1. Copyright John Wiley & Sons 2007 Presentation prepared by Robin Roberts, Griffith University and Mike Spark, Swinburne University of Technology

2. Copyright John Wiley & Sons 2007 Chapter 5 Target markets: segmentation and evaluation

3. Copyright John Wiley & Sons 2007 Chapter 5 Chapter Objectives 1.Know what a market is 2.Recognise the major segmentation variables 3.Know what segment profiles are and how they are used 4.Understand the differences among general targeting strategies 5.Understand how to evaluate market segments

4. Copyright John Wiley & Sons 2007 Chapter 5 Chapter Objectives 6.Identify the factors that influence the selection of specific market segments as target markets 7.Appreciate the importance of market positioning for both target marketing and competitive strategy 8.Understand how current positioning is measured and interpreted, and the range of possibilities for re-positioning a company, product or brand

5. Copyright John Wiley & Sons 2007 Chapter 5 What is a market? A group of people who, as individuals or organisations, have needs for products in a product class and have the ability, willingness and authority to purchase such products

6. Copyright John Wiley & Sons 2007 Chapter 5 Key components for a market? –Must be a need or desire a particular product –Must have the ability to purchase the product –Must be willing to use their buying power to purchase the product –Must have the authority to buy the product

7. Copyright John Wiley & Sons 2007 Chapter 5 Types of markets Consumer Markets (B2C) –Purchasers and household members –Purchases are for personal consumption or benefit, not to make a profit

8. Copyright John Wiley & Sons 2007 Chapter 5 Types of markets Business Markets (B2B) –Individuals and groups that purchase products for resale, direct use to produce other products, or use in daily business operations –Purchasers can be categorised as producers, resellers, government and institutional markets

9. Copyright John Wiley & Sons 2007 Chapter 5 The target market selection process

10. Copyright John Wiley & Sons 2007 Chapter 5 Describe your target market Neil Paterson, Director of Sales and Marketing, Sofitel Hotel, Gold Coast Dial-UpBroadband

11. Copyright John Wiley & Sons 2007 Chapter 5 Describe your target market Bruce White, Director of Marketing, Story Bridge Adventure Climb Dial-UpBroadband

12. Copyright John Wiley & Sons 2007 Chapter 5 Market segmentation definitions Market segmentation is the process of dividing a total market into groups, or market segments, consisting of people or organisations with relatively similar product needs

13. Copyright John Wiley & Sons 2007 Chapter 5 Market segmentation definitions A market segment consists of individuals, groups, or organisations with one or more similar characteristics that cause them to have relatively similar product needs

14. Copyright John Wiley & Sons 2007 Chapter 5

15. Copyright John Wiley & Sons 2007 Chapter 5 Market segmentation at Virgin Blue Darren Wright - National Marketing Manager – Virgin Blue Dial-UpBroadband

16. Copyright John Wiley & Sons 2007 Chapter 5 Market segmentation Step 1 – Identify segmentation variables the characteristics of individuals, groups or organisations used to divide a market into segments

17. Copyright John Wiley & Sons 2007 Chapter 5 Segmentation variables for consumer markets

18. Copyright John Wiley & Sons 2007 Chapter 5 Market segmentation by gender Fernwood Women’s Health Club Dial-UpBroadband

19. Copyright John Wiley & Sons 2007 Chapter 5 Demographic variables — Family Life Cycle

20. Copyright John Wiley & Sons 2007 Chapter 5 Variables for segmenting business markets Geographic location Type of organisation Customer size Product use

21. Copyright John Wiley & Sons 2007 Chapter 5 Market segmentation Step 2 – Develop market segment profiles describe the similarities among potential customers within a segment, and explain the differences among people and organisations in different segments

22. Copyright John Wiley & Sons 2007 Chapter 5 Roy Morgan Value Segments™

23. Copyright John Wiley & Sons 2007 Chapter 5 Market targeting Step 3 – Identify the appropriate targeting strategy A target market is a group of people or organisations for which a business creates and maintains a marketing mix specifically designed to satisfy the needs of group members

24. Copyright John Wiley & Sons 2007 Chapter 5 Targeting strategies

25. Copyright John Wiley & Sons 2007 Chapter 5 Market targeting Step 4 – Evaluate relevant marketing segments –Sales estimates, –Competitive assessment and –Cost estimates involved with each segment are analysed

26. Copyright John Wiley & Sons 2007 Chapter 5 Market targeting Step 5 – Select specific target markets Are customer needs different enough to warrant the use of segmentation? –If not, use the undifferentiated approach Select target markets that are in line with corporate objectives, have long-term potential and match the firm’s resources

27. Copyright John Wiley & Sons 2007 Chapter 5 Will Toyota reach the Australian youth market? Toyota Camry Sportivo Dial-UpBroadband

28. Copyright John Wiley & Sons 2007 Chapter 5 Sales forecasts Sales forecasts are: The amount of a product a company expects to sell during a specific period at a specified level of marketing activities Developing Sales forecasts – Categories: – Executive judgment– Surveys –Time Series analysis– Market tests –Regression analysis

29. Copyright John Wiley & Sons 2007 Chapter 5 Market positioning –describes how target market segments perceive the company’s offer in relation to competing products or brands Company positioning –reflects how the company as a whole is perceived — the company’s offer in relation to other companies

30. Copyright John Wiley & Sons 2007 Chapter 5 Market positioning cont’d Brand positioning –Describes how individual brands are perceived by target customers Competitive positioning –focuses on the differences between brands or companies

31. Copyright John Wiley & Sons 2007 Brand positioning for airlines (the ‘holidaymaker’ segment)

32. Copyright John Wiley & Sons 2007 Chapter 5 Market positioning Step 6 – Determine the positioning for each target segment understand your current positioning, by conducting market research perceptual mapping is a common technique to portray customer perceptions of how products compete based on mutual attributes re-positioning is not an overnight job!

33. Copyright John Wiley & Sons 2007 Chapter 5 Market positioning Step 7 – Develop a marketing mix for each target segment your desired positioning must force your marketing mix positioning is determined by your promise and your performance! It is a long-term process, requiring lots of resources

34. Copyright John Wiley & Sons 2007 Chapter 5