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  1. Slide 9-1

  2. CHAPTER IDENTIFYING MARKET SEGMENTSAND TARGETS Slide 9-2

  3. AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO: • Explain what market segmentation is, when to use it. • Identify the five steps involved in segmenting and targeting markets. • Recognize the different factors used to segment consumer and organizational markets. Slide 9-3

  4. AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO: • Know how to develop a market-product grid to identify a target market and recommend resulting actions. • Explain how marketing managers position products in the marketplace. • Describe three approaches to developing a sales forecast for a company. Slide 9-4

  5. SNEAKERS MARKETING WARS:HIP-HOP, YAO MING, ANDTHREE BILLION TRILLION CHOICES • New Segmentsand Strategies Slide 9-5

  6. SNEAKERS MARKETING WARS:HIP-HOP, YAO MING, ANDTHREE BILLION TRILLION CHOICES • Competitive Trends • Age Segments • Gender Segments • Price Segments • Sport Segments • Lifestyle Segments Slide 9-6

  7. WHY SEGMENT MARKETS? • What Market Segmentation Means • Market Segments • Product Differentiation • Segmentation: Linking Needs to Actions Slide 9-7

  8. FIGURE 9-1Market segmentation—linking market needs to an organization’s marketing program Slide 9-8

  9. WHY SEGMENT MARKETS? • What Market Segmentation Means • How Reebok’s Segmentation Strategy Developed Slide 9-9

  10. FIGURE 9-2Market-product grid showing how different Reebok shoes reach segments of customers with different needs Slide 9-10

  11. WHY SEGMENT MARKETS? • What Market Segmentation Means • Using Market-Product Grids Slide 9-11

  12. FIGURE 9-ABenefits (+) and drawbacks (-) of a firm’s market-product strategies Slide 9-12

  13. MARKETING NEWSNET Sneaker Strategies—Who’s Doing What Reebok Nike Vans Slide 9-13

  14. WHY SEGMENT MARKETS? • When to Segment Markets • One Product and Multiple Market Segments • Multiple Product and Multiple Market Segments • Segments of One: Mass Customization • Build-to-Order (BTO) • Synergy Slide 9-14

  15. Harry PotterWhat product/market segmentation strategy? Slide 9-15

  16. Street & Smith’s BaseballWhat product/market segmentation strategy? Slide 9-16

  17. WEB LINK Customizing Your Own Designer Shoes Slide 9-17

  18. Concept Check 1. Market segmentation involves aggregating prospective buyers into groups that have two key characteristics. What are they? A: The groups should (1) have common needs and (2) respond similarly to a marketing action. Slide 9-18

  19. Concept Check 2. When should a firm segment its markets? A: A firm goes to the trouble and expense of segmenting its markets when this will increase its sales, profit, and return on investment. Slide 9-19

  20. FIGURE 9-3The five key steps in segmenting and targeting markets link market needs of customers to the organization’s marketing program Slide 9-20

  21. STEPS IN SEGMENTING AND TARGETING MARKETS • Step 1: Group Potential Buyers into Segments • Criteria to Use in Forming the Segments • Potential for Increased Profit • Similarity of Needs of Buyers within a Segment • Difference of Needs of Buyers Among Segments • Potential of a Marketing Action to Reach a Segment • Simplicity and Cost of Assigning Buyers to Segments Slide 9-21

  22. STEPS IN SEGMENTING AND TARGETING MARKETS • Step 1: Group Potential Buyers into Segments • Ways to Segment Consumer Markets • Customer Characteristics • Geographic: Region • Demographic: Household • Psychographic: Lifestyle Slide 9-22

  23. STEPS IN SEGMENTING AND TARGETING MARKETS • Step 1: Group Potential Buyers into Segments • Ways to Segment Consumer Markets • Buying Situations • Benefits Sought: Product Features • Patronage: Usage Rate • Frequency Marketing • 80/20 Rule Slide 9-23

  24. FIGURE 9-4 Segmentation variables and breakdowns for U.S. consumer markets Slide 9-24

  25. Mac-Gray MicroFridgeWhat benefits sought andwhat consumer market segments targeted? Slide 9-25

  26. FIGURE 9-5 Patronage of fast-food restaurants by adults 18 years and older: Simmons Market Research Bureau NCS/NHCS Spring 2004 Adult Full-Year Choices System Crosstabulation Report Slide 9-26

