2. Chapter 10 Target Markets: Segmentation, Evaluation, and Positioning

3. Objectives Learn what a market is
Understand differences among targeting strategies
Become familiar with segmentation variables
Know what segment profiles are and how they are used
Evaluate market segments
Identify factors that influence selection of specific market segments
Understand positioning
Become familiar with sales forecasting methods

4. What are Markets
Group of people seeking products in a specific product category (see Ch. 2 definition)
Can be…
specific location (flea market)
large geographic area
relationship between supply and demand (market for given product)
action word, as in market a product

5. Market Requirements Need/desire for a particular product
Have ability to purchase product
Willing to use buying power
Have authority to buy specific products

6. Target Market Selection Process

7. Step 1: Targeting Strategy

8. Undifferentiated Targeting Strategy
A strategy in which an organization defines an entire market for a particular product as its target market, designs a single market mix, and directs it at that market.

9. Homogeneous Market
A market in which a large portion of customers have similar needs for a product.

10. Concentrated Targeting Strategy Through Market Segmentation

11. Heterogeneous Market
A market made up of individuals or organizations with diverse needs for products in a specific product class.

12. 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.

13. Market Segment
Individuals, groups, or organizations sharing one or more similar characteristics that cause them to have similar product needs.

14. Conditions For Successful Market Segmentation
Customer product needs are heterogeneous
Segments identifiable and divisible
Market divided so segments can be compared on sales potential, costs, and profits
At least one segment has potential to justify marketing expense
Segment can be reached with a particular marketing mix

15. Concentrated Target Strategy
Market segmentation strategy in which an organization targets a single market segment using one marketing mix

16. Differentiated Targeting Strategy Through Market Segmentation

17. Differentiated Targeting Strategy
A strategy in which an organization targets two or more segments by developing a marketing mix for each segment.

18. Step 2: Determine Which Segmentation Variables to Use
characteristics of individuals, groups, or organizations used to divide a market into segments

19. Variables for Segmenting Consumer Markets

20. Demographic Variables
Age
Gender
Race
Ethnicity
Income
Education
Occupation
Family size
Family life cycle
Religion
Social class

21. Age Group Spending Levels

22. Life Cycle Stages

23. Family Life Cycle Stages
Source: Jason Fields, “America’s Families and Living Arrangements: 2003,” Current Population Reports, U.S. Census Bureau, 2003.

24. Geographic Variables Climate Terrain City size Population density
Urban/rural areas
Getty Images

25. Market Density
The number of potential customers within a unit of land area.

26. Geodemographic Segmentation
A method of market segmentation that clusters people in zip code areas and smaller neighborhood units based on lifestyle and demographic information.

27. Micromarketing
An approach to market segmentation in which organizations focus precise marketing efforts on very small geographic markets.

28. Psychographic Variables
Personality characteristics
Motives
Lifestyles

29. VALS Types
Take the VALS Survey

30. Behavioristic Variables
Dividing a market according to some feature of consumer behavior toward a product

31. Benefit Segmentation
The division of a market according to benefits that consumers want from the product.

32. Segmenting Business Markets
Geographic Location
Type of Organization
Customer Size
Product Use

33. Step 3: Develop Market Segment Profiles
Similarities among potential customers
Differences among people and organizations in different segments

34. Step 4: Evaluate Relevant Market Segments
Sales Estimates
Market potential
Company sales potential (breakdown and buildup)
Competitive Assessment
Cost Estimates
© Microsoft

35. Step 5: Select Specific Target Markets
Choose market segmentation
Available resources to compete in market segmentation
Confirm requirements of market segment
Long-term growth of market segment

36. Product Positioning and Repositioning
creating and maintaining a certain concept of a product in customers minds.
Perceptual Mapping
Bases for Positioning
Repositioning

37. Toothpaste Product Positions

38. Perceptual Map For Pain Relievers

39. Developing Sales Forecast
The amount of a product a company expects to sell during a specific period at a specified level of marketing activities.

40. Executive Judgment
A sales forecasting method based on the intuition of one or more executives.

41. Surveys Customer Forecasting Sales Force Forecasting
Expert Forecasting
Delphi Technique
Time Series Analysis
Trend Analysis
Regression Analysis

42. Time Series Analysis
Time series analysis – historical sales data used to discover patterns in sales over time
Trend analysis – aggregate sales data over many years to determine trends in annual sales
Cycle analysis – analysis over 3-5 years to ascertain whether sales fluctuate in a consistent manner

43. Time Series Analysis (cont’d)
Seasonal analysis – daily, weekly, or monthly sales figure to evaluate sales influences of seasonal factors
Random factor analysis – attributing erratic sales variations to random events

44. Regression Analysis
Predicting sales based on finding a relationship between past sales and one or more independent variables, such as population or income

45. Market Test
Making a product available to buyers in one or more test areas and measuring purchases and consumer responses to marketing efforts.
McDonald’s Market Tests Chicken Breast Strips

46. Using Multiple Forecasting Methods
Diverse product lines
Product sold to different market segments
Variation in length of needed forecasts
Verifying results of one method by using others