Chapter Five

Market Segmentation and Segmentation Strategies

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Market Segmentation and Segmentation Strategies

• Needs based market segmentation

• Customer needs

• Segmentation strategies

• Customer relationship marketing

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Needs-Based Market Segmentation

Figure 5-1 Needs-Based Market Segmentation

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Customer Needs and Market Segmentation

• What is a market segment? (p173)

• Why is market segmentation important? (p171)

• How are markets segmented? (p177 & 178)

Figure 5-5 Forces that Shape Differences in Consumer Needs

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Business Needs and Market Segmentation

Figure 5-7 Forces that Shape Differences in B2B Customer Needs

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Market Segmentation

Figure 5-8 Market Segmentation of the Small Business Market

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Needs-Based Market Needs-Based Market Segmentation Segmentation (Fig5-9)(Fig5-9)

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Needs-Based Segmentation Needs-Based Segmentation and Segment Identification and Segment Identification (Fig 5-10)(Fig 5-10)

Why Should Segments be Identified?

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Segment Attractiveness

What Makes a Segment Attractive?

Figure 5-11 Forces that Shape Segment Attractiveness

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Segment Profitability

Marketing = NMC ROS Segment Sales Revenues

Marketing = NMC ROI Segment M&S Expenses

= X X X - NMC Segment Segment Price Per Percent Marketing

Demand Share Unit Margin Expenses

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Segment Market Profitability

Figure 5-13 Segment Market Profitability

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Segment Positioning

• How does segment positioning simplify promotional efforts? (p185)

• How does a firm determine if its segmentation strategy is meaningful? (p185)

• What is meant by Segment Strategy Acid Test? (p185)

• What is the importance of the marketing mix in the segmentation strategy? (p186)

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Segmentation Strategies

Figure 5-16 Market Segmentation Strategies

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Segmentation Strategies

Figure 5-17 Toyota’s Adjacent Segmentation Strategy

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Customer Relationship Marketing

Figure 5-21 Customer Relationship Marketing Strategies

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Customer Relationship Management

• How does a firm justify the use of CRM? (P 197)

• CRM vs. Needs-Based Market Segmentation (see Fig 5-22)

• Four Critical Steps in Developing CRM Programs (p198)

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Review

• Needs based market segmentation

• Customer needs

• Segmentation strategies

• Customer relationship marketing

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