Download Factors used to segment consumer

McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.
LEARNING OBJECTIVES (LO)
After reading Chapter 9, you should be able to:
LO1
Explain what market segmentation is
and when to use it.
LO2
Identify the five steps involved in
segmenting and targeting markets.
LO3
Recognize the factors used to segment
consumer and organizational markets.
1-2
Market Segmentation
LEARNING OBJECTIVES (LO)
After reading Chapter 9, you should be able to:
LO4
Develop a market-product grid
to identify a target market and
recommend resulting actions.
LO5
Explain how marketing managers
position products in the marketplace.
LO6
Describe three approaches to
developing a sales forecast for
an organization.
1-3
Market Segmentation
The Affluent Asian Adult
The Multiple Faces
Five distinct groups of
affluent adults in ten
Asian countries today
•“Work to lives” (28%)
•“Gimmes” (25%)
•“Executive Warriors” (21%)
•“HUMmers (15%)
•“Luxury Loyalist” (12%)
Source: Synovate Survey
1-4
Opening Story – Market Segmentation
The Affluent Asian Adult
The “Executive Warriors”
1-5
Opening Story – Market Segmentation
Market Segmentation
Nature & Meaning
LO1

Market Segmentation

Market Segments

Product Differentiation

Segmentation: Linking Needs to Actions
1-6
What is Market Segmentation
FIGURE 9-1 Market segmentation links
market needs to an organization’s marketing
program through marketing mix actions
LO1
1-7
What is Market Segmentation
FIGURE 9-2 Market-product grid showing
how different pillows reach different
segment of sleepers
LO1
1-8
What is Market Segmentation
Market Segmentation
When & How to Segment Markets
1. One Product and
Multiple Market Segments
2. Multiple Products and
Multiple Market Segments
3. Segments of One: Mass Customization
LO1
1-9
What is Market Segmentation
Harry Potter
What Market Segmentation is this?
One
Product
and
Multiple
Market
Segments
LO1
1-10
What is Market Segmentation
Market Segmentation
When & How to Segment Markets
Segments of One: Mass Customization
• Customer Relationship Management (CRM)
• Mass Customization
• Build-to-Order (BTO)
LO1
1-11
What is Market Segmentation
LG
What Market Segmentation is this?
Segments of
One: Mass
Customization
LO1
1-12
What is Market Segmentation
Segmenting & Targeting Markets
A Five-Step Approach
FIGURE 9-3 The five key steps in segmenting and
targeting markets that link market needs to a firm’s
marketing program
LO2
1-13
Five Steps in Segmenting & Targeting Markets
Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments
• Simplicity and Cost-Effectiveness of Assigning
Potential Buyers to Segments
• Potential for Increased Profit
• Similarity of Needs of Potential Buyers
Within a Segment
• Difference of Needs of Buyers Among Segments
• Potential of a Marketing Action to Reach
a Segment
LO3
1-14
Factors used to segment consumer & organisational markets
FIGURE 9-4 Segmentation variables and breakdowns
for consumer markets
Customer
Characteristics
Buying
Responses
LO3
1-15
Factors used to segment consumer & organisational markets
Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments

Ways to Segment Consumer
Markets – Customer Characteristics
• Geographic customer characteristic
• Demographic customer characteristic
• Psychographic customer characteristic
LO3
1-16
Factors used to segment consumer & organisational markets
Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments

Ways to Segment Consumer Markets
– Buying Responses
 Product Features
 Usage Rate or Frequency Marketing
 80/20 Rule
LO3
1-17
Factors used to segment consumer & organisational markets
FIGURE 9-5 Patronage of fast-food
restaurants by adults 18 years and older
LO3
1-18
Factors used to segment consumer & organisational markets
FIGURE 9-6 Comparison of various kinds of
users and nonusers for Wendy’s, Burger
King, and McDonald’s fast-food restaurants
LO3
1-19
Factors used to segment consumer & organisational markets
Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments

Behavioral Variables to Use
in Forming Segments
• Students
 Dorms, Sororities,
& Fraternities
 Day Commuters
 Apartments
 Night Commuters
• Nonstudents
LO3
 Faculty & Staff
 Workers in Area
 Residents in Area
 Visitors
1-20
Factors used to segment consumer & organisational markets
Firms’ Colour Copying Problems
What variables can Xerox use for segmentation?
LO3
1-21
Factors used to segment consumer & organisational markets
FIGURE 9-7 Segmentation variables and
breakdowns for organizational markets
LO3
1-22
Factors used to segment consumer & organisational markets
Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments

Ways to Segment
Organizational Markets
• Geographic customer characteristic
 Statistical Areas
LO3
1-23
Factors used to segment consumer & organisational markets
Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments

