Chapter 8 MKTG6

8/14/2019 Chapter 8 MKTG6

1/47

Chapter 1 Copyright 2012 by Cengage Learning Inc. All rights reserved 1

Lamb, Hair, McDaniel

CHAPTER 8Segmenting and

Targeting Markets

2012-2013

iStockphoto.com/Rubberball


2/47

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 of people that lacks any one of

these characterist ics is NOT a market.

1 2013 by Cengage Learning Inc. All Rights Reserved.2


3/47

Market Segmentation

Market

Market

Segment

MarketSegmentation

People or organizations with needs or wants

and the ability and willingness to buy.

A subgroup of people or organizations sharingone or more characteristics that cause them tohave similar product needs.

The process of dividing a market into

meaningful, relatively similar, identifiablesegments or groups.



4/47

The Concept of Market Segmentation

2013 by Cengage Learning Inc. All Rights Reserved.

4


5/47

The Importance of

Market Segmentation

Markets have a variety of product needs and

preferences

Marketers can better define customer needs

Decision makers can define objectives andallocate resources more accurately



6/47

Criteria for Segmentation

Substantiality

Identifiabilityand Measurability

Accessibility

Responsiveness

Segment must be large enough towarrant a special marketing mix.

Segments must be identifiable andtheir size measurable.

Members of targeted segmentsmust be reachable with marketing

mix.

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



7/47

Bases for Segmentation

Usage Rate

Benefits Sought

Psychographics

Demographics

Geography



8/47

Geographic Segmentation

Region of the country or

world

Market size

Market density

Climate



9/47

Benefits of

Regional Segmentation

New ways to generate sales in sluggish

and competitive markets

Scanner data allow assessment of best

selling brands in region

Regional brands appeal to local

preferences Quicker reaction to competition



10/47

Demographic Segmentation

Age

Gender

Income

Ethnic

Family life cycle



11/47

Age Segmentation

Tweens

Teens

Generation Y

Generation X

Baby Boomers

The War Generation

(ages 61-66)

The Great

Depression

Generation (ages

67-76) The G.I. Generation

(ages 77+)

2013 by Cengage Learning Inc. All Rights Reserved.11

Marketers can segment markets using cohorts:


12/47

Gender Segmentation

Women make 70 percent of consumers

goods purchases annually

Many marketers of male-dominated

arenas are targeting women

Increasing numbers of marketers in

female dominated categories are

targeting men.



13/47

Income Segmentation

Determines consumer wants

Determines buying power

Retailers can appeal to: low-income (Walmart)

High-income (Saks Fifth Avenue)

Both (Costco, Target)



14/47

Ethnic Segmentation

Largest ethnic markets are:

Hispanic Americans

African AmericansAsian Americans

Companies must make products gearedtoward specific ethnic groups as theycontinue to expand.

Foodpix/Jupiterimages/Ge

ttyImages



15/47

Family Life Cycle


Age

Children

Marital

Status


16/47

Exhibit 8.1

Family Life Cycle



17/47

Psychographic

Segmentation

Psychographic

Segmentation

Market segmentation on the basis of

personality, motives, lifestyles, and

geodemographics.



18/47

Bases for Psychographic

Segmentation

Personality

Motives

Lifestyles

Geodemographics



19/47

Personality and Motive

Segmentation

Reflects a persons traits, attitudes,

and habits.

Personality

Motives

Marketers might appeal to emotional,

rational, or status motives, among others.



20/47

Lifestyle Segmentation

How time is spent

Importance of things around

themBeliefs

Socioeconomic characteristics



21/47

Geodemographic Segmentation

Geodemographic

Segmentation

4

Segmenting potential

customers into

neighborhood lifestyle

categories.

Combines geographic,

demographic, and lifestylesegmentation.



22/47

Benefit Segmentation

The process of grouping customers

into market segments according to

the benefits they seek from the

product.

Benefit

Segmentation



23/47

Usage-Rate Segmentation

Usage-Rate

Segmentation

Dividing a market by the amount

of product bought or consumed.

80/20

Principle

A principle holding that 20

percent of all customers generate

80 percent of the demand.



24/47

Bases for Segmenting

Business Markets

CompanyCharacteristics

BuyingProcesses

Producers

Resellers

Government

Institutions



25/47

Company Characteristics

Important segmentation variables:

Geographic location

Type of company

Company size

Product use



26/47

Buyer Characteristics

Satisficers

Business customers who place an

order with the first familiar supplier to

satisfy product and delivery

requirements.

Optimizers

Business customers who consider

numerous suppliers, both familiar and

unfamiliar, solicit bids, and study allproposals carefully before selecting

one.



