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Chapter 9

Chapter 9. Identifying Market Segments and Targets. Learning Objectives. In what ways can a company divide the consumer market into segments? How should business markets be segmented? How should a company choose the most attractive target markets?

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Chapter 9

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  1. Chapter 9 Identifying Market Segments and Targets

  2. Learning Objectives • In what ways can a company divide the consumer market into segments? • How should business markets be segmented? • How should a company choose the most attractive target markets? • What are the requirements for effective segmentation? • What are the different levels of market segmentation?

  3. Bases for Segmenting Consumer Markets • Market segment • A group of customers who share a similar set of needs and wants Geographic segmentation Demographic segmentation Psychographic segmentation Behavioral segmentation

  4. Geographic Segmentation • Geographical units • Nations, states, regions, counties, cities, or neighborhoods • Nielsen Claritas’ PRIZM • Education and affluence • Family life cycle • Urbanization • Race and ethnicity • Mobility

  5. Geographic Segmentation

  6. Demographic Segmentation Age & life-cycle stage Life stage Gender Race & culture Generation Income

  7. Demographic Segmentation • Age and life-cycle stage • Our wants and abilities change with age • Life stage • A person’s major concern (e.g., divorce)

  8. Demographic Segmentation • Gender • Men and women have different attitudes and behave differently • Income • Income segmentation is a long-standing practice

  9. Demographic Segmentation • Generation Millennials (Gen Y) Gen X Baby Boomers Silent Generation

  10. Demographic Segmentation • Race and culture Hispanic Americans Asian Americans African Americans LGBT

  11. Psychographic Segmentation • Buyers are divided into groups on the basis of psychological/personality traits, lifestyle, or values

  12. Figure 9.1: VALSSegmentation System

  13. BehavioralSegmentation • Marketers divide buyers into groups on the basis of their knowledge of, attitude toward, use of, or response to a product

  14. BehavioralSegmentation • Needs and benefits • Decision roles • Initiator • Influencer • Decider • Buyer • User

  15. Userandusage-relatedvariables Occasions User status Usage rate Attitude Loyalty status Buyer-readiness stage

  16. Figure 9.2Marketing Funnel

  17. Figure 9.3Behavioral Segmentation Breakdown

  18. How Should Business Markets Be Segmented? • Demographic • Operating variables • Purchasing approaches • Purchasing approaches • Situational factors • Personal characteristics

  19. Market targeting

  20. EffectiveSegmentation Criteria • Measurable • Substantial • Accessible • Differentiable • Actionable

  21. Porter’s five forces Threat of Rivalry Threat of New Entrants Threat of Substitutes Threat of Buyer Bargaining Power Threat of Supplier Bargaining Power

  22. Evaluating & Selecting the Market Segments • Figure 9.4: Possible Levels of Segmentation

  23. One-to-one marketing Identify your prospects and customers Differentiate customers in terms of their needs and value to your company Interact to improve your knowledge about customers’ needs and to build relationships Customize products, services, and messages to each customer

  24. Legal and Ethical Issues • Marketers must avoid consumer backlash • Labeling consumers • Vulnerable groups • Disadvantaged groups • Potentially harmful products

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