AM_6 Segmenting and Targeting Markets

7/30/2019 AM_6 Segmenting and Targeting Markets

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Segmenting andTargeting Markets


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Market Segmentation

Market

MarketSegment

MarketSegmentation

People or organizations withneeds or wants and the ability and

willingness to buy

A subgroup of people ororganizations sharing one or morecharacteristics that cause them to

have similar product needs.

The process of dividing a marketinto meaningful, relatively similar,identifiable segments or groups.


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A Market is...

(1) people or organizations with

(2) needs or wants, and with

(3) the ability and

(4) the willingness to buy.

A group o f people that lacks any one of

these characterist ics isNOTa market.


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The Importance ofMarket Segmentation

Markets have a variety of product

needs and preferences

Marketers can better define

customer needs

Decision makers can define objectives

and allocate resources more accurately


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Criteria for Segmentation

Substantiality

IdentifiabilityMeasurability

Accessibility

Responsiveness

Segment must be largeenough to warrant a special

marketing mix.

Segments must be identifiableand their size measurable.

Members of targeted segmentsmust be reachable with

marketing mix.

Unless segment responds to amarketing mix differently, noseparate treatment is needed.


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Segmentation Bases

Characteristics of individuals,

groups,

or organizations used

to divide a total market

into segments.

(variables)


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Bases for Segmentation

Usage Rate

Benefits Sought

Psychographics

Demographics

Geography


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Geographic Segmentation

Segmenting markets by

region of the country/world

market size

market density

climate


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Benefits of RegionalSegmentation

New ways to generate sales in sluggishand competitive markets

Scanner/POS data allow assessment ofbest selling brands in region

Regional brands appeal to local

preferences React more quickly to competition


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Usage Rate

Benefits Sought

Psychographics

Demographics

Geography


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Demographic Segmentation

Segmenting markets

by age, gender, income,

ethnic background,

and family life cycle


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Bases forDemographic Segmentation

Age

Gender

Income

Ethnic background Family Life Cycle


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Family Life Cycle

Age

Marital

Status

Children


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Family Life Cycle


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Usage Rate

Benefits Sought

Psychographics

Demographics

Geography


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Psychographic Segmentation

Market segmentation on

the basis of personality,motives, lifestyles, and

geodemographics.


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Bases forPsychographic Segmentation

PsychographicSegmentation

Personality

Motives

Lifestyles

Geodemographics


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Lifestyle Segmentation

How time is spent

Importance of things

around them Beliefs

Socioeconomiccharacteristics


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Geodemographic Segmentation

Segmenting potential

customers into neighborhood

lifestyle categories.

Combines geographic,

demographic, and lifestyle

segmentation.


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Usage Rate

Benefits Sought

Psychographics

Demographics

Geography


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Benefit Segmentation

The process of grouping

customers into market

segments according to

the benefits they seek

from the product.


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Usage Rate

Benefits Sought

Psychographics

Demographics

Geography


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Usage-Rate Segmentation

Dividing a market by the

amount of product

bought or consumed.


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The 80/20 Principle

A principle holding that

20 percent of all customers

generate 80 percent

of the demand.

Target

customers

20%Share of

customers

Target

customers

80%

Share of

sales


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Business Marketing Segmentation

Four segments of business markets:

Producers / manufacturers Resellers

Governments

Institutions


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Steps in Segmenting a Market

Selecta

marketfor

study

Choosebasesfor

segmen-tation

Selectdescrip-tors

Profileand

analyzesegments

Selecttargetmarkets

Design,imple-ment,

maintainmktging

mix


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Target Market

A group of people or

organizations for which an

organization designs,

implements, and maintains a

marketing mix intended to

meet the needs of that group,

resulting in mutually

satisfying exchanges.


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UndifferentiatedTargeting Strategy

Marketing approach that

views the market as one big

market with no individual

segments and thus requires a

single marketing mix.

U diff ti t d


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UndifferentiatedTargeting Strategy

Advantages: Potential savings on

production and marketingcosts

Disadvantages: Unimaginative product

offerings

Company moresusceptible to competition


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Concentrated Targeting Strategy

A strategy used to select one

segment of a market (a

niche) for targeting marketing

efforts.


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Concentrated Targeting Strategy

Advantages: Concentration of resources Meets narrowly defined

segment

Small firms can compete Strong positioning

Disadvantages: Segments too small, or

changing Large competitors may

market to niche segment


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Cannibalization

Situation that occurs when

sales of a new productcut into sales of a

firms existing products.


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Position

The place a product, brand,

or group of products occupies

in consumers minds relative

to competing offerings.


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Positioning

Developing a specific

marketing mix to influence

potential customers overall

perception of a brand,

product line, or organization

in general.


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Product Differentiation

A positioning strategy that

some firms use to distinguish

their products from those of

competitors.


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Perceptual Mapping

A means of displaying or

graphing, in two or more

dimensions, the location of

products, brands, or groupsof products in customers

minds.


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Perceptual Map and PositioningStrategy for Levi Strauss Products


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Repositioning

Changing consumers

perceptions of a brandin relation to

competing brands.

AM_6 Segmenting and Targeting Markets

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