Post on 26-Jan-2016
description
Identifying Market Segments and Targets
Segmentation, targeting, and positioning
To compete more effectively, many companies are now embracing target marketing. Instead of scattering their marketing efforts, they’re focusing on those consumers they have the greatest chance of satisfying.
Effective target marketing requires that marketers:
• 1. Identify and profile distinct groups of buyers who differ in their needs and wants (market segmentation).
• 2. Select one or more market segments to enter (market targeting).
• 3. For each target segment, establish and communicate the distinctive benefit(s) of the company’s market offering (market positioning).
Steps in Market Segmentation, Targeting,and Positioning
1. Identifysegmentationvariables andsegment themarket
2. Develop profiles ofresultingsegments
MarketMarketSegmentationSegmentation
3. Evaluateattractivenessof eachsegment
4. Select thetargetsegment(s)
MarketMarketTargetingTargeting
5. Identifypossible
positioningconcepts foreach target
segment
6. Select,develop, andcommunicate
the chosenpositioning
concept
MarketMarketPositioningPositioning
Levels of Market Segmentation
Mass Marketing
Same product to all consumers One size fits all Mass Marketing Lower cost (No segmentation)
Mass Marketing
Same product to all consumers One size fits all Mass Marketing Lower cost (No segmentation)
Segment Marketing
Different products to one/more segments Isolate broad segments & adapt offers
Fine-tuned products Fewer competitors (Some segmentation)
Segment Marketing
Different products to one/more segments Isolate broad segments & adapt offers
Fine-tuned products Fewer competitors (Some segmentation)
Micromarketing (Local, Individual, Self)
Products to suit the tastes of individuals or locations High cost Logistical problem (Complete segmentation)
Micromarketing (Local, Individual, Self)
Products to suit the tastes of individuals or locations High cost Logistical problem (Complete segmentation)
Niche Marketing
Different products to subgroups within segments Fewer or no competitors( More segmentation)
Niche Marketing
Different products to subgroups within segments Fewer or no competitors( More segmentation)
Basic Market-Preference Patterns
(a) Homogeneouspreferences
Sweetness
Cre
am
iness
(c) Clusteredpreferences
Cre
am
iness
Cre
am
iness
Sweetness
(b) Diffusedpreferences
Cre
am
iness
Sweetness
Steps in Segmentation Process
Description1. Needs-Based Segmentation
Group customers into segments based on similar needs and benefits sought by customer in solving a particular consumption problem.
2. Segment Identification
For each needs-based segment, determine which demographics, lifestyles, and usage behaviors make the segment distinct and identifiable (actionable).
3. Segment Attractiveness
Using predetermined segment attractiveness criteria (such as market growth, competitive intensity, and market access), determine the overall attractiveness of each segment.
4. Segment Profitability
Determine segment profitability.
5. Segment Positioning
For each segment, create a “value proposition” and product-price positioning strategy based on that segment’s unique customer needs and characteristics.
Effective Segmentation Criteria
Measurable Measurable
AccessibleAccessible
SubstantialSubstantial
DifferentialDifferential
Segments must be large or profitable enough to serve.
Segments can be effectively reached and served.
Size, purchasing power, profiles of segments can be measured.
Segments must respond differently to different marketing mix elements & actions.
Bases for Segmenting Consumer Markets
GeographicGeographic
DemographicDemographic
PsychographicPsychographic
BehavioralBehavioral
Geographic Segmentation
World Region or CountryWorld Region or Country
City or MetroCity or Metro
Rural and Semi-Urban Areas Rural and Semi-Urban Areas
Demographic Segmentation
• Dividing the market into groups Dividing the market into groups based on variables such as:based on variables such as:
– AgeAge– GenderGender– Family size or life cycleFamily size or life cycle– IncomeIncome– OccupationOccupation– EducationEducation– ReligionReligion– RaceRace– GenerationGeneration– NationalityNationality
Psychographic Segmentation
• Lifestyle is a person’s pattern of living as expressed in his or her psychographics.
• It involves measuring consumers’ major AIO dimensions—• activities (work, hobbies, shopping, sports, social events) • interests (food, fashion, family, recreation), and• opinions (about themselves, social issues, business,
products).
• Personality refers to the unique psychological characteristics that distinguish a person or group.
• Personality is usually described in terms of traits such as self-confidence, dominance, sociability, autonomy, defensiveness, adaptability, and aggressiveness.
The VALS Segmentation System
The VALS Segmentation System
The main dimensions of the VALS segmentation framework are consumer motivation (the horizontal dimension) and consumer resources (the vertical dimension). Consumers are inspired by one of three primary motivations: ideals, achievement, and self-expression
The four groups with higher resources are:
1. Innovators—Successful, sophisticated, active, “take-charge” people with high self-esteem. Purchases often reflect cultivated tastes for relatively upscale, niche-oriented products and services.
2. Thinkers—Mature, satisfied, and reflective people motivated by ideals and who value order, knowledge, and responsibility. They seek durability, functionality, and value in products.
3. Achievers—Successful, goal-oriented people who focus on career and family. They favor premium products that demonstrate success to their peers.
4. Experiencers—Young, enthusiastic, impulsive people who seek variety and excitement. They spend a comparatively high proportion of income on fashion, entertainment, and socializing.
The VALS Segmentation System
The four groups with lower resources are:
• 1.Believers—Conservative, conventional, and traditional people with concrete beliefs. They prefer familiar, U.S.-made products and are loyal to established brands.
