1. MARKETING MANAGEMENT 12 th edition 8 Identifying Market Segments and Targets KotlerKeller

2. 8-2 Objectives  Distinction of Mass Marketing Versus Micromarketing  What is Marketing Segmentation and for What Purpose is It Used – Target Marketing  How can a company identify the segments that make up a market?  What criteria can a company use to choose the most attractive target markets?

3. 8-3 Market Segmentation and Target Marketing  Marketing Methodologies ■Mass Marketing: Promotion of a product for all buyers ■Micromarketing: Promotion of a product(s) to buyers grouped by different collection criteria (segments, niches, local areas, individuals).  Marketing Segmentation ■The process of identifying and profiling buyers grouped by common needs and preferences that differ from others – supports micromarketing strategy. ■Effective Segmentation: Segments Must be Measurable and Substantial; Accessible, Differentiable and Actionable.  Target Marketing: Is the selection of specific markets and/or micromarkets (and segments) as the strategic and primary source(s) of revenue and profits for an enterprise.  Three Steps for Effective Target Marketing: ■Segment the mass market into micromarkets ■Select one or more micormarkets (segments) to enter based on opportunity and competitive strengths. ■For each target market, establish and communicate the key distinctive benefit(s) of the company’s market offering (market positioning)

4. 8-4 Four levels of Micromarketing Segments Niches Local Areas Individuals Preference Segments Flexible Offerings Naked Solutions Discretionary Options ■Buyers Grouped by Similar Sets of Needs, Wants and Preferences ■Pursued by Single or Multiple Application Solution Providers – Concentrated Marketing ■Very Narrowly Defined Customer Groups Seeking a Distinctive Mix of Benefits ■May Be a Subset of a Market Segment (commonly referred to as sectors) ■Pursued by Specialized Solution Providers with in-depth, narrow core competencies ■Customer Groups Defined by Geographic Areas or Boundaries ■May Include Multiple Market Segments or Micromarkets ■Pursued by Solution Providers with Geographic Identity ■The Individual Defines the Market – Segments of One ■May Come from All Needs and Preference Segments Above ■Offerings Designed by Choiceboards or Custom Specifications - Customerization

5. 8-5 Segmenting Consumer and Business Markets Basis for Segmenting Consumer Markets ■Geographic Segmentation Region, City or Metro Size Density Climate ■Demographic Segmentation Age Family Size Family Life Cycle Life Stage Gender Income Occupation Education Religion Race Generation Nationality Social Classes ■Psychographic Lifestyle Personality Values ■Behavioral Occasions Benefits User Status Usage Rate Loyalty Status Buyer Readiness Stage Attitude Toward Product Multi-Attribute Segmentation: Geoclustering Targeting Multiple Segments Basis for Segmenting (Small) Business Markets Demographic 1.Industry: Which industries should we serve? 2.Company size: What size companies should we serve? 3.Location: What geographical areas should we serve? Operating Variables 4.Technology: What customer technologies should we focus on? 5.User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers? 6.Customer capabilities: Should we serve customers needing many or few services? Purchasing Approaches 7.Purchasing-function organization: Should we serve companies with highly centralized or decentralized purchasing organizations? 8.Power structure: Should we serve companies that are engineering dominated, financially dominated, and so on? 9.Nature of existing relationships: 10.General purchase policies: 11.Purchasing criteria: Situational Factors 12.Urgency: 13.Specific applications: 14.Size of order: Personal Characteristics 15.Buyer-seller similarity: 16.Attitudes towards risk: 17.Loyalty: Decision Roles Variables Initiator Influencer Decider Buyer User Measurable Substantial Accessible Differentiable Actionable

6. 8-6 Market Targeting and Effective Segmentation Description 1. Needs-Based Segmentation Group customers into segments based on similar needs and benefits sought by customer in solving a particular consumption problem. 2. Segment Identification For each needs-based segment, determine which demographics, lifestyles, and usage behaviors make the segment distinct and identifiable (actionable). 3. Segment Attractiveness Using predetermined segment attractiveness criteria (such as market growth, competitive intensity, and market access), determine the overall attractiveness of each segment. 4. Segment Profitability Determine segment profitability. 5. Segment Positioning 6. Segment Acid Test 7. Marketing-Mix Strategy For each segment, create a “value proposition” and product-price positioning strategy based on that segment’s unique customer needs and characteristics. Create segment storyboards to test the attractiveness of each segment’s positioning strategy Expand segment positioning strategy to include all aspects of the marketing mix: product, price, promotion and place Market Partitioning (Creating Sectors) Needs-Based Market Segmentation Evaluating and Selecting Target Markets  Single product family to single market segment  Single product family to multiple market segments with no market synergy  Single product family to multiple market segments with market synergy  Multiple product families to a specific market segment  Combination of all above Undifferentiated Marketing Company ignores segment Differences and goes after Whole market w/ one offer. Differentiated Marketing Company ignores segment Differences and goes after Whole market w/ one offer.

7. 8-7 Segmenting Business Markets - Example

8. 8-8 Segment-by-Segment Invasion Plan