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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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what are markets
What are Markets?
  • Market: people or organizations with (1)…………., (2)…………., and
  • (3)…………………………
  • Types of Markets
role of market segmentation
Role of Market Segmentation
  • Market Segmentation: division of the total market into smaller, relatively homogeneous groups
  • Why?
  • Levels – Mass, Segment, and Niche
why segment
Why segment?

Most efficient

Most effective

Many Groups

of One

One Mass

Market

the importance of market segmentation
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.
segmentation process
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
criteria for effective segmentation
Substantiality

Measurability / Identifiability

Accessibility

Responsiveness

Criteria for Effective Segmentation
most important point
Most important point
  • In relation to responsiveness to different marketing mixes, segments must be:
    • Homogeneous within
    • Heterogeneous between
bases for segmenting consumer markets
Bases for Segmenting Consumer Markets

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

bases for segmentation
Geography

Demographics

Psychographics

Benefits Sought

Usage Rate

Bases for Segmentation
segmenting consumer markets
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)

segmenting consumer markets15
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
family life cycle
Age

MaritalStatus

Children

Family Life Cycle
psychographic segmentation
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
geodemographic segmentation
Geodemographic Segmentation

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

benefit segmentation
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

usage rate segmentation
Usage Rate Segmentation

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

Sprint- fired customers for excessive use of CS

bases for segmenting business markets
Producers

Resellers

Government

Institutions

Bases for Segmenting Business Markets

Buying

Processes (Satisficers/Optimizers)

Company

Characteristics

slide23
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).

targeting
Targeting
  • Choosing one or more segments for which to design your marketing operations
undifferentiated strategy differentiated concentrated
Undifferentiated StrategyDifferentiatedConcentrated

Identify the Appropriate Targeting Strategy

undifferentiated strategy
Undifferentiated Strategy

Single Marketing Mix

Organization

Target Market

Sugar, flour, commodities

differentiated strategy
Differentiated Strategy

Marketing Mix 1

Marketing Mix 2

Organization

Target Market

Best Buy, Walmart, Gap

concentrated strategy
Concentrated Strategy

Single Marketing Mix

Organization

Target Market

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

slide29
Situation that occurs when sales of a new product cut into sales of a firm’s existing products.

Cannibalization

Cannibalization

slide30
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
one to one marketing
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
product positioning
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)

positioning of procter gamble detergents
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
product positioning dimensions
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)
perceptual mapping
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
perceptual maps price quality
Expensive

Corolla

Celica

Avalon

Camry

Conservative

Sporty

Inexpensive

Perceptual Maps (Price/Quality)
product positioning using perceptual maps
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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