Market Segmentation and Target Markets.ppt

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					Market Segmentation
and Target Markets




            chapter 7
                      Harcourt, Inc.
                                Objectives

 Understand  the concepts: market,
  segmentation, and target markets
 Learn the advantages and
  disadvantages of target marketing
 Explain the steps in target market
  selection

               Dr. Rosenbloom
                                Objectives

 Discuss  segmentation criteria,
  strategies, bases, and information
  sources
 Understand market profiling and
  positioning strategies
 Discuss differences for business
  and international marketing
               Dr. Rosenbloom
                What is a market?

 Individuals   or organizations
 who:
     Are willing, able, and capable of
      purchasing a firm’s product
     Segmentation is critical because
      demand is often heterogeneous

                 Dr. Rosenbloom
What is market segmentation?


   Market    Segmentation
       Process of dividing a large
        market into smaller target
        markets, or customer groups
        with similar needs and/or
        desires

                 Dr. Rosenbloom
               Market Segmentation
Mass
Market
               Niche            Micro-
                               marketing      The
                                           Individual




                                            Personal-
                                Micro-       ization
Standardized   Niche           marketing
 Marketing
    Mix                Dr. Rosenbloom
                     Target Marketing
 Advantages
     Easier analysis of potential and actual
      consumers
     Tailoring of products to market
     Assessment of demand potential
     Identify competing products
     Increased sales effectiveness and cost
      efficiencies
     Product positioning and easy identification
      of opportunities
                    Dr. Rosenbloom
                 Target Marketing
 Disadvantages
     Increased marketing costs
     Personalization can become
      burdensome to manage
     Faux segmentation may be viewed
      cynically
     Narrow segmentation can impact
      brand loyalty
     Ethics and stereotyping issues
                 Dr. Rosenbloom
            Target Market Selection
Identify Total Market

 Determine Need for
   Segmentation

 Determine Bases for
    Segmentation
                                              Assess Potential
Profile Each Selected                     Profitability of Segment
       Segment                           and Select Target Segment

                                           Select Positioning
                                                Strategy

                                          Develop and Implement
                                         Appropriate Marketing Mix

                                          Monitor, Evaluate and
                        Dr. Rosenbloom          Control
                              Market Criteria
 Segmentable      markets are:
     Heterogeneous
     Measurable
     Substantial
     Actionable
      • Companies must be able to respond to
        preferences with an appropriate marketing mix
     Accessible
      • Market must be efficiently reachable
                        Dr. Rosenbloom
              External Factors


 Stagein product life cycle
 Competition
 Product specific issues
 Market for the product



          Dr. Rosenbloom
         Segmentation Variables

Demographic                   Benefits-Sought
Segmentation                Segmentation

 Geographic                   Situation
Segmentation                Segmentation

 Psychographic                Behavior/Usage
Segmentation                Segmentation
                 Dr. Rosenbloom
  Demographic Segmentation

Age                          Income Level


            Family

Education                      Ethnicity

            Dr. Rosenbloom
       Demographic Segmentation
 Age
     Some products are
      marketed to
      specific age
      groups




                     Dr. Rosenbloom
       Demographic Segmentation
 Age
     Some products are
      marketed to
      specific age
      groups




                     Dr. Rosenbloom
       Demographic Segmentation
 Income    Level
     Some products are
      marketed to
      consumers with
      different income
      levels




                     Dr. Rosenbloom
       Demographic Segmentation
 Income    Level
     Some products are
      marketed to
      consumers with
      different income
      levels




                     Dr. Rosenbloom
Demographic Segmentation
                         Bartles and James




                             Hal Riney and
        Dr. Rosenbloom            Partners
       Demographic Segmentation
 Family
     Some products are
      marketed to
      consumers with
      special family
      consideration
      • Family Life Cycle
      • Bachelor, marriage,
        married with children,
        retired, etc.
                           Dr. Rosenbloom
Functions Of Advertising
                             KinderCare




      Dr. Rosenbloom   The Martin Agency
       Demographic Segmentation
 Family
     Some products are
      marketed to
      consumers with
      special family
      consideration
      • Family Life Cycle
      • Bachelor, marriage,
        married with children,
        retired, etc.
                           Dr. Rosenbloom
       Demographic Segmentation
 Education
     Some products are
      marketed to
      consumers with
      certain educational
      levels




                       Dr. Rosenbloom
       Demographic Segmentation
 Ethnicity
     Some products are
      marketed to
      consumers from
      specific ethnic
      backgrounds




                     Dr. Rosenbloom
       Demographic Segmentation
 Ethnicity
     Some products are
      marketed to
      consumers from
      specific ethnic
      backgrounds




                     Dr. Rosenbloom
         Segmentation Variables

Demographic                   Benefits-Sought
Segmentation                Segmentation

 Geographic                   Situation
Segmentation                Segmentation

 Psychographic                Behavior/Usage
Segmentation                Segmentation
                 Dr. Rosenbloom
         Geographic Segmentation
 When an organization localizes its
 marketing efforts to accommodate the
 unique needs of specific geographic
 regions




                 Dr. Rosenbloom
         Geographic Segmentation
 When an organization localizes its
 marketing efforts to accommodate the
 unique needs of specific geographic
 regions




                 Dr. Rosenbloom
       Geographic Segmentation


 Metropolitan       Statistical Areas
     An urbanized area of 50,000 and a total
      metropolitan area population of at least
      100,000
       • Charlottesville, Virginia



                     Dr. Rosenbloom
       Geographic Segmentation


 Primary    Metropolitan Statistical
 Areas
     An urbanized county or cluster of
      counties with a population of more
      than 1 million
       • Gary/Hammond, Indiana


                   Dr. Rosenbloom
       Geographic Segmentation


 Consolidated  Metropolitan
 Statistical Area
     A metropolitan area that includes at
      least two PMSAs
       • Baltimore, Maryland and Washington,
         D.C.


