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MARKETING Real People, Real Choices CHAPTER 7 Target Marketing Strategies Chapter Objectives • Understand the need for market segmentation • Know the different dimensions marketers use to segment consumer & industrial markets • Explain how marketers evaluate & select potential market segments 7-2 Chapter Objectives • Explain how marketers develop a targeting strategy • Understand how a firm develops & implements a positioning strategy • Know how marketers practice customer relationship management to increase long-term success and profits 7-3 Step 1: Segmentation • Segmentation is the process of dividing a larger market into smaller pieces based on one or more meaningful, shared characteristics • Segmentation variables are used to divide the market into smaller slices – Can segment a variety of ways 7-4 Segmenting Consumer Markets • Demographics • Psychographics • Geographics • Behaviors 7-5 Demographic Dimensions • • • • • Age Gender Family structure Income & social class Race & ethnicity 7-6 Age • Children • Teens • Generation Y – Who is Gen Y? • Baby Boomers • Elderly 7-7 The Hispanic Market Segment • • • • • Brand loyalty Highly concentrated by national origin Youthful (median age is 23.6) 3.5 people in average household Receptive to relationship building 7-8 Psychographics • Segments markets in terms of shared attitudes, interests, & opinions • Segments include demographic as well as includes richer descriptions • VALS example – Achievers 7-9 Geographics • Regional distinctions – Heart disease density • Local distinctions – Zip code analysis 7-10 Segmenting by Behavior • Behavioral segmentation slices consumers on the basis of how they act toward, feel about, or use a product – Users versus nonusers – Heavy, moderate, light users – Usage occasions • I’ve got Lance in my Pants!!! 7-11 Segmenting Industrial Markets • Organizational demographics – firm size – number of facilities – domestic or multinational – type of business – production technology utilized 7-12 Step 2: Targeting • Evaluating Market Segments • Developing Segment Profiles – Lance’s “Bubba” • Choosing a Targeting Strategy 7-13 Evaluating Market Segments • A viable target segment should satisfy these requirements: – Large enough? – Identifiable? – Measurable? – Reachable with marketing communications? – Practical: Can the marketer serve their needs? 7-14 Choosing a Targeting Strategy • Undifferentiated Marketing • Differentiated Marketing • Concentrated Marketing 7-15 Undifferentiated Marketing • Appeals to a broad spectrum of people • Efficient due to economies of scale • Effective when most consumers have similar needs • Example: Wal-Mart 7-16 Differentiated Marketing • Develops one or more products for each of several customer groups with different product needs • Appropriate when consumers are choosing among well-known brands with distinctive images & possible to identify one+ segments with distinct needs for different types of products – Lexus versus Toyota 7-17 Concentrated Marketing • Entails focusing efforts on offering one or more products to a single segment • Useful for smaller firms that do not have the resources to serve all markets • Specialized niche – Lamborghini 7-18 Step 3: Positioning Strategy • Analyze the competitors’ positions in the marketplace • Offer a product with a distinct advantage • Finalize the marketing mix • Evaluate the target market’s response to positioning so modifications can be made – Repositioning 7-19 The Brand Personality • A positioning strategy attempts to create a brand personality for a product – A distinctive image that captures its character & benefits • How do marketers determine where their products actually stand in the minds of consumers – Perceptual mapping 7-20 Question • Some firms are criticized for targeting consumers. Is targeting ethical? • What about in the case of unwholesome products to vulnerable segments like the elderly or children? • Should the government regulate such marketing activities? 7-21