Ways to Segment
Organizational Markets
• Demographic customer characteristic
 SICS Code
 Number of employees
LO3
1-24
Factors used to segment consumer & organisational markets
Segmenting & Targeting Markets
Step 1: Grouping Potential Buyers into Segments

Ways to Segment
Organizational Markets
• Benefits sought
 product features
LO3
1-25
Factors used to segment consumer & organisational markets
Segmenting & Targeting Markets
Step 2: Grouping Products into Categories

So that buyers can relate to them

Product groups/lines

LO3
E.g. Aisles in supermarkets
1-26
Factors used to segment consumer & organisational markets
Segmenting & Targeting Markets
Step 3: Market-Product Grid & Size of Markets

Market-Product Grid
• Forming a Market-Product Grid
• Estimating Market Sizes
LO4
1-27
Developing a Market-Product Grid and marketing actions for a target market
Segmenting & Targeting Markets
Step 3: Market-Product Grid & Size of Markets
LO4
FIGURE 9-8 Selecting a target market for your restaurant next
to an urban university (target market is shaded)
1-28
Developing a Market-Product Grid and marketing actions for a target market
Segmenting & Targeting Markets
Step 4: Selecting a Target Market

Criteria to Use in Selecting Target Markets
• Market Size
• Expected Growth
• Competitive Position
• Cost of Reaching Segment
LO4
• Compatibility with Organizational
Goals and Resources
1-29
Developing a Market-Product Grid and marketing actions for a target market
Segmenting & Targeting Markets
Step 4: Selecting a Target Market
Note the 2 different sets of criteria
in market segmentation process:
Criteria for
Segmenting
Market
(Step 1)
LO4
Criteria for
Targeting
Market
(Step 4)
1-30
Developing a Market-Product Grid and marketing actions for a target market
Segmenting & Targeting Markets
Step 4: Selecting a Target Market

Choose the Products & Segments
• No Breakfast
• Four Student Segments Only
LO4
1-31
Developing a Market-Product Grid and marketing actions for a target market
Segmenting & Targeting Markets
Step 5: Taking Marketing Actions to reach Target Market

Your restaurant’s segmentation strategy
• Day Commuters
• Between-Meal Snacks
• Dinners to Night Commuters
LO4
1-32
Developing a Market-Product Grid and marketing actions for a target market
FIGURE 9-9 Advertising actions to reach
specific student segments (an entire market
segment vs. a narrow niche)
LO4
1-33
Developing a Market-Product Grid and marketing actions for a target market
Segmenting & Targeting Markets
Step 5: Taking Marketing Actions to reach Target Market

Apple’s Ever-Changing
Segmentation Strategy

Market-Product Synergies: A Balancing Act
• Marketing Synergies
• Product Synergies
LO4
1-34
Developing a Market-Product Grid and marketing actions for a target market
Marketing Matters
Apple’s Segmentation Strategy
LO4
1-35
Developing a Market-Product Grid and marketing actions for a target market
Product Positioning
Two Approaches

Product Positioning

Product Repositioning

Two Approaches to Product Positioning
• Head-to-Head Positioning
• Differentiation Positioning
LO5
1-36
Positioning Products in the Marketplace
Product Positioning
Two Approaches

Product Positioning
• Identify Important Attributes for a
Product Class
• Judgments of Existing Brands on
These Important Attributes
• Ratings of an Ideal Product’s or
Brand’s Attributes
LO5
1-37
Positioning Products in the Marketplace
Product Positioning
Two Approaches

Perceptual Map

Repositioning Chocolate Milk for Adults
How can
dairies put
more zip
into
chocolate
milk sales?
LO5
1-38
Positioning Products in the Marketplace
FIGURE 9-10 Using positioning and
perceptual map to increase milk sales to
children and adult
LO5
1-39
Positioning Products in the Marketplace
Sales Forecasting
Three Approaches
LO6

Market Potential

Sales Forecast

Industry Potential

Company Forecast
1-40
Three Approaches to developing a Sales Forecast
Sales Forecasting
Three Approaches

Judgments of the Decision Maker
• Direct Forecast
• Lost-Horse Forecast

Surveys of Knowledgeable Groups
• Survey of Buyers’ Intentions Forecast
LO6
• Salesforce Survey Forecast
1-41
Three Approaches to developing a Sales Forecast
Sales Forecasting
Three Approaches

Statistical Methods
• Trend Extrapolation
• Linear Trend Extrapolation
LO6
1-42
Three Approaches to developing a Sales Forecast
FIGURE 9-12 Linear trend extrapolation of
sales revenues at Xerox (made at the start
of 2000)
LO6
1-43
Three Approaches to developing a Sales Forecast