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MKTG

MKTG. Lamb, Hair, McDaniel 2007-2008. 7. CHAPTER. Segmenting and Targeting Markets. Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian University. Learning Outcomes. Describe the characteristics of markets and market segments

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MKTG

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  1. MKTG Lamb, Hair, McDaniel 2007-2008 7 CHAPTER Segmenting and Targeting Markets Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian University

  2. Learning Outcomes Describe the characteristics of markets and market segments Explain the importance of market segmentation Discuss criteria for successful market segmentation Describe the bases commonly used to segment consumer markets Describe the bases for segmenting business markets LO1 LO2 LO3 LO4 LO5

  3. Learning Outcomes List the steps involved in segmenting markets Discuss alternative strategies for selecting target markets Explain one-to-one marketing Explain how and why firms implement positioning strategies and how product differentiation plays a role LO6 LO7 LO8 LO9

  4. Market Segmentation LO1 Describe the characteristics of markets and market segments

  5. A Market Is... people or organizations with needs or wants, and with the ability and the willingness to buy. A group of people that lacks any one of these characteristics is not a market. LO1

  6. Targeting “everyone” is: • Expensive • Wasteful • Nearly impossible Teenagers • A more sensible approach: • Identify smaller segments who are most likely to consider your brand (segmentation) and target them with specifically designed MC messages Market Segmentation

  7. Market People or organizations with needs or wants and the ability and willingness to buy. Market Segment A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. Market Segmentation The process of dividing a market into meaningful, relatively similar, identifiable segments or groups. Market Segmentation LO1

  8. The Market Segmentation Process Market Segmentation 1. Identify people with shared needs and characteristics

  9. The Market Segmentation Process Market Segmentation 1. Identify people with shared needs and characteristics 2. Aggregate these groups into market segments according to their mutual interest in the product’s utility

  10. The Concept of Market Segmentation LO1

  11. The Importance of Market Segmentation LO2 Explain the importance of market segmentation

  12. 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 and allocate resources more accurately LO2

  13. Market segmentation More precise definition of customers needs and wants More accurate marketing objectives Improved resource allocation Better marketing results REVIEW LEARNING OUTCOME LO2 The Importance of Market Segmentation

  14. Criteria for Successful Segmentation LO3 Discuss criteria for successful market segmentation

  15. Substantiality Segment must be large enough to warrant a special marketing mix. Identifiabilityand Measurability Segments must be identifiable and their size measurable. Accessibility Members of targeted segments must be reachable with marketing mix. Responsiveness Unless segment responds to a marketing mix differently, no separate treatment is needed. Criteria for Segmentation LO3

  16. REVIEW LEARNING OUTCOME LO3 Successful Market Segmentation Usefulsegment? • Substantial • Identifiable and measurable • Accessible • Responsive Then, yes: Useful segmentation scheme

  17. Bases for Segmenting Consumer Markets LO4 Describe the bases commonly used to segment consumer markets

  18. SegmentationBases Bases for Segmenting Consumer Markets Characteristics of individuals, groups, or organizations used to divide a total market into segments. (variables) LO4

  19. Bases for Segmentation Geography Demographics Psychographics Benefits Sought Usage Rate LO4

  20. Geographic Segmentation • Region of the country or world • Market size • Market density • Climate LO4

  21. Geography - Community

  22. Geography- Climate

  23. Geography - Region

  24. 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 LO4

  25. Age Gender Income Ethnic background Family life cycle Demographic Segmentation LO4

  26. Gender

  27. Demographic segmentation: Heavy usage patterns of various age groups McGraw-Hill/Irwin

  28. Ethnic Segmentation • Largest ethnic markets are: • Hispanic Americans • African Americans • Asian Americans • Will comprise 1/3 of U.S. population by 2010 with buying power of $1 trillion annually LO4

