1. Segmenting and Targeting Markets6
chapter
Prepared by
Deborah Baker
Texas Christian University
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2. chapter 6 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. 6
chapter
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3. 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. 6
chapter
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4. Learning Objectives (continued)
7. Discuss alternative strategies for selecting target markets.
8. Explain how and why firms implement positioning strategies and how product differentiation plays a role.
9. Discuss global market segmentation and targeting issues. 6
chapter
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5. Describe the characteristics of markets and market segments.1
Learning Objective
Describe the characteristics of
markets and market segments.
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6. 1 Market Segmentation Market Segment 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.
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7. 1
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.
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8. Explain the importance of market segmentation.2
Learning Objective
Explain the importance
of market segmentation.
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9. The Importance of Market Segmentation2
Markets have a variety of product needs and preferences
Marketers can better define customer needs
Decision makers can define objectives and allocate resources more accurately
Competitive
Advantage
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10. Discuss criteria for successful3
Learning Objective
Discuss criteria for successful
market segmentation.
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11. Criteria for Successful Segmentation3
Criteria for Market Segments
Substantiality
Identifiability
Accessibility
Responsiveness
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12. Criteria for Segmentation3
Criteria for Segmentation
Substantiality
Identifiability
Measurability
Accessibility
Responsiveness
Segment must be large enough to warrant a special marketing mix.
Segments must be identifiable and their size measurable.
Members of targeted segments must be reachable with marketing mix.
Unless segment responds to a marketing mix differently, no separate treatment is needed.
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13. Describe the bases commonly used to segment consumer markets.4
Learning Objective
Describe the bases commonly
used to segment consumer markets.
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14. Characteristics of individuals, groups, to divide a total market4
Segmentation Bases
Characteristics of individuals, groups,
or organizations used
to divide a total market
into segments.
(variables)
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15. Bases for Segmentation4
Bases for Segmentation
Usage Rate
Benefits Sought
Psychographics
Demographics
Geography
Bases Used to Segment Consumer Markets
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16. Geographic Segmentation4
Geographic Segmentation
Segmenting markets by region of the country or world, market size, market density, or climate.
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17. Geographic Segmentation4
Geographic Segmentation
Region of the country or world
Market size
Market density
Climate
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18. Benefits of Regional Segmentation4
Benefits of Regional Segmentation
New ways to generate sales in sluggish and competitive markets
Scanner data allow assessment of best selling brands in region
Regional brands appeal to local preferences
React more quickly to competition
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19. Demographic Segmentation4
Demographic Segmentation
Segmenting markets
by age, gender, income, ethnic background,
and family life cycle
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20. Bases for Demographic Segmentation4
Age
Gender
Income
Ethnic background
Family Life Cycle
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21. 4 Ethnic Background Largest ethnic markets are:
African-American
Hispanic-American
Asian-American
Will comprise 1/3 of U.S. population by 2010 with buying power of a trillion dollars
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22. 4
Family Life Cycle
Age
Marital Status
Children
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23. Psychographic Segmentation4
Psychographic Segmentation
Market segmentation on
the basis of personality, motives, lifestyles, and geodemographics.
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24. Bases for Psychographic Segmentation4
Psychographic Segmentation
Personality
Motives
Lifestyles
Geodemographics
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25. Lifestyle Segmentation4
Lifestyle Segmentation
How time is spent
Beliefs
Socioeconomic characteristics
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26. Geodemographic Segmentation4
Geodemographic Segmentation
Segmenting potential customers into neighborhood lifestyle categories.
Combines geographic, demographic, and lifestyle segmentation.
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27. 4 VALS 2 Dimensions Abundant Resources Minimal Resources Principle-
oriented
Status-
Action-
Fulfillers
Believers
Actualizers
Achievers
Strivers
Strugglers
Experi- encers
Makers
Minimal Resources
Abundant Resources
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28. 4
Benefit Segmentation
The process of grouping customers into market segments according to the benefits they seek from the product .
