Download market segment

Identifying
Market Segments
and Targets
Marketing Management, 13th ed
As a marketer…
• Can you satisfy all customers with
a single product?
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Ford’s Model T Followed a Mass
Market Approach
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• Henry Ford epitomized this strategy
when he offered the Model T Ford
“in any color, as long as it is black.”
• Coca-Cola also used mass
marketing when it sold only one kind
of Coke in a 6.5-ounce bottle.
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• Customers are too numerous and diverse
in their buying requirements.
• This is why successful marketers look for
specific market segments that they can
serve more effectively.
• Can you tell me a product that can not
be differentiated?
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salt
sugar
oil
gasoline
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car
computer
Smart phone
jean
perfume
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mass marketing = one size fits all
Some observers even claim that mass
marketing is dying.
Therefore, to stay focused rather than
scattering their marketing resources, more
marketers are using market segmentation.
What is a Market Segment?
A market segment consists of a
group of customers who share a
similar set of needs and wants.
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Chapter Questions
• What are the different levels of market
segmentation?
• How can a company divide a market
into segments?
• How should a company choose the
most attractive target markets?
• What are the requirements for effective
segmentation?
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Target marketing requires marketers to take
three major steps:
(1) Identify and profile distinct groups of buyers
who might require separate products or marketing
mixes (market segmentation);
(2) select one or more market segments to enter
(market targeting);
(3) establish and communicate the products’ key
distinctive benefits in the market (market
positioning).
Effective Targeting Requires…
• Identify and profile distinct groups of
buyers who differ in their needs and
preferences
• Select one or more market segments to
enter
• Establish and communicate the
distinctive benefits of the market
offering
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A market segment consists of a large identifiable group
within a market, with similar wants, purchasing power,
geographical location, buying attitudes, or buying habits
• For example, an automaker may identify four
broad segments in the car market: buyers who
are primarily seeking
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(1) basic transportation,
(2) high performance,
(3) luxury,
(4) safety.
Segmenting Consumer Markets
Geographic
Demographic
Psychographic
Behavioral
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Geographic segmentation
• Geographic segmentation calls for
dividing the market into different
geographical units such as nations,
states, regions, counties, cities, or
neighborhoods.
• The company can operate in one or a
few geographic areas or operate in all
but pay attention to local variations.
Demographic Segmentation
• In demographic segmentation, the market is divided
into groups on the basis of age and the other
variables in table.
• One reason this is the most popular consumer
segmentation method is that consumer wants,
preferences, and usage rates are often associated
with demographic variables. Another reason is that
demographic variables are easier to measure.
Behavioral Segmentation
• In behavioral segmentation, buyers are divided
into groups on the basis of their knowledg of,
attitude toward, use of, or response to a product.
Many marketers believe that behavioral
variables—occasions, benefits, user status,
usage rate, loyalty status, buyer-readiness
stage, and attitude—are the best starting points
for constructing market segments.
Six steps in market segmentation, targeting
and positioning
Demographic Segmentation
Age and Life Cycle
Life Stage
Gender
Income
Generation
Social Class
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Toyota Scion
Targets Gen Y Consumers
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Dove Targets Women
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Clear Men
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Age Segmentation for Pamper’s Diaper
New baby (0 – 5 months)
Baby (6- 12 months)
Toddler (13 – 23 months)
Preschooler (24 months +)
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Behavioral Segmentation
Decision Roles
• Initiator
• Influencer
• Decider
• Buyer
• User
Behavioral Variables
• Occasions
• Benefits
• User Status
• Usage Rate
• Buyer-Readiness
• Loyalty Status
• Attitude
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Loyalty Status
Hard-core
Split loyals
Shifting loyals
Switchers
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Psychographic Segmentation
• Buyers are divided into different groups
on the basis of lifestyle or personality
and values. People within the same
demographic group can exhibit very
different psychographic profiles.
What are the advantages of market
segmentation?
• Segment marketing allows a firm to
create a more fine-tuned product or
service offering and price it appropriately
for the target audience.
• The choice of distribution channels and
communications
channels
becomes
much easier, and the firm may find it
faces fewer competitors in certain
segments.
Niche Marketing
• A niche is a more narrowly defined group, typically a
small market whose needs are not being well served.
Marketers usually identify niches by dividing a segment
into subsegments or by defining a group seeking a
distinctive mix of benefits.
• For example, a tobacco company might identify
two subsegments of heavy smokers: those who are
trying to stop smoking, and those who don’t care.
Perwoll Brillant Black
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• Whereas segments are fairly large and normally
attract several competitors, niches are fairly
small and may attract only one or two rivals.
• Still, giants such as IBM can and do lose pieces
of their market to nichers:
Dalgic labeled this confrontation
“guerrillas against gorillas.”
Some larger firms have therefore turned
to niche marketing.
Ramada Franchises Enterprises, for example, offers
lodgings in several niches:
Ramada Limited for economy travelers;
Ramada Inn as a mid-price, full-service hotel;
Ramada Plaza for the upper-mid-price niche;
Ramada
Renaissance
hotels,
offering
excellent, four-star service.
Effective Segmentation
To be useful, market segments must be:
➤ Measurable:
The size, purchasing
power, and characteristics of the
segments can be measured.
➤ Substantial: The segments are
large and profitable enough to
serve. A segment should be the
largest possible homogeneous
group worth going after with a
tailored marketing program.
➤ Accessible: The segments can be
effectively reached and served.
➤ Differentiable: The segments are
conceptually distinguishable and
respond differently to different
marketing mixes.
If two segments respond
identically to a particular offer,
they do not constitute separate
segments.
➤ Actionable: Effective programs
can be formulated for attracting
and serving these segments.
MARKET TARGETING STRATEGIES
• Once the firm has identified its market-segment
opportunities, it is ready to initiate market targeting.
Here, marketers evaluate each segment to determine
how many and which ones to target and enter.
target market
A set of buyers sharing common
needs or characteristics that the
company decides to serve.
Evaluating Market Segments
• In evaluating different market segments, the firm
must look at two factors:
(1) the segment’ overall attractiveness,
(2) the company’s objectives and resources.
First, the firm must ask whether a potential
segment has the characteristics that make it
generally attractive, such as size, growth,
profitability, scale economies, and low risk.
Undifferentiated marketing
A market-coverage strategy in
'which a firm decides to ignore
market segment differences and go
after the whole market 'with one
offer.
Differentiated Marketing
A market-coverage strategy in which
a firm decides to target several
market segments and designs
separate offers for each.
Concentrated Marketing
A market-coverage strategy in which
a firm goes after a large share of one
or a few submarkets.
mass marketing
Using
almost
the
same
product,
promotion
and
distribution for all consumers.
micromarketing
Aform of target marketing in
which tailor their marketing
programmes to the needs and
wants of narrowly defined
geographic, demographic,
psychographio or behavioural
segments.
individual marketing
Tailoring products and marketing
programmes to the needs and,
preferences of individual
customers.
niche marketing
Adapting a company's offerings
to more closely match the needs
of one or more subsegments
there is often little competition.
Crest Whitestrips Follows a
Multisegment Strategy
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