                   Dr. Rosenbloom
Segmenting Consumer Markets

Demographic                   Benefits-Sought
Segmentation                Segmentation

 Geographic                   Situation
Segmentation                Segmentation

 Psychographic                Behavior/Usage
Segmentation                Segmentation
                 Dr. Rosenbloom
Psychographic Segmentation

   Grouping customers together
    based on social class,
    lifestyles and psychological
    characteristics (attitudes,
    interests and opinions)
   PRIZM analysis from Claritas




           Dr. Rosenbloom
Segmenting Consumer Markets

Demographic                   Benefits-Sought
Segmentation                Segmentation

 Geographic                   Situation
Segmentation                Segmentation

 Psychographic                Behavior/Usage
Segmentation                Segmentation
                 Dr. Rosenbloom
  Benefits-Sought Segmentation
 Markets can be
 segmented based
 on the benefits that
 consumers desire
 from using a
 specific product



                   Dr. Rosenbloom
Benefits-Sought Segmentation
                                American Pork
                                      Council




          Dr. Rosenbloom   Bozell, Incorporated
Segmenting Consumer Markets

Demographic                   Benefits-Sought
Segmentation                Segmentation

 Geographic                   Situation
Segmentation                Segmentation

 Psychographic                Behavior/Usage
Segmentation                Segmentation
                 Dr. Rosenbloom
         Situation Segmentation

 Purchase    situation or occasion
     Physical surroundings
     Social surroundings
     Temporal perspective
       • How much time to make a purchase?
     Task definition
     Pre-purchase attitude
                 Dr. Rosenbloom
Segmenting Consumer Markets

Demographic                   Benefits-Sought
Segmentation                Segmentation

 Geographic                   Situation
Segmentation                Segmentation

 Psychographic                Behavior/Usage
Segmentation                Segmentation
                 Dr. Rosenbloom
    Behavior/Usage Segmentation
   Markets can be segmented by how often or how
    heavily consumers use a specific product
       80/20 Principle - 80% of revenue generated by 20%
        of customers

                Light Users
                   80%
                                           Heavy Users
                                              20%


                          Dr. Rosenbloom
                       Segmentation Data
 Internal   sources
     In-house customer and marketing databases
     Data mine to explore patterns and
      relationships in collected data
 External   sources
     Lists of catalog/magazine subscribers
     U.S. Census information
     Mediamark, CACI Marketing Systems, etc.
                       Dr. Rosenbloom
                     Positioning Strategy
 Differentiation
 through:
     Price/quality -
      emphasize value
      in terms of
      quality, price, or
      both


                           Dr. Rosenbloom
                    Positioning Strategy
 Differentiation                Differentiation
 through:                           through:
     Product attributes -                 Symbol - use of a
      characteristics as a                  symbol or icon to
      positioning base                      position a product
     Product usage -                       in the consumer
      positioning based                     consciousness
      on a products
      typical use
                       Dr. Rosenbloom
                    Positioning Strategy
 Differentiation
 through:
     Product user - the
      typical user of a
      product




                       Dr. Rosenbloom
                   Positioning Strategy
 Differentiation
 through:
     Product class -
      positioning against
      another type of
      product or product
      class


                       Dr. Rosenbloom
                   Positioning Strategy
 Differentiation
 through:
     Competition -
      comparisons to a
      product’s
      competition
      (directly or
      indirectly)

                         Dr. Rosenbloom
 Segmenting Business Markets

 Demographics
     Industry size, growth potential, etc.
 Operating    Characteristics
     Technology, brand-user status, etc.
 Purchasing     Approaches
     Purchasing policies, size of orders,
      etc.
                  Dr. Rosenbloom
 Segmenting Business Markets

 Product   Use or Usage Situation
     The way the product will be used
      and customer service levels
      required
 Situational   Factors
     Urgency, special product uses
 Buyer’s   Personal Characteristics

                 Dr. Rosenbloom
Segmenting Global Markets

 Economic
     Stage of development in a host
      country
 Political/Legal
     Regulations and laws
 Cultural
     Language barriers, differences in
      consumer customs
                 Dr. Rosenbloom
Segmenting Global Markets

 Some segments transcend
 national borders
    Rich around the world
    Older and comfortable
    Indulged kids
    Emerging middle class
    Women employed outside the
     house
              Dr. Rosenbloom
  Market Segmentation


 Differentiated
 Concentrated
 Undifferentiated



      Dr. Rosenbloom
          Differentiated Marketing
 Differentiated
 Marketing
     An organization
      targets multiple
      market
      segments and
      develops
      segment
      specific mixes

                     Dr. Rosenbloom
          Concentrated Marketing
 Concentrated
 Marketing
     When an
      organization
      concentrates its
      marketing
      efforts on a
      smaller segment
      of a larger
      market
                     Dr. Rosenbloom
      Undifferentiated Marketing
 Undifferentiated
 Marketing
     An organization
      develops one
      strategy
      appropriate for
      all members of
      the total market


                     Dr. Rosenbloom

				
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