1. Third Edition Roger A. Kerin Lau Geok Theng Steven W. Hartley
William Rudelius
Copyright © 2015 by McGraw-Hill Education. All rights reserved.

2. Copyright © 2015 by McGraw-Hill Education. All Rights Reserved.

3. LEARNING OBJECTIVES After reading Chapter 9, you should be able to:
LO9-1
Explain what market segmentation is and when to use it.
Identify the five steps involved in segmenting and targeting markets.
LO9-2
Recognize the bases used to segment consumer and organizational (business) markets.
LO9-3
9-2
Market Segmentation

4. 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 marketing actions.
LO9-4
LO9-5
Explain how marketing managers position products in the marketplace.
9-3
Market Segmentation

5. Segmentation of Cambodian Households
PATH
Segmentation of Cambodian Households
9-4
Opening Story – Market Segmentation

6. Meaning of Segmentation
Why Segment Markets?
Meaning of Segmentation
Market Segmentation
Market Segments
Product Differentiation
Segmentation: Linking Needs to Actions
The Zappos Segmentation Strategy
LO9-1
9-5
What is Market Segmentation?

7. Market segmentation links market needs to an organization’s marketing program through marketing mix actions
LO9-1
9-6
What is Market Segmentation?

8. Using Market-Product Grids
A market-product grid shows the kind of sleeper that is targeted for each of the bed pillows with a different firmness
Using Market-Product Grids
LO9-1
9-7
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
LO9-1
9-8
What is Market Segmentation?

10. Harry Potter One Product and Multiple Market Segments
What Market Segmentation Is This?
One Product and Multiple Market Segments
LO9-1
9-9
What is Market Segmentation?

11. When & How to Segment Markets
Market Segmentation
When & How to Segment Markets
3. Segments of one
Mass Customization
Build-to-Order (BTO)
LO9-1
9-10
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
LO9-1
9-11
What is Market Segmentation?

13. When and How to Segment Markets?
Market Segmentation
When and How to Segment Markets?
The segmentation tradeoff: Synergies vs. cannibalization
Organizational synergy
Cannibalization
“Tiffany/Walmart” Strategies
LO9-1
9-12
What is Market Segmentation?

14. Segmenting & Targeting Markets
A Five-Step Approach
LO9-2
9-13
Five Steps in Segmenting & Targeting Markets

15. Segmenting & Targeting Markets
Step 1: Group Potential Buyers Into Segments
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
LO9-3
9-14
Five Steps in Segmenting & Targeting Markets

16. Segmentation variables and breakdowns for consumer markets
Customer Characteristics
Buying Responses
LO9-3
9-15
Five Steps in Segmenting & Targeting Markets

17. Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments
Ways to segment consumer markets – Customer Characteristics
Geographic customer characteristic –
Regions, city size, statistical area, density
Demographic customer characteristic –
Gender, age, race, education, income, etc.
Psychographic customer characteristic –
Personality, lifestyle, etc.
LO9-3
9-16
Five Steps in Segmenting & Targeting Markets

18. Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments
Ways to segment consumer markets – Buying responses
Outlet types – Instore, direct
Benefits sought – Product features,
needs
Usage/patronage – Usage rate, user
status
Awareness/intention
Behavior - involvement
LO9-3
9-17
Five Steps in Segmenting & Targeting Markets

19. To Which “Flock” You Belong To
Marketing Matters
To Which “Flock” You Belong To
LO9-3
9-18
Five Steps in Segmenting & Targeting Markets

20. Patronage of fast-food restaurants by adults 18 years and older
LO9-3
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Five Steps in Segmenting & Targeting Markets

21. Comparison of various kinds of users and nonusers for Wendy’s, Burger King, and McDonald’s fast-food restaurants
LO9-3
9-20
Five Steps in Segmenting & Targeting Markets

22. Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments
Variables to use in forming student segments for your restaurant:
Students living in dormitories
Students living near college in apratments
Day commuter students living outside the area
Night commuter students living outside the area
LO9-3
9-21
Five Steps in Segmenting & Targeting Markets

23. Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments
Variables to use in forming non-student segments for your restaurant:
Faculty and staff members at the university
People who live in the area
People who work in the area outside the university
People who do not work in the area but visit for business
and social reasons
LO9-3
9-22
Five Steps in Segmenting & Targeting Markets

24. Segmentation Variables and Breakdowns For Organizational Markets
LO9-3
9-23
Five Steps in Segmenting & Targeting Markets

25. Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments
Ways to Segment Organizational Markets – Customer characteristics
Geographic – global, region or country,
statistical area, density
Demographic – SIC code, SICS sector,
number of employees, annual sales
LO9-3
9-24
Five Steps in Segmenting & Targeting Markets

26. Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments
Ways to Segment Organizational Markets – Buyer responses
Nature of goods – Number of locations,
kind, where used, application
Buying condition – Purchase location,
who buy, types of buy
LO9-3
9-25
Five Steps in Segmenting & Targeting Markets

27. Segmenting & Targeting Markets
Step 2: Grouping Products for Sale into Categories
Grouping products into categories which are meaningful to different buyers
Supermarkets are organized into product
groups
For your restaurant, it can be meals –
Breakfast, lunch, snack and dinner
LO9-3
9-26
Five Steps in Segmenting & Targeting Markets

28. Segmenting & Targeting Markets
Step 3: Market-Product Grid & Size of Markets
Forming the market-product grid
Group products in vertical columns
and relate to segments in horizontal rows
Estimating the size of market in each cell
Market research or guesstimates
LO9-4
9-27
Five Steps in Segmenting & Targeting Markets

29. Segmenting & Targeting Markets
Step 3: Market-Product Grid & Size of Markets
LO9-4
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Five Steps in Segmenting & Targeting Markets

30. 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
LO9-4
9-29
Five Steps in Segmenting & Targeting Markets

31. 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)
LO9-4
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Five Steps in Segmenting & Targeting Markets

32. Segmenting & Targeting Markets Step 4: Selecting a Target Market
Selecting the target segment for your restaurant
No breakfast
Four student segments only
LO9-4
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Five Steps in Segmenting & Targeting Markets

33. Segmenting & Targeting Markets
Step 5: Taking Marketing Actions to Reach Target Market
Strategy to reach target segments for your restaurant
Day commuters - advertise
Between-meal snacks - discount
Dinners to night commuters –
single meal promotion
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Five Steps in Segmenting & Targeting Markets

34. Advertising Actions to Reach Specific Student Segments for Your Restaurant
LO9-4
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Five Steps in Segmenting & Targeting Markets

35. Segmenting & Targeting Markets
Step 5: Taking Marketing Actions to Reach Target Market
Market-product synergy: A balancing act
Marketing synergies
Product synergies
LO9-4
9-34
Five Steps in Segmenting & Targeting Markets

36. Apple’s Segmentation Strategy
Marketing Matters
Apple’s Segmentation Strategy
LO9-4
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Five Steps in Segmenting & Targeting Markets

37. Writing a positioning statement
Product Positioning
Two Approaches
Product positioning
Product repositioning
Two approaches to product positioning
Head-to-head positioning
Differentiation positioning
Writing a positioning statement
LO9-5
9-36
Positioning Products in the Marketplace

38. Product positioning with perceptual maps
Using Perceptual Maps
Product positioning with perceptual maps
Identify important attributes for a product or brand class
Customers’ ratings of competing products or brands on these attributes
Customer’s ratings of the company’s products or brands on these attributes
Reposition the company’s products or brands in the minds of consumers
LO9-5
9-37
Positioning Products in the Marketplace

39. Positioning and Repositioning with Perceptual Maps
Product Positioning
Positioning and Repositioning with Perceptual Maps
Perceptual map
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
LO9-5
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Positioning Products in the Marketplace

40. 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
LO9-5
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Positioning Products in the Marketplace