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IDENTIFYING MARKET SEGMENTS AND TARGETS

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					IDENTIFYING
    MARKET
  SEGMENTS
AND TARGETS



              Slide 9-1
   AFTER READING THIS CHAPTER
     YOU SHOULD BE ABLE TO:

1. Explain what market segmentation is
   and when to use it.

2. Identify the five steps involved in
   segmenting and targeting markets.
3. Recognize the different factors used to
   segment consumer and organizational
   markets.

                                             Slide 9-2
   AFTER READING THIS CHAPTER
     YOU SHOULD BE ABLE TO:

4. Know how to develop a market-product
   grid to identify a target market and
   recommend resulting actions.
5. Explain how marketing managers
   position products in the marketplace.




                                           Slide 9-3
SNEAKERS MARKETING WARS: JAY-Z,
 YAO MING, AND A ―SWOOSHLESS‖
    NIKE LINE FOR WAL-MART

• How Do You
  Stand Out on
  “Sneaker Walls”?




                                  Slide 9-4
SNEAKERS MARKETING WARS: JAY-Z,
 YAO MING, AND A ―SWOOSHLESS‖
    NIKE LINE FOR WAL-MART

• New Segments
  and Strategies




                                  Slide 9-5
SNEAKERS MARKETING WARS: JAY-Z,
 YAO MING, AND A ―SWOOSHLESS‖
    NIKE LINE FOR WAL-MART

• Competitive Trends
   Age Segments
   Gender Segments
   Price Segments
   Sport Segments
   Lifestyle Segments
                                  Slide 9-6
     WHY SEGMENT MARKETS?

• What Market Segmentation Means
   Market Segmentation
   Market Segments
   Product Differentiation
   Segmentation: Linking Needs to Actions




                                             Slide 9-7
FIGURE 9-1 Market segmentation—linking
market needs to an organization’s marketing
program




                                              Slide 9-8
    WHY SEGMENT MARKETS?

• What Market Segmentation Means
   How Reebok’s Segmentation Strategy
    Developed

   Using Market-Product Grids




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




                                            Slide 9-10
    WHY SEGMENT MARKETS?

• When to Segment Markets
   Examples of Successful Market Segmentation
    • Customer Relationship Management (CRM)

    • Mass Customization

    • Build-to-Order (BTO)




                                               Slide 9-11
      Street & Smith’s Baseball
What product/market segmentation strategy?




                                             Slide 9-12
              Harry Potter
What product/market segmentation strategy?




                                             Slide 9-13
    WHY SEGMENT MARKETS?

• When to Segment Markets
   The Segmentation Trade-Off:
    CRM versus Synergy




                                  Slide 9-14
     Ann Taylor & Ann Taylor Loft
What is the danger of a two-segment strategy?




                                                Slide 9-15
  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 9-16
  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 9-17
FIGURE 9-3 The five key steps in
segmenting and targeting markets link
market needs of customers to the
organization’s marketing program




                                        Slide 9-18
    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 9-19
    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 9-20
    STEPS IN SEGMENTING AND
      TARGETING MARKETS

• Step 1: Group Potential Buyers into
  Segments
   Ways to Segment Consumer Markets
     • Buying Situations
         Benefits Sought: Product Features

         Usage/Patronage: Usage Rate

            • Frequency Marketing

            • 80/20 Rule


                                              Slide 9-21
FIGURE 9-B Segmentation variables and
breakdowns for U.S. consumer markets




                                        Slide 9-22
       Mac-Gray MicroFridge
        What benefits sought and
what consumer market segments targeted?




                                          Slide 9-23
FIGURE 9-C 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 9-24
FIGURE 9-4 Comparison of various kinds
of users and nonusers for Wendy’s,
Burger King, and McDonald’s fast-food
restaurants




                                         Slide 9-25
    STEPS IN SEGMENTING AND
      TARGETING MARKETS

• Step 1: Group Potential Buyers into
  Segments
   Variables to use in Forming Segments
     • Students in Dorms        • Faculty/Staff
     • Students in Apartments   • People Living in Area
     • Day Commuters            • People Working in Area
     • Night Commuters



                                                          Slide 9-26
    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 9-27
FIGURE 9-D Segmentation variables and
breakdowns for U.S. organizational markets




                                             Slide 9-28
 Xerox WorkCenter C2424
   What variables are used to
segment organizational markets?




                                  Slide 9-29
  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 9-30
  Concept Check

2. What are two main ways to segment
   consumer and organizational
   markets?
A: customer characteristics and buying
   situations




                                         Slide 9-31
    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 9-32
FIGURE 9-5 Selecting a target market for
your Wendy’s fast-food restaurant next to an
urban university (target market is shaded)




                                               Slide 9-33
    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 the
                              Organization’s Objectives
     • Competitive Position   and Resources
   Choose the Segments


                                                      Slide 9-34
    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 9-35
                 Wendy’s
   How can Wendy’s target different market
segments with different advertising programs?




                                                Slide 9-36
FIGURE 9-6 Advertising actions to reach
specific student segments




                                          Slide 9-37
    STEPS IN SEGMENTING AND
      TARGETING MARKETS

• Step 5: Take Marketing Actions to Reach
  Target Markets
   Apple’s Ever-Changing Segmentation
    Strategy




                                            Slide 9-38
   Apple Computer (1977–Today)
How have Apple’s product lines and market
   segmentation strategies changed?




                                            Slide 9-39
    STEPS IN SEGMENTING AND
      TARGETING MARKETS

• Market-Product Synergies: A Balancing
  Act
   Marketing Synergies
   Product Synergies




                                          Slide 9-40
FIGURE 9-E Benefits (+) and drawbacks (-)
of a firm’s market-product strategies




                                            Slide 9-41
  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 9-42
  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 9-43
  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 to 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 9-44
    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 9-45
            Chocolate Milk
How can dairies put more ―zip‖ into sales?




