CHAPTER

IDENTIFYING MARKET SEGMENTS AND TARGETS

Segmentation
Market Segmentation results in

Market Segments groups of people who think differently from the whole, but the same as each other
Product Differentiation

Soda?

Market-product grid showing how different Reebok shoes reach customer groups with different needs

When to Segment Markets

When the expected gain in sales is larger than the expense of the process
Mass produced goods homogenized need but were cheap Mass customization is now cheap & encourages choice, so companies segment by that choice Future?-Build-to-Order (BTO) -runs of 1, not 1001, like Dell Computers

Ann Taylor & Ann Taylor Loft

What is the danger of a two-segment strategy?

If danger is small, segmenting begins

Group Buyers into Segments

Criteria to Use in Forming the Segments
Potential for Increased Profit Similarity of Needs of Buyers within a Segment Difference of Needs of Buyers Among Segments Potential of a Marketing Action to Reach a Segment Simplicity and Cost of Assigning Buyers to Segments

Criteria for Segmentation

Substantiality Identifiability Measurability

Segment must be large enough to warrant a special marketing mix. Segments must be identifiable and their size measurable.

Members of targeted segments must be reachable with Accessibility marketing mix. Unless segment responds to a Responsiveness marketing mix differently, no separate treatment is needed.

Segmentation Variables: Customer Characteristics

Demographic-Household 1) 2) 3) 4) Age & Gender Income Ethnic Background Family Life Cycle 1) 2) 3) 4) Geographic-Location Region of he world Market size Market density Climate

Psychographic- Lifestyles 1) 2) 3) 4) How time is spent Values and Beliefs Spending habits Education

FIGURE 9-B Segmentation variables and breakdowns for U.S. consumer markets

Segmentation Variables: Usage

Usage Rate

Usage rate is the quantity consumed or patronage (store visits) during a specific period of time.
80/20 Rule

The 80/20 rule is a concept that suggests 80% of a firms sales are obtained from 20 % of its customers.

Comparison of users and nonusers for Wendys,Burger King, and McDonalds

Ways to Segment Organizational Markets

Customer Characteristics
Geographic: Statistical Area Demographic: NAICS Code

Demographic: Number of Employees

Benefits Sought: Product Features

Chart Products to be Sold & Estimate of the size of the market

Selecting a target market for Wendys near a city university

Criteria used to Select the Target Market

Market Size
Expected Growth

Compatibility with the Organizations Objectives and Resources

Cost of Reaching Segment Competitive Position

Wendys
How can Wendys target different market segments with different advertising programs?

FIGURE 9-6 Advertising actions to reach specific student segments

Market-Product Strategies
Benefits & drawbacks of a cos market-product strategies

POSITIONING THE PRODUCT Product Positioning- Using Perceptual Maps

Identify Important Attributes for a Product Class Judgments of Existing Brands on These Important Attributes Ratings of an Ideal Brands Attributes Perceptual Map

Product Positioning using Perceptual Maps

Market Segmentation

Market segmentation involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.

Market Segments

Market segments are the relatively homogeneous groups of prospective buyers that result from the market segmentation process.

Product Differentiation

Product differentiation is a strategy that involves a firms using different marketing mix activities to help consumers perceive the product as being different and better than competing products.

Market-Product Grid

A market-product grid is a framework to relate the market segments of potential buyers to products offered or potential marketing actions by the firm.

Usage Rate

Usage rate is the quantity consumed or patronage (store visits) during a specific period of time.

80/20 Rule

The 80/20 rule is a concept that suggests 80 percent of a firms sales are obtained from 20 percent of its customers.

Product Positioning

Product positioning refers to the place an offering occupies in consumers minds on important attributes relative to competitive products.

Perceptual Map

A perceptual map is a means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands relative to its own and then take marketing actions.