Download Market Segmentation and Target Markets

Market Segmentation
and Target Markets
chapter 7
Harcourt, Inc.
Objectives
 Understand
the concepts: market,
segmentation, and target markets
 Learn the advantages and
disadvantages of target marketing
 Explain the steps in target market
selection
Dr. Rosenbloom
Objectives
 Discuss
segmentation criteria,
strategies, bases, and information
sources
 Understand market profiling and
positioning strategies
 Discuss differences for business
and international marketing
Dr. Rosenbloom
What is a market?
 Individuals
or organizations
who:


Are willing, able, and capable of
purchasing a firm’s product
Segmentation is critical because
demand is often heterogeneous
Dr. Rosenbloom
What is market segmentation?
 Market

Segmentation
Process of dividing a large
market into smaller target
markets, or customer groups
with similar needs and/or
desires
Dr. Rosenbloom
Market Segmentation
Mass
Market
Niche
Standardized
Marketing
Mix
Niche
Micromarketing
Micromarketing
Dr. Rosenbloom
The
Individual
Personalization
Target Marketing
 Advantages






Easier analysis of potential and actual
consumers
Tailoring of products to market
Assessment of demand potential
Identify competing products
Increased sales effectiveness and cost
efficiencies
Product positioning and easy identification
of opportunities
Dr. Rosenbloom
Target Marketing
 Disadvantages





Increased marketing costs
Personalization can become
burdensome to manage
Faux segmentation may be viewed
cynically
Narrow segmentation can impact
brand loyalty
Ethics and stereotyping issues
Dr. Rosenbloom
Target Market Selection
Identify Total Market
Determine Need for
Segmentation
Determine Bases for
Segmentation
Assess Potential
Profitability of Segment
and Select Target Segment
Profile Each Selected
Segment
Select Positioning
Strategy
Develop and Implement
Appropriate Marketing Mix
Dr. Rosenbloom
Monitor, Evaluate and
Control
Market Criteria
 Segmentable




markets are:
Heterogeneous
Measurable
Substantial
Actionable
• Companies must be able to respond to
preferences with an appropriate marketing mix

Accessible
• Market must be efficiently reachable
Dr. Rosenbloom
External Factors
 Stage
in product life cycle
 Competition
 Product specific issues
 Market for the product
Dr. Rosenbloom
Segmentation Variables
Demographic
Segmentation
Segmentation
Geographic
Segmentation
Situation
Segmentation
Psychographic
Behavior/Usage
Segmentation
Segmentation
Benefits-Sought
Dr. Rosenbloom
Demographic Segmentation
Income Level
Age
Family
Ethnicity
Education
Dr. Rosenbloom
Demographic Segmentation
 Age

Some products are
marketed to
specific age
groups
Dr. Rosenbloom
Demographic Segmentation
 Age

Some products are
marketed to
specific age
groups
Dr. Rosenbloom
Demographic Segmentation
 Income

Level
Some products are
marketed to
consumers with
different income
levels
Dr. Rosenbloom
Demographic Segmentation
 Income

Level
Some products are
marketed to
consumers with
different income
levels
Dr. Rosenbloom
Demographic Segmentation
Bartles and James
Dr. Rosenbloom
Hal Riney and
Partners
Demographic Segmentation
 Family

Some products are
marketed to
consumers with
special family
consideration
• Family Life Cycle
• Bachelor, marriage,
married with children,
retired, etc.
Dr. Rosenbloom
Functions Of Advertising
KinderCare
Dr. Rosenbloom
The Martin Agency
Demographic Segmentation
 Family

Some products are
marketed to
consumers with
special family
consideration
• Family Life Cycle
• Bachelor, marriage,
married with children,
retired, etc.
Dr. Rosenbloom
Demographic Segmentation
 Education

Some products are
marketed to
consumers with
certain educational
levels
Dr. Rosenbloom
Demographic Segmentation
 Ethnicity

Some products are
marketed to
consumers from
specific ethnic
backgrounds
Dr. Rosenbloom
Demographic Segmentation
 Ethnicity

Some products are
marketed to
consumers from
specific ethnic
backgrounds
Dr. Rosenbloom
Segmentation Variables
Demographic
Segmentation
Segmentation
Geographic
Segmentation
Situation
Segmentation
Psychographic
Behavior/Usage
Segmentation
Segmentation
Benefits-Sought
Dr. Rosenbloom
Geographic Segmentation
 When
an organization localizes its
marketing efforts to accommodate the
unique needs of specific geographic
regions
Dr. Rosenbloom
Geographic Segmentation
 When
an organization localizes its
marketing efforts to accommodate the
unique needs of specific geographic
regions
Dr. Rosenbloom
Geographic Segmentation
 Metropolitan

Statistical Areas
An urbanized area of 50,000 and a total
metropolitan area population of at least
100,000
• Charlottesville, Virginia
Dr. Rosenbloom
Geographic Segmentation
 Primary
Metropolitan Statistical
Areas

