolation
Linear Trend Extrapolation
LO6
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Three Approaches to developing a Sales Forecast

43. FIGURE 9-12 Linear trend extrapolation of sales revenues at Xerox (made at the start of 2000)
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Three Approaches to developing a Sales Forecast