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29. Usage-Rate Segmentation4
Usage-Rate Segmentation
Dividing a market by the amount of product bought or consumed.
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30. 4
The 80/20 Principle
A principle holding that 20 percent of all customers generate 80 percent of the demand.
80/20
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31. Describe the bases for segmenting business markets.5
Learning Objective
Describe the bases for segmenting business markets.
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32. 5
Macrosegmentation
The process of dividing business markets into segments based on general characteristics such as geographic location, customer type, customer size, and product use.
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33. 5
Microsegmentation
The process of dividing business markets into segments based on the characteristics of decision-making units within a macrosegment.
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34. Business Marketing Segmentation5
Business Marketing Segmentation
Geographic
Customer Type
Customer Size
Product Use
Business
Markets
Purchasing Criteria
Purchasing Strategy
Importance
Personal
Characteristics
Micro-
segmentation
Macro-
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35. List the steps involved6
Learning Objective
List the steps involved
in segmenting markets.
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36. Steps in Segmenting a Market6
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
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37. Discuss alternative strategies for selecting target markets.7
Learning Objective
Discuss alternative strategies
for selecting target markets.
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38. 7
Target Market
A group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges.
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39. Strategies for Selecting Target Markets7
Concentrated
Strategy
Undifferentiated
Multisegment
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40. Undifferentiated Targeting Strategy7
Marketing approach that views the market as one big market with no individual segments and thus requires a single marketing mix.
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41. Undifferentiated Targeting Strategy7
Advantages:
Potential savings on production and marketing costs
Disadvantages:
Unimaginative product offerings
Company more susceptible to competition
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42. Concentrated Targeting Strategy7
A strategy used to select one segment of a market for targeting marketing efforts.
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43. 7
Niche
One segment of
a market.
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44. Concentrated Targeting Strategy7
Advantages:
Concentration of resources
Meets narrowly defined segment
Small firms can compete
Strong positioning
Disadvantages:
Segments too small, or changing
Large competitors may market to niche segment
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45. Multisegment Targeting Strategy7
A strategy that chooses
two or more well-defined market segments and develops a distinct marketing mix for each.
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46. Multisegment Targeting Strategy7
Advantages:
Greater financial success
Economies of scale
Disadvantages:
High costs
Cannibalization
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47. Costs of Multisegment Targeting7
Costs of Multisegment Targeting
Product design costs
Production costs
Promotion costs
Inventory costs
Marketing research costs
Management costs
Cannibalization
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48. 7 Cannibalization Situation that occurs when sales of a new product
cut into sales of a
firm’s existing products.
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49. 8 Learning Objective Explain how and why firms implement
positioning strategies and
how product differentiation
plays a role.
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50. 8
Positioning
Developing a specific marketing mix to influence potential customers’ overall perception of a brand, product line, or organization in general.
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51. 8
Position
The place a product, brand, or group of products occupies in consumers’ minds relative to competing offerings.
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52. Effective Positioning8
Effective Positioning
Assess the positions of competing products
Determine the dimensions of these positions
Choose an effective market position
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53. Product Differentiation8
Product Differentiation
A positioning strategy that some firms use to distinguish their products from those of competitors.
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54. 8
Perceptual Mapping
A means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers’ minds.
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55. Perceptual Mapping--Levi’s8
Perceptual Mapping--Levi’s
High Price
Low Price
Classic
Designer
Vintage
Red Line
Slates
Red Tab Elesco
Red Tab
Dry Goods
Dockers Premium
Silver Tab
501 L2
Dockers
Classics
Red Tab Basics
Old product
New product
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56. 8 Positioning Bases Positioning Bases Attribute Price and Quality
Use or Application
Product User
Product Class
Competitor
Positioning Bases
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57. Changing consumers’ perceptions of a brand8
Repositioning
Changing consumers’ perceptions of a brand
in relation to
competing brands.
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58. Discuss global market segmentation9
Learning Objective
Discuss global market segmentation
and targeting issues.
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59. Global Market Standardization9
Global Issues
Trends
Global Market Standardization
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