An urbanized county or cluster of
counties with a population of more
than 1 million
• Gary/Hammond, Indiana
Dr. Rosenbloom
Geographic Segmentation
 Consolidated
Metropolitan
Statistical Area

A metropolitan area that includes at
least two PMSAs
• Baltimore, Maryland and Washington,
D.C.
Dr. Rosenbloom
Segmenting Consumer Markets
Demographic
Segmentation
Segmentation
Geographic
Segmentation
Situation
Segmentation
Psychographic
Behavior/Usage
Segmentation
Segmentation
Benefits-Sought
Dr. Rosenbloom
Psychographic Segmentation
Grouping customers together
based on social class,
lifestyles and psychological
characteristics (attitudes,
interests and opinions)
 PRIZM analysis from Claritas

Dr. Rosenbloom
Segmenting Consumer Markets
Demographic
Segmentation
Segmentation
Geographic
Segmentation
Situation
Segmentation
Psychographic
Behavior/Usage
Segmentation
Segmentation
Benefits-Sought
Dr. Rosenbloom
Benefits-Sought Segmentation
 Markets
can be
segmented based
on the benefits that
consumers desire
from using a
specific product
Dr. Rosenbloom
Benefits-Sought Segmentation
American Pork
Council
Dr. Rosenbloom
Bozell, Incorporated
Segmenting Consumer Markets
Demographic
Segmentation
Segmentation
Geographic
Segmentation
Situation
Segmentation
Psychographic
Behavior/Usage
Segmentation
Segmentation
Benefits-Sought
Dr. Rosenbloom
Situation Segmentation
 Purchase



situation or occasion
Physical surroundings
Social surroundings
Temporal perspective
• How much time to make a purchase?


Task definition
Pre-purchase attitude
Dr. Rosenbloom
Segmenting Consumer Markets
Demographic
Segmentation
Segmentation
Geographic
Segmentation
Situation
Segmentation
Psychographic
Behavior/Usage
Segmentation
Segmentation
Benefits-Sought
Dr. Rosenbloom
Behavior/Usage Segmentation

Markets can be segmented by how often or how
heavily consumers use a specific product

80/20 Principle - 80% of revenue generated by 20%
of customers
Light Users
80%
Heavy Users
20%
Dr. Rosenbloom
Segmentation Data
 Internal


sources
In-house customer and marketing databases
Data mine to explore patterns and
relationships in collected data
 External



sources
Lists of catalog/magazine subscribers
U.S. Census information
Mediamark, CACI Marketing Systems, etc.
Dr. Rosenbloom
Positioning Strategy
 Differentiation
through:

Price/quality emphasize value
in terms of
quality, price, or
both
Dr. Rosenbloom
Positioning Strategy
 Differentiation
 Differentiation
through:


through:
Product attributes characteristics as a
positioning base
Product usage positioning based
on a products
typical use
Dr. Rosenbloom

Symbol - use of a
symbol or icon to
position a product
in the consumer
consciousness
Positioning Strategy
 Differentiation
through:

Product user - the
typical user of a
product
Dr. Rosenbloom
Positioning Strategy
 Differentiation
through:

Product class positioning against
another type of
product or product
class
Dr. Rosenbloom
Positioning Strategy
 Differentiation
through:

Competition comparisons to a
product’s
competition
(directly or
indirectly)
Dr. Rosenbloom
Segmenting Business Markets
 Demographics

Industry size, growth potential, etc.
 Operating

Characteristics
Technology, brand-user status, etc.
 Purchasing Approaches

Purchasing policies, size of orders,
etc.
Dr. Rosenbloom
Segmenting Business Markets
 Product

Use or Usage Situation
The way the product will be used
and customer service levels
required
 Situational

Factors
Urgency, special product uses
 Buyer’s
Personal Characteristics
Dr. Rosenbloom
Segmenting Global Markets
 Economic

Stage of development in a host
country
 Political/Legal

Regulations and laws
 Cultural

Language barriers, differences in
consumer customs
Dr. Rosenbloom
Segmenting Global Markets
 Some
segments transcend
national borders





Rich around the world
Older and comfortable
Indulged kids
Emerging middle class
Women employed outside the
house
Dr. Rosenbloom
Market Segmentation
 Differentiated
 Concentrated
 Undifferentiated
Dr. Rosenbloom
Differentiated Marketing
 Differentiated
Marketing

An organization
targets multiple
market
segments and
develops
segment
specific mixes
Dr. Rosenbloom
Concentrated Marketing
 Concentrated
Marketing

When an
organization
concentrates its
marketing
efforts on a
smaller segment
of a larger
market
Dr. Rosenbloom
Undifferentiated Marketing
 Undifferentiated
Marketing

An organization
develops one
strategy
appropriate for
all members of
the total market
Dr. Rosenbloom