1. Market Segmentation and Target Markets
chapter 7
Harcourt, Inc.

2. Objectives
Understand the concepts: market, segmentation, and target markets
Learn the advantages and disadvantages of target marketing
Explain the steps in target market selection
Dr. Rosenbloom

3. Objectives
Discuss segmentation criteria, strategies, bases, and information sources
Understand market profiling and positioning strategies
Discuss differences for business and international marketing
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4. What is a market? Individuals or organizations who:
Are willing, able, and capable of purchasing a firm’s product
Segmentation is critical because demand is often heterogeneous
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5. What is market segmentation?
Process of dividing a large market into smaller target markets, or customer groups with similar needs and/or desires
Dr. Rosenbloom

6. Market Segmentation Continuum of Market Segmentation Size Mass Market
Niche
Micro-marketing
The Individual
Continuum of Market Segmentation Size
Personal-ization
Micro-marketing
Niche
Standardized Marketing Mix
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7. Target Marketing Advantages
Easier analysis of potential and actual consumers
Tailoring of products to market
Assessment of demand potential
Identify competing products
Increased sales effectiveness and cost efficiencies
Product positioning and easy identification of opportunities
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8. Target Marketing Disadvantages Increased marketing costs
Personalization can become burdensome to manage
Faux segmentation may be viewed cynically
Narrow segmentation can impact brand loyalty
Ethics and stereotyping issues
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9. Target Market Selection
Identify Total Market
Determine Need for Segmentation
Determine Bases for Segmentation
Assess Potential Profitability of Segment and Select Target Segment
Profile Each Selected Segment
Select Positioning Strategy
Develop and Implement Appropriate Marketing Mix
Monitor, Evaluate and Control
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10. Market Criteria Segmentable markets are: Heterogeneous Measurable
Substantial
Actionable
Companies must be able to respond to preferences with an appropriate marketing mix
Accessible
Market must be efficiently reachable
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11. External Factors Stage in product life cycle Competition
Product specific issues
Market for the product
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12. Segmentation Variables
Demographic Segmentation
Benefits-Sought Segmentation
Geographic Segmentation
Situation Segmentation
Psychographic Segmentation
Behavior/Usage Segmentation
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13. Demographic Segmentation
Income Level
Age
Family
Ethnicity
Education
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14. Demographic Segmentation
Age
Some products are marketed to specific age groups
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15. Demographic Segmentation
Age
Some products are marketed to specific age groups
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16. Demographic Segmentation
Income Level
Some products are marketed to consumers with different income levels
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17. Demographic Segmentation
Income Level
Some products are marketed to consumers with different income levels
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18. Demographic Segmentation
Bartles and James
Hal Riney and Partners
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19. Demographic Segmentation
Family
Some products are marketed to consumers with special family consideration
Family Life Cycle
Bachelor, marriage, married with children, retired, etc.
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20. Functions Of Advertising
KinderCare
The Martin Agency
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21. Demographic Segmentation
Family
Some products are marketed to consumers with special family consideration
Family Life Cycle
Bachelor, marriage, married with children, retired, etc.
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22. Demographic Segmentation
Education
Some products are marketed to consumers with certain educational levels
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23. Demographic Segmentation
Ethnicity
Some products are marketed to consumers from specific ethnic backgrounds
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24. Demographic Segmentation
Ethnicity
Some products are marketed to consumers from specific ethnic backgrounds
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25. Segmentation Variables
Demographic Segmentation
Benefits-Sought Segmentation
Geographic Segmentation
Situation Segmentation
Psychographic Segmentation
Behavior/Usage Segmentation
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26. Geographic Segmentation
When an organization localizes its marketing efforts to accommodate the unique needs of specific geographic regions
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27. Geographic Segmentation
When an organization localizes its marketing efforts to accommodate the unique needs of specific geographic regions
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28. Geographic Segmentation
Metropolitan Statistical Areas
An urbanized area of 50,000 and a total metropolitan area population of at least 100,000
Charlottesville, Virginia
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29. Geographic Segmentation
Primary Metropolitan Statistical Areas
An urbanized county or cluster of counties with a population of more than 1 million
Gary/Hammond, Indiana
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30. Geographic Segmentation
Consolidated Metropolitan Statistical Area
A metropolitan area that includes at least two PMSAs
Baltimore, Maryland and Washington, D.C.
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31. Segmenting Consumer Markets
Demographic Segmentation
Benefits-Sought Segmentation
Geographic Segmentation
Situation Segmentation
Psychographic Segmentation
Behavior/Usage Segmentation
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32. Psychographic Segmentation
Grouping customers together based on social class, lifestyles and psychological characteristics (attitudes, interests and opinions)
PRIZM analysis from Claritas
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33. Segmenting Consumer Markets
Demographic Segmentation
Benefits-Sought Segmentation
Geographic Segmentation
Situation Segmentation
Psychographic Segmentation
Behavior/Usage Segmentation
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34. Benefits-Sought Segmentation
Markets can be segmented based on the benefits that consumers desire from using a specific product
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35. Benefits-Sought Segmentation
American Pork Council
Bozell, Incorporated
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36. Segmenting Consumer Markets
Demographic Segmentation
Benefits-Sought Segmentation
Geographic Segmentation
Situation Segmentation
Psychographic Segmentation
Behavior/Usage Segmentation
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37. Situation Segmentation
Purchase situation or occasion
Physical surroundings
Social surroundings
Temporal perspective
How much time to make a purchase?
Task definition
Pre-purchase attitude
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38. Segmenting Consumer Markets
Demographic Segmentation
Benefits-Sought Segmentation
Geographic Segmentation
Situation Segmentation
Psychographic Segmentation
Behavior/Usage Segmentation
Dr. Rosenbloom