  27. FIGURE 9-6Comparison of various kindsof users and nonusers for Wendy’s,Burger King, and McDonald’s fast-food restaurants Slide 9-27

  28. STEPS IN SEGMENTING AND TARGETING MARKETS • Step 1: Group Potential Buyers into Segments • Variables to use in Forming Segments for Wendy’s • Students in Dorms • Faculty/Staff • Students in Apartments • People Living in Area • Day Commuters • People Working in Area • Night Commuters Slide 9-28

  29. STEPS IN SEGMENTING AND TARGETING MARKETS • Step 1: Group Potential Buyers into Segments • Ways to Segment Organizational Markets • Customer Characteristics • Geographic: Statistical Area • Demographic: NAICS Code • Demographic: Number of Employees • Benefits Sought: Product Features Slide 9-29

  30. FIGURE 9-7 Segmentation variables and breakdowns for U.S. organizational markets Slide 9-30

  31. Xerox Phaser 8400 PrinterWhat variables are used tosegment organizational markets? Slide 9-31

  32. Concept Check 1. The process of segmenting and targeting markets is a bridge between what two marketing activities? A: identifying market needs and taking marketing actions Slide 9-32

  33. Concept Check 2. What are two main ways to segment consumer and organizational markets? A: customer characteristics and buying situations Slide 9-33

  34. STEPS IN SEGMENTING AND TARGETING MARKETS • Step 2: Group Products to be Sold into Categories • Step 3: Develop a Market-Product Grid and Estimate Size of Markets Slide 9-34

  35. STEPS IN SEGMENTING AND TARGETING MARKETS • Step 4: Select Target Markets • Criteria to Use in Picking the Target Segments • Market Size • Cost of Reaching Segment • Expected Growth • Compatibility with theOrganization’s Objectivesand Resources • Competitive Position • Choose the Segments Slide 9-35

  36. FIGURE 9-8Selecting a target market for your Wendy’s fast-food restaurant next to an urban university (target market is shaded) Slide 9-36

  37. STEPS IN SEGMENTING AND TARGETING MARKETS • Step 5: Take Marketing Actions to Reach Target Markets • Your Wendy’s Segmentation Strategy • Day Commuters • Between-Meal Snacks • Dinner to Night Students Slide 9-37

  38. Wendy’sHow can Wendy’s target different market segments with different advertising programs? Slide 9-38

  39. FIGURE 9-9 Advertising actions to reach specific student segments Slide 9-39

  40. STEPS IN SEGMENTING AND TARGETING MARKETS • Step 5: Take Marketing Actions to Reach Target Markets • Apple’s Ever-Changing Segmentation Strategy Slide 9-40

  41. Apple II Computer (1977)How have Apple’s product lines and market segmentation strategies changed? Slide 9-41

  42. Apple’s Personal Computer Product Lines What market segments do these products target? Power Mac G5 PowerBook iMac iBook Slide 9-42

  43. MARKETING NEWSNET Apple’s Segmentation Strategy—Camp Runamok No Longer Slide 9-43

  44. STEPS IN SEGMENTING AND TARGETING MARKETS • Market-Product Synergies: A Balancing Act • Marketing Synergies • Product Synergies Slide 9-44

  45. Concept Check 1. What are some criteria used to decide which segments to choose for targets? A: These criteria include market size, expected growth, competitive position, cost of reaching the segment, and compatibility with the organization’s objectives and resources. Slide 9-45

  46. Concept Check 2. In a market-product grid, what factor is estimated or measured for each of the cells? A: Each cell in the grid can show the estimated market size of a given product sold to a specific market segment. Slide 9-46

  47. Concept Check 3. What is the difference between marketing synergies and product synergies in a market-product grid? A: Marketing synergies run horizontally across a market-product grid. Each row represents an opportunity for efficiency in the marketing efforts for a market segment. Product synergies run vertically down the market-product grid. Each column represents an opportunity for efficiency in research and development (R&D) and production. Slide 9-47

  48. POSITIONING THE PRODUCT • Product Positioning • Product Repositioning • Two Approaches to Product Positioning • Head-to-Head Positioning • Differentiation Positioning Slide 9-48

  49. POSITIONING THE PRODUCT • Product Positioning Using Perceptual Maps • Identify Important Attributes for a Product Class • Judgments of Existing Brands on These Important Attributes • Ratings of an “Ideal” Brand’s Attributes • Perceptual Map Slide 9-49

  50. Chocolate Milk How can dairies put more “zip” into sales? Slide 9-50