• 2. Strivers—Trendy and fun-loving people who are resource-constrained. They favor stylish products that emulate the purchases of those with greater material wealth.
• 3. Makers—Practical, down-to-earth, self-sufficient people who like to work with their hands. They seek U.S.-made products with a practical or functional purpose.
• 4. Survivors—Elderly, passive people concerned about change and loyal to their favorite brands.
Behavioral Segmentation
Occasions
Regular occasion, special occasion
Benefits Quality, service, economy, convenience, speed
User status
Nonuser, ex-user, potential user, first-time user, regular user
Usage rate
Light user, medium user, heavy user
Loyalty status
Hard-core loyals, Split loyals, Shifting loyals, Switchers
Buyers Readiness stage
Unaware, aware, informed, interested, desirous, intending to buy
Attitude toward product
Enthusiastic, positive, indifferent, negative, hostile
Segmenting Business Markets
DemographicsDemographics
Operating VariablesOperating Variables
Purchasing ApproachesPurchasing Approaches
Situational FactorsSituational Factors
Personal CharacteristicsPersonal Characteristics
Business Marketers Use Many of the Same Consumer Variables,
Plus:
Major Segmentation Variables for Business MarketDemographic
• 1.Industry: Which industries should we serve?
• 2.Company size: What size companies should we serve?
• 3.Location: What geographical areas should we serve?
Operating Variables
• 4.Technology: What customer technologies should we focus on?
• 5.User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers?
• 6.Customer capabilities: Should we serve customers needing many or few services?
Purchasing Approaches
• 7.Purchasing‑function organization: Should we serve companies with highly centralized or decentralized purchasing organizations?
• 8.Power structure: Should we serve companies that are engineering dominated, financially dominated, and so on?[
• 9. Nature of existing relationships: Should we serve companies with which we have strong relationships or simply go after the most desirable companies?
• 10. General purchase policies: Should we serve companies that prefer leasing? Service contracts? Systems purchases? Sealed bidding?
• 11. Purchasing criteria: Should we serve companies that are seeking quality? Service? Price?
Major Segmentation Variables for Business Market
Situational Factors
• 12.Urgency: Should we serve companies that need quick and sudden delivery or service?
• 13.Specific application: Should we focus on certain applications of our product rather than all applications?
• 14.Size of order: Should we focus on large or small orders?
Personal Characteristics
• 15.Buyer‑seller similarity: Should we serve companies whose people and values are similar to ours?
• 16.Attitudes toward risk: Should we serve risk‑taking or risk‑avoiding customers?
• 17.Loyalty: Should we serve companies that show high loyalty to their suppliers?
Segmenting International Markets
Bases for segmentation
Geographic Segmentation: Assumes that nations close to one another will have many common traits and behaviors although there are some exceptions
Economic factors: GDP, Interest rate, Inflation rate, Unemployment levels, Devaluation/revaluation, Disposable and discretionary income, Currency markets, Global financial system
Political & Legal factors: Type and stability of Govt. receptivity
of foreign firms, monetary regulations and the amount of bureaucracy.
Cultural factors: Common languages, religions, values &
attitudes, customs & behavior
Market Targeting
Once the firm has identified its market-segment opportunities, it must decide how many and which ones to target. Marketers are increasingly combining several variables in an effort to identify smaller, better-defined target groups
How many and which segments to target?Segment Size and GrowthSegment Size and Growth
Analyze sales, growth rates and expected profitabilitySelect ‘right size and right growth’
Segment Structural AttractivenessSegment Structural AttractivenessCompetitorsAvailability of Substitute Products Power of Buyers & Suppliers.
Company Objectives and ResourcesCompany Objectives and ResourcesCompany objectivesCompany skills & resources relative to the segment(s).Look for Competitive Advantages.
Market Targeting: Market Coverage Strategies
Undifferentiated Marketing Firm relies on mass production, distribution and advertising Cuts down costs Intense competition & under satisfaction of customers
Differentiated Marketing Firm operates in several market segments with different
Mixes More total sales More costs: Product modification Manufacturing
Administrative Inventory Promotion
Concentrated Marketing Appealing when company resources are limited. Firm achieves a strong market position in niches & enjoys
operating economies
Market Coverage Strategies
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
Marketing MixMarketing Mix
Marketing MixMarketing Mix
Marketing Mix 1Marketing Mix 1
Marketing Mix 2Marketing Mix 2
Marketing Mix 3Marketing Mix 3
MarketMarket
A. Undifferentiated Marketing
B. Differentiated Marketing
C. Concentrated Marketing
Market Targeting: Selecting market segments
Market Targeting: Selecting market segments
Single-Segment Concentration Many companies concentrate on a single segment.Through
concentrated marketing, the firm gains a thorough understanding of the segment’s needs and achieves a strong market presence.
Selective Specialization Here the firm selects a number of segments, each objectively
attractive and appropriate. There may be little or no synergy among the segments, but each segment promises to be a moneymaker.
Product Specialization Another approach is to specialize in making a certain product for
several segments.Through a product specialization strategy, the firm builds a strong reputation in the specific product area.
Market Specialization With market specialization, the firm concentrates on serving many
needs of a particular customer group.Full Market Coverage Here a firm attempts to serve all customer groups with all of the
products they might need. Only very large firms can undertake a full market coverage strategy.