Chapter04 Marketing Foundation

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ofChapter

M A R K E T I N G

The Market

SegmentationProcess


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Chapter

Objectives

1. Explain the factors underlying market segmentation

strategy choices.

2. Outline the stages in the market segmentation

process.

3. Explain the concept ofpositioning within market

segments.

4. Show how target market decision analysis can beused in market segmentation.

5. Show how target market decision analysis can be

used to assess the assortment ofproductsoffered

to the market.

The Market Segmentation Process


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Chapter

Alternative Market MatchingStrategy

1. Company resources

2. Differentiability ofproducts3. Stage in product life cycle

4. Competitorsstrategies

5. Size ofsegment

4The Market Segmentation Process

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Chapter

Segmentation Strategies

MARKET SMALLOR FOCUSED LARGE

STRATEGY MARKET MARKET

Multi-offer High value niche Differentiated

(Many products) e.g.,Custom home e.g., Ford MotorCo.

builders

Single-offer Concentrated Mass marketing(One product) e.g., Jolt Cola (Undifferentiated)

e.g., Magic Baking

Powder

4The Market Segmentation ProcessFigure 4.1

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Single-Offer Strategy

The attempt tosatisfy a large ora

small market with one product andsingle marketing program.


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Multi-Offer Strategy

The attempt tosatisfy several

segmentsof the market very well withspecialized products and unique

marketing programs aimed at each

segment.


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Chapter

Market Matching Strategies (1 of2)

1908 Early 2000s 1955 Early 2000

Market Singl

e-Offer Mul

ti-Offer Singl

e-Offer Mul

ti-OfferSegment Strategy Strategy Strategy Strategy

General-Purpose CarsSmall Model T Focus Beetle Golf

Medium Model T Taurus Jetta

Large Crown Victoria Passat

Sporty Cars

Low-Priced ZX2Escort new Beetle

GTI

Medium-Priced Cougar Cabrio

Mustang Audi TT

Porsche Boxster

High-priced Jaguar XK8 Porsche 911Aston Martin DB7

4The Market Segmentation ProcessTable 4.1

PRODUCT OFFERINGS

Ford MotorCompany Audio/Volkswagen/Porsche

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Chapter

Market Matching Strategies (2 of2)

1908 Early 2000s 1955 Early 2000sMarket Single-Offer Multi-Offer Single-Offer Multi-OfferSegment Strategy Strategy Strategy Strategy

Luxury CarsMedium-priced Lincoln Continental Audi A4

Lincoln Town CarHigh-priced Jaguar S-Type Audi A6

Audi A8

Vans Windstar EuroVan

Econoline

TrucksSmall Model T (Truck) Ford Ranger

Medium Ford F series

Sport Utility Vehicles Explorer

(SUVs) Expedition

Excursion

Lincoln Navigator

4The Market Segmentation ProcessTable 4.1

Ford MotorCompany Audio/Volkswagen/Porsche

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Chapter

Market Segmentation Decision ProcessStage 1

Stage 2

Stage 3

Stage 4

Stage 5


Select target market segment(s).

Do benefits achieve company goals and justify development ofeach segment?

Estimate cost benefit for each segment.

Forecast own market share for each segment.

Analyze competitive forceswithin each segment.

Determine marketing programto serve each segment.

Forecast total market potentialfor each segment.

Develop relevant market segment profiles.

Identify bases for segmenting markets.

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Target Market

A market segment that a company

chooses toserve.


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Target Market Decision Analysis

The evolution ofpotential market

segments.


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The Divide-the-Box Procedure


The Market Divided into Segments

The Entire Market

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HypotheticalDivide-the-Box Example forRadio


The Market Segment forR

adio byA

ge & BenefitAge

BenefitTeens

Middle

AdultsSenior

Young

Adult

Information

Entertainment

Companionship

The Entire Market forRadio

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HypotheticalMiddle AdultSegment forRadio


Early

Retiree

Hourly

Employee

Business

OwnerProfessional

Information X XX

Entertainment X X

Companionship X

Middle Adults

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HypotheticalMiddle Adult

Segment forInformation Radio


Early

Retiree

Hourly

Employee

Business

OwnerProfessional

Breaking news XXPolitical

commentary XX

Financial market

commentary X XX

Advice X X

Weather X X

Call-in X

Gossip X

Middle Adults

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Product Mix

The assortment ofproduct lines and

individual offerings available from acompany.


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Using Target MarketD

ecisionA

nalysis to

Evaluate a Product Mix


Belongers Etc.Achievers

RomanticPhone MPhone A

Phone C

CharacterPhone RPhone Y

Contemporary

Product

Offering

Psychographic Category

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Source: Properly applied PsychographicsAdd Marketing Luster, Marketing News (November12, 1982), p. 10.

Reprinted with permission by the American Marketing Association.


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Hypothetical Positioning Map: CBCversus CommercialRadio


Informational Music

Challenging

Entertaining

Commercial

Talk RadioCommercial

Talk Radio

*As it Happens

CBC local*

*This Morning

AfterHours*

*CBC News

*Ideas

Disc Drive*

Take 5*

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Chapter

Positioning

Shaping the product and developing a

marketing program in such a way thatthe product is perceived to be (and

actually is) different from competitors

products.



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Positioning Map ofCola Market

The Market Segmentation Process

Well-Known Brand/Quality

Lower

Price

Higher

Price

Unknown Brand/Quality

Cott Cola

Presidents Choice

Z Cola

Private-label store brands

Coca-Cola/Pepsi

Chapter04 Marketing Foundation

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