1. Target Marketing Process: Linking Customer Needs to Marketing Action

2. Market segmentation links market needs to an organization’s marketing program

3. Segmentation
process of dividing a larger market into smaller pieces based on one or more meaningful, shared characteristics and that will respond similarly to a marketing action
Segmentation variables are used to divide the market into smaller slices: demographics, psychographics, behavior, etc.

4. Why Segment Markets? One Product and Multiple Market Segments
Multiple Products and Multiple Market Segments
Segments of One: Mass Customization
The Segmentation Trade Off: CRM versus synergies

5. Demographic Dimensions
Age
Gender
Family structure
Income and social class
Race and ethnicity
Geography

6. Age
Children
Teens
Generation X, Y
Baby Boomers
Elderly

7. Psychographics
Psychographic segments market in terms of shared attitudes, interests, and opinions
Segments include demographic information such as age and income, but also includes richer descriptions
Some organizations develop their own psychographic segments for their consumers, but others utilize national systems (VALS by SRI International)

8. Segmenting by Behavior
Behavioral segmentation slices consumers on the basis of how they act toward, feel about, or use a product
Users versus nonusers
Heavy, moderate, light users
Usage occasions

9. Segmenting Industrial Markets
Organizational demographics
firm size
number of facilities
domestic or multi-national
type of business
production technology utilized
NAICS characteristics

10. Criteria for Forming Segments
Potential for increased profit and ROI
Similarity of needs of potential buyers in a segment
Difference of needs of buyers among segments
Feasibility of a marketing action reaching segment
Simplicity and cost of assigning buyers to markets

11. Evaluating Market Segments
A viable target segment should satisfy these requirements:
Are members of the segment similar to each other but different from other segments?
Can marketers measure the segment?
Is the segment large enough to be profitable?
Can marketing communications reach the segment?
Can the marketer serve the segment’s needs?

12. Targeting Evaluating Market Segments Developing Segment Profiles
Choosing a Targeting Strategy

13. Targeting Strategies Undifferentiated Marketing
Concentrated Marketing
Customized Marketing

14. Undifferentiated Marketing
Appeals to a broad spectrum of people
Efficient due to economies of scale
Effective when most consumers have similar needs

15. Differentiated Marketing
Develops one or more products for each of several customer groups with different product needs
Appropriate when consumers are choosing among well-known brands with distinctive images and it is possible to identify one or more segments with distinct needs for different types of products

16. Concentrated Marketing
Entails focusing efforts on offering one or more products to a single segment
Useful for smaller firms that do not have the resources to serve all markets
Example: Hard Candy

17. Customized Marketing
Segments are so precisely defined that products are offered to exactly meet the needs of each individual
Example: Levi’s Original Spin (custom) jeans, hair stylists
Mass customization is a related approach in which a company modifies a basic good to meet the needs of an individual
Example: Gateway computers, Proctor & Gamble’s products at Reflect.com Form Products to Be Sold into Groups

18. Select Target Markets Criteria to Use in Picking the Target Segments
Market size
Expected growth
Competitive position
Cost of reaching the segment
Compatibility with objectives and resources
Choose the Segments

19. Targeting Form Products to Be Sold into Groups
Develop a Market-Product Grid and Estimate Size of Markets

20. Market-product grid showing how different Reebok shoes reach segments of customers with different needs

21. Comparison of various kinds of users and nonusers for Wendy’s, Burger King, and McDonald’s restaurants

22. Positioning
Developing a marketing strategy aimed at influencing how a particular market segment perceives a product in comparison to the competition
Strategy may also consider creating a “barrier to entry” for competitors

23. Product Positioning
Head-to-head
Differentiation

24. Developing a Positioning Statement
Analyze the competitors’ positions in the marketplace
Offer a product with a competitive advantage
Finalize the marketing mix
Evaluate the target market’s response so modifications to the positioning strategy can be made (repositioning)

25. The Brand Personality
A Positioning Strategy attempts to create a brand personality for a product - a distinctive image that captures its character and benefits
How do marketers determine where their products actually stand in the minds of consumers?

26. Perceptual Map

27. Customer Relationship Management US companies spend about 75% of marketing $$ on existing customers
CRM strategy allows a company to identify its best customers, stay on top of their needs, and increase their satisfaction
CRM is about communicating with customers one on one
CRM views customers as partners

28. Characteristics of CRM
Share of Customer
Lifetime Value of the Customer
A Greater Focus on High-Value Customers

29. Steps in the CRM Process
Identify customers
Differentiate customers
Interact with customers
Customize for your customers