                                             Slide 9-46
FIGURE 9-7 Your challenge as a marketing
manager: Try to position chocolate milk to
make it more appealing to adults




                                             Slide 9-47
    POSITIONING THE PRODUCT

• Product Positioning Using Perceptual
  Maps
   Positioning Chocolate Milk for Adults
     • Finding a New Position for Chocolate Milk
       in the Minds of Adults: Nutrition

     • Packaging “Adult” Chocolate Milk




                                                   Slide 9-48
FIGURE 9-8 A perceptual map to suggest a
strategy for positioning chocolate milk to
reach adults




                                             Slide 9-49
  Concept Check

1. What is product positioning?
A: Product positioning refers to the
   place an offering occupies in
   consumers’ minds on important
   attributes relative to competitive
   offerings.



                                        Slide 9-50
  Concept Check

2. Why do marketers use perceptual
   maps in product positioning
   decisions?
A: Marketers use perceptual maps to
   display in two dimensions the
   location of their and competing
   products or brands to see how
   consumers perceive them and then
   take marketing actions.
                                      Slide 9-51
 GOING ONLINE
 APPLE’S LATEST
MARKET-PRODUCT
  STRATEGIES



                  Slide 9-52
            Going Online

1. Access the Apple History website.
   Identify the new and remaining
   markets Apple has targeted with new
   and existing products compared to
   those described in the text and the
   Marketing NewsNet.



                                         Slide 9-53
            Going Online

2. Can Apple survive as a niche PC
   marketer like BMW has with autos?
   Why or why not?




                                       Slide 9-54
  VIDEO CASE 9

  NOKIA: A PHONE
FOR EVERY SEGMENT



                    Slide 9-55
VIDEO CASE 9
   Nokia




               Slide 9-56
            VIDEO CASE 9
                 Nokia


1. Why has segmentation been a
   successful marketing strategy for
   Nokia?




                                       Slide 9-57
            VIDEO CASE 9
                  Nokia


2. What customer characteristics were
   used by mobile phone marketers
   during the industry’s early stages of
   growth? Which customer
   characteristics and segmentation
   variables does Nokia use?


                                           Slide 9-58
            VIDEO CASE 9
                 Nokia


3. Create a market-product grid for
   Nokia today. What potential new
   markets could you add to the grid?




                                        Slide 9-59
   SUPPLEMENTAL
  LECTURE NOTE 9-1
MARKET SEGMENTATION IN
PRACTICE: WHAT KIND OF
 PILLOW DO YOU NEED?


                         Slide 9-60
FIGURE 9-A Market-product grid showing
the size of markets for pillows for three
different segments of sleepers




                                            Slide 9-61
 SUPPLEMENTAL
LECTURE NOTE 9-2
MARKET-PRODUCT
  SYNERGIES



                   Slide 9-62
FIGURE 9-F Market-product grid of
alternative strategies for a lawnmower
manufacturer




                                         Slide 9-63
 IN-CLASS ACTIVITY 9-1

INTERPRETING CENSUS DATA




                         Slide 9-64
U.S. Census 2000 Promotional Video




                                     Slide 9-65
Census 2000 Short Form




                         Slide 9-66
Slide 9-67
Slide 9-68
Slide 9-69
American Community Survey Video




                                  Slide 9-70
American Community Survey Form




                                 Slide 9-71
 IN-CLASS ACTIVITY 9-2
PRODUCT CATEGORIZATION
      TO IDENTIFY
    PRODCUT GROUPS



                         Slide 9-72
 IN-CLASS ACTIVITY 9-3

PRODUCT POSITIONING FOR
CONSUMERS AND RETAILERS



                         Slide 9-73
3M Post-it® Notes TV ad




                          Slide 9-74
3M Post-it® Flag Highlighter Invention




           + =

                                         Slide 9-75
3M Post-it® Flag Highlighter
  Colors and Packages




                               Slide 9-76
3M Post-it® Flag Highlighter
Front and Back of Package




                               Slide 9-77
Slide 9-78
Slide 9-79
     Market Segmentation


Market segmentation involves
aggregating prospective buyers into
groups that (1) have common needs and
(2) will respond similarly to a marketing
action.




                                            Slide 9-80
     Market Segments


Market segments are the relatively
homogeneous groups of prospective
buyers that result from the market
segmentation process.




                                     Slide 9-81
    Product Differentiation


Product differentiation is a strategy that
involves a firm’s using different
marketing mix activities to help
consumers perceive the product as being
different and better than competing
products.



                                             Slide 9-82
      Market-Product Grid


A market-product grid is a framework
to relate the market segments of potential
buyers to products offered or potential
marketing actions by the firm.




                                             Slide 9-83
              Synergy


Synergy is the increased customer value
achieved through performing
organizational functions more efficiently.




                                             Slide 9-84
            Usage Rate


Usage rate is the quantity consumed or
patronage (store visits) during a specific
period of time.




                                             Slide 9-85
            80/20 Rule


The 80/20 rule is a concept that suggests
80 percent of a firm’s sales are obtained
from 20 percent of its customers.




                                            Slide 9-86
      Product Positioning


Product positioning refers to the place
an offering occupies in consumers’ minds
on important attributes relative to
competitive products.




                                           Slide 9-87
         Perceptual Map


A perceptual map is a means of
displaying or graphing in two dimensions
the location of products or brands in the
minds of consumers to enable a manager
to see how consumers perceive competing
products or brands relative to its own and
then take marketing actions.


                                             Slide 9-88

				
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