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Chapter 8 Segmenting and Targeting Markets. What are Markets?. Market: people or organizations with (1)…………., (2)…………., and (3)………………………… Types of Markets . Role of Market Segmentation. Market Segmentation: division of the total market into smaller, relatively homogeneous groups

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Chapter 8 Segmenting and Targeting Markets

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Chapter 8 segmenting and targeting markets l.jpg

Chapter 8Segmenting and Targeting Markets


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What are Markets?

  • Market: people or organizations with (1)…………., (2)…………., and

  • (3)…………………………

  • Types of Markets


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Role of Market Segmentation

  • Market Segmentation: division of the total market into smaller, relatively homogeneous groups

  • Why?

  • Levels – Mass, Segment, and Niche


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Why segment?

Most efficient

Most effective

Many Groups

of One

One Mass

Market


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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.


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No Market Segmentation


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Segmented by …………..


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Segmented by ……..


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Segmentation Process

  • Marketers follow two methods to determine the bases on which to identify markets:

    • Segments are predefined by managers based on their observation of the behavioral and demographic characteristics of likely users

    • Segments are defined by asking customers which attributes are important and then clustering the responses


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Substantiality

Measurability / Identifiability

Accessibility

Responsiveness

Criteria for Effective Segmentation


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Most important point

  • In relation to responsiveness to different marketing mixes, segments must be:

    • Homogeneous within

    • Heterogeneous between


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Bases for Segmenting Consumer Markets

Characteristics of individuals, groups, or organizations used to divide a total market into segments=(variables, bases)


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Geography

Demographics

Psychographics

Benefits Sought

Usage Rate

Bases for Segmentation


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Segmenting Consumer Markets

  • Geographic Segmentation: Dividing an overall market into homogeneous groups on the basis of their locations

  • www.hawaiiantropic.com

  • east-west: Skippy, midwest: jif, south:peter pan

Metropolitan Statistical Area (MSA)


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Segmenting Consumer Markets

  • ……………….. segmentation: dividing consumer groups according to characteristics such as gender, age, income, occupation, education, ethnicity, household size, and stage in the family life cycle.

  • Vh1/Mtv, AARP, ivillage, Nike, Latina Style


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Age

MaritalStatus

Children

Family Life Cycle


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Family Life Cycle


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Psychographic Segmentation

  • Psychographic Segmentation: dividing a population into groups that have similar psychological characteristics and lifestyles.

  • Lifestyle: people’s decisions about how to live their daily lives, including family, job, social, and consumer activities


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Geodemographic Segmentation

Segmenting potential customers into neighborhood lifestyle categories. Combines geographic, demographic, and psychographic segmentation.


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Benefit Segmentation

The process of grouping customers into market segments according to the …………..they seek from the product.

Cell phone carriers, L’Oreal, Weight watchers


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Usage Rate Segmentation

Dividing a market by the ………….of product bought or consumed.

Sprint- fired customers for excessive use of CS


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Producers

Resellers

Government

Institutions

Bases for Segmenting Business Markets

Buying

Processes (Satisficers/Optimizers)

Company

Characteristics


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Steps in Segmenting Markets

1

4

2

3

5

6

Select a market for study

Choosebasesfor segmen-tation

Selectdescriptors

Profileandanalyzesegments

Selecttargetmarkets

Design,implement,maintainmarketingmix

Note that steps 5 and 6 are actually marketing activities that follow market segmentation (steps 1 through 4).


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Targeting

  • Choosing one or more segments for which to design your marketing operations


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Undifferentiated StrategyDifferentiatedConcentrated

Identify the Appropriate Targeting Strategy


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Undifferentiated Strategy

Single Marketing Mix

Organization

Target Market

Sugar, flour, commodities


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Differentiated Strategy

Marketing Mix 1

Marketing Mix 2

Organization

Target Market

Best Buy, Walmart, Gap


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Concentrated Strategy

Single Marketing Mix

Organization

Target Market

http://www.youtube.com/watch?v=4aICIVOl3JU


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Situation that occurs when sales of a new product cut into sales of a firm’s existing products.

Cannibalization

Cannibalization


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STRATEGIES FOR REACHING TARGET MARKETS

  • No single, best choice strategy suits all firms

  • Determinants of a market-specific strategy:

    • Company resources

    • Product homogeneity

    • Competitors’ strategy


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An individualized marketing method that utilizes customer information to build long-term, personalized, and profitable relationships with each customer.

- ‘share of customer’

One-to-One Marketing


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Product Positioning

  • Positioning starts with a product. A Piece of merchandise, a service, a company, an institution, or even a person... But positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is, you position the product in the mind of the prospect.

    Al Ries and Jack Trout (1981)


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Brand

Positioning

MarketShare

Tide

Tough, powerful cleaning

31.1%

Cheer

Tough cleaning, color protection

8.2%

Bold

Detergent plus fabric softener

2.9%

Gain

Sunshine scent and odor-removing formula

2.6%

Era

Stain treatment and stain removal

2.2%

Dash

Value brand

1.8%

Oxydol

Bleach-boosted formula, whitening

1.4%

Solo

Detergent and fabric softener in liquid form

1.2%

Dreft

Outstanding cleaning for baby clothes, safe

1.0%

LO9

Ivory Snow

Fabric & skin safety on baby clothes

0.7%

Ariel

Tough cleaner, aimed at Hispanic market

0.1%

Positioning of Procter & Gamble Detergents


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Product Positioning Dimensions

  • Product Attributes / Differences / Benefits

    • Light beer-taste, filling

    • Toothpaste-mint taste, tartar , whitening, enamel protection

    • Levi’s- the brand that fits

  • Product User / Usage

    • Johnson and Johnson Baby Shampoo-not just for babies,

  • By Association/Product Class (Amtrack)

  • Problem Solution (Application, Use)- Arm and Hammer, Made on an Apple

  • Against a Competitor / Away from Competitors (Avis, BMW-the ultimate driving machine, 7-Up- the Un-Cola)


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A means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers’ minds.

Perceptual Mapping


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Expensive

Corolla

Celica

Avalon

Camry

Conservative

Sporty

Inexpensive

Perceptual Maps (Price/Quality)


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High moisturizing

Zest

7

Tone

4

Lever 2000

2

Dove

5

Safeguard

Coast

8

Lux

Nondeodorant

Deodorant

3

1

Dial

Lifebuoy

Lava

6

Low moisturizing

Product Positioning using perceptual maps


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Changing consumers’ perceptions of a brand in relation to competing brands.

Repositioning


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Positioning and Product Differentiation


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