27/47

Buyer Characteristics

Demographic characteristics

Decision style

Tolerance for risk

Confidence level

Job responsibilities



28/47

Note that steps 5 and 6 are actually marketing activities

that follow market segmentation (steps 1 through 4).

Steps in Segmenting

Markets


1 Select amarket forstudy

2 Choosebases forsegmentation

3 Selectdescriptors

4 Profile andanalyzesegments

5 Selecttargetmarkets

6 Design,implement,and

maintainmarketingmix


29/47

Strategies for Selecting

Target Markets

A group of people or

organizations for which anorganization designs,

implements, and maintains a

marketing mix intended to

meet the needs of that group,resulting in mutually satisfying

exchanges.

Target

Market



30/47

Strategies for Selecting

Target Markets

ConcentratedStrategy

UndifferentiatedStrategy

MultisegmentStrategy

2013 by Cengage Learning Inc. All Rights Reserved.30 7


31/47

A marketing approach that

views the market as one big

market with no individualsegments and thus

uses a single

marketing mix.

Undifferentiated Targeting

Strategy



32/47

Advantage:

Potential savings on production

and marketing costs

Disadvantages:

Unimaginative product offerings

Company more susceptible to

competition


UndifferentiatedStrategy

Undifferentiated Targeting

Strategy


33/47

Concentrated

Targeting Strategy

A strategy used to select one

segment of a market for targeting

marketing efforts.

icheOne segment of

a market.

Concentrated Targeting

Strategy



34/47

Advantage:

Concentration of resources Meets narrowly defined segment Small firms can compete Strong positioning

Disadvantages:

Segments too small, orchanging

Large competitors may

market to niche segment

Concentrated Targeting

Strategy


ConcentratedStrategy


35/47

Multisegment Targeting

Strategy


Multisegment

TargetingStrategy

A strategy that

chooses two ormore well-defined

market segments

and develops a

distinct marketing

mix for each.


36/47

Advantage:

Greater financial success

Economies of scale

Disadvantages:

Higher costs

Cannibalization

Multisegment Targeting

Strategy


MultisegmentStrategy


37/47

Product design costs

Production costs

Promotion costs

Inventory costs

Marketing research costs

Management costs

Cannibalization

Costs of Multisegment

Targeting Strategy



38/47

One-to-One Marketing

Information-Intensive

Long-Term

One-to-One

Marketing is...

Individualized Cost Reduction

Has a Goal of

Customer Loyalty

Increased Revenue

Personalized

Customer Retention



39/47

One-to-One Marketing Trends

One-size-fits all marketing no longer relevant

Direct and personal marketing efforts will grow to meet

needs of busy consumers.

Consumers will be loyal to companies that have

earnedand reinforcedtheir loyalty.

Mass-media approaches will decline as technologyallows better customer tracking.



40/47

Positioning

developing a specific marketing mix toinfluence potential customers overall

perception or a brand, product line, or

organization in general.

Posi t ion ing is



41/47

Positioning of Procter & Gamble Detergents

Brand PositioningTide Tough, powerful cleaning

Cheer Tough cleaning, color protection

Bold Detergent plus fabric softener

Gain Sunshine scent and odor-removing formula

Era Stan treatment and stain removal

Dash Value brand

Solo Detergent and fabric softener in liquid form

Dreft Outstanding cleaning for baby clothes, safe

Ivory Fabric and skin safety on baby clothes

Ariel Tough cleaner, aimed at Hispanic market



42/47

Effective Positioning

1. Assess the positions

occupied by competing

products

2. Determine the

dimensions underlying

these positions

3. Choose a market position

where marketing efforts

will have the greatest

impact



43/47

Product Differentiation

a positioning strategy that some firmsuse to distinguish their products from

those of competitors.

Produc t Different iat ion is



44/47

Perceptual

Mapping

a means of displaying or graphing, in

two or more dimensions, the location of

products, brands, or groups of products

in customers minds.


Perceptual Mapp ing is

Exhibit 8 3


45/47

Exhibit 8.3Perceptual Map and Positioning Strategy for Saks

Department Stores

SOURCE: Vanessa OConnell, Park Avenue Classic or Soho Trendy

?Wall Street Journal, April 20, 2007, B1.

45


46/47

Attribute

Price and Quality

Use or Application

Product User

Product Class

Competitor

Emotion

Positioning Bases



47/47

Repositioning

changing consumers perceptions of a

brand in relation to competing brands.

Reposi t ion ing is

Chapter 8 MKTG6

Documents

Transcript of Chapter 8 MKTG6