Download Marketing Management, 8/e

Chapter Five
Market Segmentation
Key Words / Outline
Marketing segmentation, Post hoc segmentation, Priori
segmentation, Benefit segmentation, Psychographic
segmentation, Vertical dimension, Horizontal dimension,
Geodemographic segmentation, Positioning map, Marketing
mix
McGraw-Hill/Irwin
Marketing Management, 8e
© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
Market Segmentation
DETERMINE CONSUMER NEEDS AND WANTS
DIVIDE MARKETS ON RELEVANT DIMENSIONS
DEVELOP PRODUCE POSITIONING
DECIDE SEGMENTATION STRATEGY
DESIGN MARKETING MIX STRATEGY
5-3
Meeting the Consumer Needs
• Successful marketing strategies depend on meeting
consumer needs and wants
• A firm with a good deal of venture capital may seek to
discover broad variety of unmet needs
• Operate within your firm’s need satisfaction activities
• At a strategic level, need and wants usually are translated
into more operational concepts
5-4
Market Division
• Three important questions to be considered
- Should the segmentation be a priori or a post hoc?
- How does one determine the relevant dimensions or bases to use
for segmentation?
- What are some bases for segmenting consumer and
organizational buyer markets?
5-5
Market Segments for High-Tech
Products
The pessimists
Business
Family
Entertainment
Less Affluent
Sidelined citizens
Not interested in technology
More Affluent
Media-junkies
Old consumers
typically managers
who don’t touch
their computers
at work
Willing to use
technology but
slow to upgrade.
Seek entertainment
and can’t find much
of it online. Prefer
TV and other media
5-6
Market Segments for High-Tech
Products
The optimists
Less Affluent
Family
Entertainment
Techno-strivers
Use technology from
cell phones to pagers
to online service
primarily to gain
career edge
Families with limited
budget but still
Interested in new
technology.
Favor online
entertainment but have
less cash to spend
on it
More Affluent
These customers are
the biggest spenders
and they’re early
adopters of new
technology for
personal use
Also big spenders but
focused on technology
for home uses such
as family PC
They like the on-line
world for
entertainment and
are willing to spend
for the latest
technotainment
5-7
A Priori versus Post Hoc
Segmentation
• A priori segmentation: An approach where the marketing
manager has decided on the appropriate basis for
segmentation in advance of doing any research on a market
• Post hoc segmentation: An approach in which people are
grouped into segments on the basis of findings
• Both these approaches are valuable and the question of
which to use depends in part how well the firm knows the
market
5-8
Consumer Market Segmentation
• Customers can be divided or segmented by using
-
Geography
Demography
Sociography
Behavior
5-9
Organizational Buyer Markets
•
•
•
•
•
•
•
Company size
Purchase quantity
Product application
Organization type
Location
Purchase status
Attribute importance
5 - 10
Psychographic Segmentation
• VALS 2 (“values and lifestyles”)
• Life styles are measured by asking consumers about their
- Activities
- Interests
- Opinions
• Segmentation research based on VALS™ is a product of
SRI Consulting Business Intelligence
5 - 11
VALS 2 - Eight American Lifestyles
ACTUALIZERS
Abundant Resources
Principle Oriented
Status Oriented
Action Oriented
FULFILLEDS
ACHIEVERS
EXPERIENCERS
BELIEVERS
STRIVERS
MAKERS
STRUGGLERS
Minimal Resources
5 - 12
Geodemographic Segmentation
• PRIZM: Potential Ranking Index by Zip Markets
- PRIZM assumes that similar customers live within the same or
proximate neighborhood (s)
- PRIZM classifies every U.S. neighborhood into one of 62
distinct types or clusters of consumers
- PRIZM helps marketers understand customers in selected
markets
5 - 13
Product Positioning
• Positioning can be achieved according to selected attributes
or functions
-
Superiority to competitive products
Positioned by use or application
Positioned in terms of particular types of users
Positioned relative to a product class
• Position mapping is a visual depiction of customers
perception of competitive products
5 - 14
Market Segmentation Strategies
•
•
The firm may decide not to enter the market
The firm may not decide to segment but to be a mass
marketer if
-
The market is so small it’s not profitable to market to one
portion of it
Heavy users comprise so much of sales they are the only
relevant target
Dominant brand does not need segmentation
5 - 15
Market Evaluation Measures
•
3Ms of market evaluation
-
Measurable – large enough to measure size and characteristics
Meaningful – large enough to deliver sufficient sales and growth
potential
Marketable – can be reached and served in an efficient manner
5 - 16
Market Evaluation Questions
•
Measurability questions
-
What are the appropriate bases for segmenting this market and
can they be measured?
Is secondary data available so this can be done inexpensively?
If primary data are needed, will there be a return on investment?
Are specific names/addresses needed?
Can purchases by this segment be measured and tracked?
5 - 17
Market Evaluation Questions
•
Meaningfulness Questions
-
How many people are in this market and how frequently will
they purchase the product?
What market share can we expect?
What is the growth potential?
How strong is the competition and is it likely to change?
How satisfied are the consumers in this market with current
offerings?
5 - 18
Market Evaluation Questions
•
Marketability Questions
-
-
Can this segment be reached with current channels of
distribution?
Can we establish new channels efficiently, if needed?
What promotion media does this segment read, listen to, or
watch?
Can we afford to promote to this segment and is there a media to
reach them?
Are people in this segment willing to pay a price necessary for
profit?
Can we produce a product for this market profitably?
5 - 19
Design Marketing Mix
•
•
•
Selection of target market and designing the market
should go hand in hand
Marketing mix decisions should have already been
carefully considered
Product positioning has many implications for promotion
and channel distribution
5 - 20