1. Marketing
and
Segmentation

2. Suppose a teenage girl is looking for a pair of jeans.
What influences her?

3. Demographics
Psychographics
Perceptual clues
Symbolism
Past experience
Group dynamics
Rituals
Family
Reference groups
Race & ethnic factors
Social class
Subculture
Culture

4. Market Segmentation

5. “Smart marketing starts with smart segmentation.”
Jeffrey J. Fox

6. Target Market: A group of people or organizations which a business creates and maintains a marketing mix specifically designed to satisfy the needs of group members
Market Segment: Individuals, groups, or organizations with one or more similar characteristics that cause them to have similar product needs
Market Segmentation: The process of dividing a total market into groups with relatively similar product needs to design a marketing mix that matches those needs

7. Marketing Concept: “All marketing strategies should
be based on known customer
needs and or wants.”
Segmentation is the practical application of
marketing research and consumer behavior.

8. Reminder:
The “marketing mix” consists of:
Product
Price
Promotion
Distribution (Place)

9. Almost no one tries to sell
to everyone!

10. Major kinds of segmentation:
Undifferentiated marketing strategy:
Generic Differentiation
Same marketing mix for ALL segments
Overlooks segment differences
4-Ps designed for everyone
Advantage:
Concentrated resources

11. Major kinds of segmentation:
Undifferentiated marketing strategy:
Generic Differentiation
Same marketing mix for ALL segments
Overlooks segment differences
4-Ps designed for everyone
Disadvantage:
4-Ps for everyone?
Competing against focused firms

12. Concentrated
Undifferentiated

13. 2. Full-coverage marketing strategy:
Segmented Differentiation
Treat each segment as separate market
4-Ps designed for every market
Advantage:
Focus…

14. 2. Full-coverage marketing strategy:
Segmented Differentiation
Treat each segment as separate market
4-Ps designed for every market
Disadvantage:
Development costs
(must weigh increased costs
increased sale)

16. Concentrated
Undifferentiated

17. 3. Single Marketing Strategy:
Targeted Differentiation
Niche Marketing
Go after one segment (ethnic marketing)
Advantage: Sharp focus… good expertise
efficiency… high profits
gives smaller firms a chance
good place to start

18. 3. Single Marketing Strategy:
Targeted Differentiation
Niche Marketing
Go after one segment (ethnic marketing)
Disadvantage:
More risk… eggs in one basket
Competition can wipe you out

19. 4. Concentrated marketing strategy: Hybrid Differentiation
Single product to several segment
5. Micromarketing
Local marketing and individual marketing
Mass Customization
Build-to-Order (BTO)

20. Concentrated
Undifferentiated

21. Which is this?
8-21

22. To work, segments must have: 1. Substantiality
Must be large enough
enough money, customers, etc
enough room to grow

23. Basic marketing rule: The best product, best prices, and
best business in the world
will fail if there are no customers!

24. Basic marketing rule: The best product, best prices, and
best business in the world
will fail if there are no customers!

25. To work, segments must have: 2. Identifiablity
Must be able to identify segment
and measure it

26. To work, segments must have: 3. Reachability
Must be accessible
must be actionable
(can action be taken?)

27. The Segmentation Tradeoff: Synergies vs. Cannibalization
Organizational Synergy
Increased customer value through efficient
marketing and manufacturing
Cannibalization
“Tiffany/Walmart” Strategies
two-tier products
8-27

28. The five key steps in segmenting and targeting markets that link market needs to a firm’s marketing program
8-28

30. Segments should be based on what people VALUE!
Ryan Hamilton

31. Five Steps in Market Segmentation

32. Criteria to Use in Forming the Segments
Step 1.
Criteria to Use in Forming the Segments
Simplicity and Cost-Effectiveness of assigning potential buyers to Segments
8-32

33. Criteria to Use in Forming the Segments
Step 1.
Criteria to Use in Forming the Segments
Simplicity and Cost-Effectiveness of assigning potential buyers to Segments
Potential for increased Profit
8-33