39. Behavior/Usage Segmentation
Markets can be segmented by how often or how heavily consumers use a specific product
80/20 Principle - 80% of revenue generated by 20% of customers
Light Users
80%
Heavy Users
20%
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40. Segmentation Data Internal sources External sources
In-house customer and marketing databases
Data mine to explore patterns and relationships in collected data
External sources
Lists of catalog/magazine subscribers
U.S. Census information
Mediamark, CACI Marketing Systems, etc.
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41. Positioning Strategy Differentiation through:
Price/quality - emphasize value in terms of quality, price, or both
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42. Positioning Strategy Differentiation through: Differentiation through:
Product attributes - characteristics as a positioning base
Product usage - positioning based on a products typical use
Differentiation through:
Symbol - use of a symbol or icon to position a product in the consumer consciousness
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43. Positioning Strategy Differentiation through:
Product user - the typical user of a product
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44. Positioning Strategy Differentiation through:
Product class - positioning against another type of product or product class
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45. Positioning Strategy Differentiation through:
Competition - comparisons to a product’s competition (directly or indirectly)
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46. Segmenting Business Markets
Demographics
Industry size, growth potential, etc.
Operating Characteristics
Technology, brand-user status, etc.
Purchasing Approaches
Purchasing policies, size of orders, etc.
Dr. Rosenbloom

47. Segmenting Business Markets
Product Use or Usage Situation
The way the product will be used and customer service levels required
Situational Factors
Urgency, special product uses
Buyer’s Personal Characteristics
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48. Segmenting Global Markets
Economic
Stage of development in a host country
Political/Legal
Regulations and laws
Cultural
Language barriers, differences in consumer customs
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49. Segmenting Global Markets
Some segments transcend national borders
Rich around the world
Older and comfortable
Indulged kids
Emerging middle class
Women employed outside the house
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50. Market Segmentation Differentiated Concentrated Undifferentiated
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51. Differentiated Marketing
An organization targets multiple market segments and develops segment specific mixes
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52. Concentrated Marketing
When an organization concentrates its marketing efforts on a smaller segment of a larger market
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53. Undifferentiated Marketing
An organization develops one strategy appropriate for all members of the total market
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