8

Segmentation & Target

Marketing
Dr. Close

Finding Markets
Markets = people with needs/wants and
the ability and willingness to buy
Types of markets:
Generic
People with broadly similar needs (social)
Diverse ways of satisfying (restaurants, movies)

Products
Very similar needs (thirsty for soft drinks)
Very close substitutes (Coke vs. Pepsi, and what
else?)
Close substitutes or no?

Pepsi vs Coke

Whats the Difference?

Market
Market
Market
Market
Segment
Segment
Market
Market
Segmentation
Segmentation

People
Peopleor
ororganizations
organizationswith
withneeds
needsor
orwants
wants
and
andthe
theability
abilityand
andwillingness
willingnessto
tobuy.
buy.
AAsubgroup
subgroupof
ofpeople
peopleor
ororganizations
organizationssharing
sharing
one
oneor
ormore
morecharacteristics
characteristicsthat
thatcause
causethem
them
to
have
similar
product
needs.
to have similar product needs.
The
Theprocess
processof
ofdividing
dividingaamarket
marketinto
into
meaningful,
meaningful,relatively
relativelysimilar,
similar,identifiable
identifiable
segments
segmentsor
orgroups.
groups.

Market Segmentation
Dividing market into meaningful, similar groups
(or aggregating those with similar needs)
Why is segmentation important?....
Markets have a variety of product preferences
Marketers can better define customer needs
Decision makers can define objectives and
allocate resources more accurately

Criteria for Segmentation

Substantiality

Segment must be large enough to

warrant a special marketing mix.

Identifiability
and Measurability

Segments must be identifiable and

their size measurable.

Accessibility

Members of targeted segments must

be reachable with marketing mix.

Responsiveness

Unless segment responds to a

marketing mix differently, no separate
treatment is needed.

So, A Good Segment is

Homogenous within: members are similar
Heterogeneous between: outsiders differ
(choose the best)
Substantial: large enough for profit (Ned
Flanders)
Operational: workable (identify then
access China)

Bases for Segmenting Markets

Geography

Region
Market size
Market
density
Climate

Demographics

Age
Gender
Income
Ethnicity
Family life
cycle

Psychographics

Personality
Motives
Lifestyle
Geodemographics

Benefits

Benefits
sought

Usage Rate

Former
Potential
1st time
Light or
irregular
Medium
Heavy

Demographic Segmentation:
Family Life Cycle

Psychographic Segmentation

Personality (cars)
Motives (emotions)
Lifestyles (outdoor)
Geodemographics (PRIZM)

Benefit Segmentation
Group consumers via needs/wants (NOT
by gender, age, lifestyle etc.)
What do you want from your cell phone?

Usage Rate Segmentation

Group by amount/rate of consumption

Former apple users
Potential apple users
Light apple users
Heavy apple users
80/20 principle of demand

6 Steps to Segment a Market

Select
a market
for
study

Choose
bases
for
segmentation

Select
descriptors

Profile
and
analyze
segments

Select
target
markets

Design,
implement,
maintain
marketing
mix

Strategies for Selecting Target

Markets
Options
Undifferentiated Targeting
One market, one mix (plain toilet paper)
Any other examples?

Concentrated Targeting
Multiple markets & mix for each
Examples include Ford, Lincoln, Mercury, and what else?

Multi-segment Targeting
Multiple markets share mix (bad idea)
Advantages = Greater financial success; Economies of scale
Disadvantages= High costs; Cannibalization

Strategies for Selecting Target

Markets
Options
Undifferentiated Targeting
One market, one mix (plain toilet paper)
Any other examples?

Concentrated Targeting
Multiple markets & mix for each
Examples include Ford, Lincoln, Mercury, and what else?

Multi-segment Targeting
Multiple markets share mix (bad idea)
Example: network television and any more?

One-to-One Marketing
One-to-One
One-to-One
Marketing
Marketing is...
is...

Has
Hasaa Goal
Goal of
of

Individualized
Individualized

Cost
Cost Reduction
Reduction

Information-Intensive
Information-Intensive

Customer
Customer Retention
Retention

Long-Term
Long-Term

Increased
Increased Revenue
Revenue

Personalized
Personalized

Customer
Customer Loyalty
Loyalty

One-to-One Marketing
Trends
Trends

One-size-fits all marketing is lame.

Direct/personal marketing will grow to meet
needs of busy consumers.
We will be loyal to companies that have
earnedand reinforcedour loyalty.
Mass-media approaches will decline as
technology allows better customer tracking.

Marketing Strategy

Matching opportunity with resources and

business objectives
Goals:
1. SCA

Enduring superiority of a business

BEST: from many parts (Wal-Mart)

2. Breakthrough opportunity

Conditions right for SCA

Positioning
Developing a marketing mix
to influence potential
customers overall
perception of a brand,
product line, or organization
in general.
How is Wal-Mart
Positioned?

Positioning
Bases
Attribute
Attribute
Price
Price and
and Quality
Quality
Use
Use or
or Application
Application
Product
Product User
User
Product
Product Class
Class
Competitor
Competitor
Emotion
Emotion

Positioning of
Procter & Gamble
Detergents
Brand

Positioning

Tide
Cheer
Bold
Gain
Era
Dash
Oxydol
Solo
Dreft
9
Ivory
Snow
LO
Ariel

Tough, powerful cleaning

Tough cleaning, color protection
Detergent plus fabric softener
Sunshine scent, odor-removing
Stain treatment and stain removal
Value brand
Bleach-boosted formula, whitening
Detergent and fabric softener in liquid form
Cleaning for baby clothes, safe
Fabric & skin safety on baby clothes
Tough cleaner, aimed at Hispanic market

Market
Share
31.1%
8.2%
2.9%
2.6%
2.2%
1.8%
1.4%
1.2%
1.0%
0.7%
0.1%

Effective
Positioning
1. Assess the positions occupied by
competing products
2. Determine the dimensions underlying
these positions
3. Choose a market position where
marketing efforts will have the
greatest impact

Product
Differentiation
A positioning strategy
that some firms use to
distinguish their
products from those of
competitors.
Are distinctions real or
perceived?

Perceptual
Mapping

Daimler Chrysler:
Do they need a reposition?
(Changing consumers perceptions of a brand
in relation to competing brands)

Summary

Generic vs product markets

Segmentation: Criteria
Bases for segmenting
Strategies of segmentation
(effective)Positioning/repositioning, bases
Any questions?