34. Criteria to Use in Forming the Segments
Step 1.
Criteria to Use in Forming the Segments
Simplicity and Cost-Effectiveness of assigning potential buyers to Segments
Potential for increased Profit
Similarity of needs of potential buyers within a Segment
8-34

35. Criteria to Use in Forming the Segments
Step 1.
Criteria to Use in Forming the 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
8-35

36. Criteria to Use in Forming the Segments
Step 1.
Criteria to Use in Forming the 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
8-36

37. Step 1. Common Segments Geographical Climate Region City size
Population density
8-37

38. Market Segmentation
Geographic

42. Market Segmentation
Geographic
Demographic

43. Age (Generational marketing)
Step 1.
Common Segments
Demographics
Age (Generational marketing)
Gender (?)
Marital status
Income
Education
Occupation
Racial and Ethnic
8-43

44. Market Segmentation
Geographic
Demographic
Psychographic

45. Step 1. Common Segments Psychographics Perception Gender (?)
Motivation
Personality
Attitudes
8-45

46. Market Segmentation
Geographic
Demographic
Psychographic

47. The Nine Nations

48. Montana economic development?
From east to west Or
From north to south

49. Step 1. Common Segments Lifestyle Combination of: Place Person
Products
VALs
8-49

52. Place
Person
Products

53. Step 1. Common Segments Usage Use-related usage rate brand loyalty
awareness
Use-situation
where… when… why… with whom
8-53

54. Usage rates (frequency) 80/20 rule Long tail
Step 1.
Common Segments
Behavioral
Product features
Usage rates (frequency)
80/20 rule
Long tail
Selling small amounts to few customers,
BUT have lots of things to sell (Netflix)
8-54

56. Culture and subculture Social class Religion
Step 1.
Common Segments
Socio-cultural
Culture and subculture
Social class
Religion
8-56

57. Subculture

58. Social class may be hard to define, but we all know it when we see it.

63. Segmentation bases, variables, and breakdowns for U. S
Segmentation bases, variables, and breakdowns for U.S. consumer markets
8-63

64. The five key steps in segmenting and targeting markets that link market needs to a firm’s marketing program
8-64

65. Target Marketing Step 2: The process of evaluating each market
segment’s attractiveness and selecting
one or more segments to enter.

66. Marketing positioning
Arranging for a product to occupy a clear,
distinctive , and desirable place
relative to competing products
in the minds of target consumers.

68. Product positioning: is the place an offering occupies in a consumer’s mind on important attributes relative to competitive products.
8-68

69. Product differentiation: is a marketing strategy that involves a firm using different marketing mix activities to help consumers perceive the product as being different and better than competing products.
8-69

70. 8-70

71. Prince Sports targets racquets at specific market segments
8-71

72. Step 3
Market-product grids show alternative strategies for a lawnmower manufacturer
8-72

73. The five key steps in segmenting and targeting markets that link market needs to a firm’s marketing program
8-73

74. STEP 4: SELECT TARGET MARKETS
Criteria to Use in Selecting Target Markets
Two Types of Criteria
Those that divide a market into Segments
Those that actually pick the Target Segments
8-74

75. Criteria to Use in Selecting Target Markets
Market Size
Expected Growth
Competitive Position
Cost of reaching the Segment
Compatibility with organizational objectives and resources
8-75

76. Perceptual Map Example
A Perceptual Map to reposition chocolate milk for adults:
Identify Important Attributes for Adult Drinks
Discover How Adults See Competing Drinks
Discover How Customers See Chocolate Milk
Reposition Chocolate Milk to Make It More Appealing to Adults
8-76

77. 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, as well as the firm’s own product or brand.
8-77

78. A perceptual map of the location of beverages in the minds of American adults
8-78

79. The strategy American dairies are using to reposition chocolate milk to reach adults
8-79

82. Step 5
Do it!