  29. Products target Hispanics

  30. Family Life Cycle Age MaritalStatus Children LO4

  31. Family Life Cycle LO4

  32. Market segmentation on the basis of personality, motives, lifestyles, and geodemographics. Psychographic Segmentation PsychographicSegmentation LO4

  33. Personality Motives Lifestyles Geodemographics http://www.marthastewart.comhttp://www.goodhousekeeping.com Online Bases for Psychographic Segmentation LO4

  34. Lifestyle Segmentation • How time is spent • Importance of things around them • Beliefs • Socioeconomic characteristics LO4

  35. Psychographic Segmentation Values and Lifestyles Typology (VALS) http://www.sric-bi.com/VALS/

  36. Biz Flix The Breakfast Club LO4

  37. Geodemographic Segmentation Geodemographic Segmentation Segmenting potential customers into neighborhood lifestyle categories. Combines geographic, demographic, and lifestyle segmentation. LO4

  38. PRIZM • PRIZM (Potential Rating Index by Zip Market): • Classifies every U.S. Zip Code into one of 62 categories • Rankings in terms of income, home value, and occupation on a ZQ (Zip Quality) Scale • Categories range from most affluent “Blue-Blood Estates” to the least well-off “Public Assistance” • Different clusters exhibit different consumption patterns Prizm

  39. PRIZM Clusters Young Digerati are the nation's tech-savvy singles and couples living in fashionable neighborhoods on the urban fringe. Affluent, highly educated and ethnically mixed, Young Digerati communities are typically filled with trendy apartments and condos, fitness clubs, clothing boutiques, casual restaurants and all types of bars—from juice to coffee to microbrew. The steady rise of older, healthier Americans over the past decade has produced one important by-product: middle-class, home-owning suburbanites who are aging in place rather than moving to retirement communities. Gray Power reflects this trend, a segment of older, midscale singles and couples who live in quiet comfort.

  40. PRIZM Clusters

  41. PRIZM • Branchburg, NJ 08876's most common PRIZM NE Segments are: • Boomtown Singles • Country Squires • God’s Country • Middleberg Managers • Up–and-Comers http://www.claritas.com/MyBestSegments/Default.jsp?ID=30&SubID=&pageName=Segment%2BLook-up

  42. A Comparison of Two PRIZM Clusters

  43. The process of grouping customers into market segments according to the benefits they seek from the product. Benefit Segmentation Benefit Segmentation LO4

  44. Usage-RateSegmentation Dividing a market by the amount of product bought or consumed. 80/20Principle A principle holding that 20 percent of all customers generate 80 percent of the demand. Benefit Segmentation LO4

  45. Verizon, Sprint Nextel and others allow consumers with standard contracts to access the Internet via cellular high-speed services. Some customers’ service is being cancelled because they are using excessive network capacity. Sprint and Cingular Wireless charge based on usage: the amount of data bits they wirelessly transfer each month. Example of Usage-Rate LO4 Beyond the Book SOURCE: Amol Sharma and Dionne Searcey, “Cell Carriers to Web Customers: Use Us, but Not too Much,” Wall Street Journal, May 11, 2006, B1.

  46. Example of Benefit Tropicana Essentials targets consumers who want extra vitamins and no sodium

  47. Geography Demographics Psychographics Benefits Usage Rate • Region • Market size • Marketdensity • Climate • Age • Gender • Income • Race/ethnicity • Family life cycle • Personality • Motives • Lifestyle • Geodemo-graphics • Benefitssought • Former • Potential • 1st time • Light orirregular • Medium • Heavy REVIEW LEARNING OUTCOME LO4 Bases for Segmenting Consumer Markets

  48. Bases for Segmenting Business Markets LO5 Describe the bases for segmenting business markets

  49. Producers Resellers Government Institutions Bases for Segmenting Business Markets LO5 Company Characteristics Buying Processes

  50. Company Characteristics Bases for Segmenting Business Markets LO5 • Geographic location • Type of company • Company size • Volume of purchase • Product use

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