8 Identifying Market Segments and Targets Marketing Management

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8 Identifying Market Segments and Targets Marketing Management, 13 th ed

8 Identifying Market Segments and Targets Marketing Management, 13 th ed

Chapter Questions • What are the different levels of market segmentation? • How can

Chapter Questions • What are the different levels of market segmentation? • How can a company divide a market into segments? • How should a company choose the most attractive target markets? • What are the requirements for effective segmentation? Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -2

Baby Boomers: A Lucrative Market Copyright © 2009 Pearson Education, Inc. Publishing as Prentice

Baby Boomers: A Lucrative Market Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -3

Effective Targeting Requires… • Identify and profile distinct groups of buyers who differ in

Effective Targeting Requires… • Identify and profile distinct groups of buyers who differ in their needs and preferences • Select one or more market segments to enter • Establish and communicate the distinctive benefits of the market offering Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -4

Ford’s Model T Followed a Mass Market Approach Copyright © 2009 Pearson Education, Inc.

Ford’s Model T Followed a Mass Market Approach Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -5

Four levels of Micromarketing Segments Niches Local areas Individuals Copyright © 2009 Pearson Education,

Four levels of Micromarketing Segments Niches Local areas Individuals Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -6

What is a Market Segment? A market segment consists of a group of customers

What is a Market Segment? A market segment consists of a group of customers who share a similar set of needs ad wants. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -7

Gather. com: A Niche Social Networking Site Copyright © 2009 Pearson Education, Inc. Publishing

Gather. com: A Niche Social Networking Site Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -8

Flexible Marketing Offerings • Naked solution: • Discretionary Product and service options: Some elements

Flexible Marketing Offerings • Naked solution: • Discretionary Product and service options: Some elements that all segment members value options but value not all Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -9

Preference Segments • Homogeneous preferences exist when consumers want the same things • Diffused

Preference Segments • Homogeneous preferences exist when consumers want the same things • Diffused preferences exist when consumers want very different things • Clustered preferences reveal natural segments from groups with shared preferences Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -10

Niche Marketers Enterprise Rent-A-Car targets the insurancereplacement market Copyright © 2009 Pearson Education, Inc.

Niche Marketers Enterprise Rent-A-Car targets the insurancereplacement market Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -11

Baskin Robbins Focuses on Local Marketing Copyright © 2009 Pearson Education, Inc. Publishing as

Baskin Robbins Focuses on Local Marketing Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -12

The Long Tail • Chris Anderson explains the long tail equation: • The lower

The Long Tail • Chris Anderson explains the long tail equation: • The lower the cost of distribution, the more you can economically offer without having to predict demand; • The more you can offer, the greater the chance that you will be able to tap latent demand for minority tastes; and • Aggregate enough minority taste, and you may find a new market. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -13

What is Customerization? Customerization combines operationally driven mass customization with customized marketing in a

What is Customerization? Customerization combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -14

Segmenting Consumer Markets Geographic Demographic Psychographic Behavioral Copyright © 2009 Pearson Education, Inc. Publishing

Segmenting Consumer Markets Geographic Demographic Psychographic Behavioral Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -15

Claritas’ Prizm • • • Education and affluence Family life cycle Urbanization Race and

Claritas’ Prizm • • • Education and affluence Family life cycle Urbanization Race and ethnicity Mobility Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -16

Demographic Segmentation Age and Life Cycle Life Stage Gender Income Generation Social Class Copyright

Demographic Segmentation Age and Life Cycle Life Stage Gender Income Generation Social Class Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -17

Toyota Scion Targets Gen Y Consumers Copyright © 2009 Pearson Education, Inc. Publishing as

Toyota Scion Targets Gen Y Consumers Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -18

Dove Targets Women Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8

Dove Targets Women Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -19

Figure 8. 1 The VALS Segmentation System Copyright © 2009 Pearson Education, Inc. Publishing

Figure 8. 1 The VALS Segmentation System Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -20

Behavioral Segmentation Decision Roles • Initiator • Influencer • Decider • Buyer • User

Behavioral Segmentation Decision Roles • Initiator • Influencer • Decider • Buyer • User Behavioral Variables • Occasions • Benefits • User Status • Usage Rate • Buyer-Readiness • Loyalty Status • Attitude Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -21

The Brand Funnel Illustrates Variations in the Buyer-Readiness Stage • • • Aware Ever

The Brand Funnel Illustrates Variations in the Buyer-Readiness Stage • • • Aware Ever tried Recent trial Occasional user Regular user Most often used Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -22

Loyalty Status Hard-core Split loyals Shifting loyals Switchers Copyright © 2009 Pearson Education, Inc.

Loyalty Status Hard-core Split loyals Shifting loyals Switchers Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -23

Figure 8. 3 Behavioral Segmentation Breakdown Copyright © 2009 Pearson Education, Inc. Publishing as

Figure 8. 3 Behavioral Segmentation Breakdown Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -24

The Conversion Model Convertible Shallow Users Strongly unavailable Weakly unavailable Average Entrenched Nonusers Ambivalent

The Conversion Model Convertible Shallow Users Strongly unavailable Weakly unavailable Average Entrenched Nonusers Ambivalent Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Available 8 -25

Segmenting for Business Markets Demographic Operating Variable Purchasing Approaches Situational Factors Personal Characteristics Copyright

Segmenting for Business Markets Demographic Operating Variable Purchasing Approaches Situational Factors Personal Characteristics Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -26

Steps in Segmentation Process Needs-based segmentation Segment identification Segment attractiveness Marketing-Mix Strategy Segment profitability

Steps in Segmentation Process Needs-based segmentation Segment identification Segment attractiveness Marketing-Mix Strategy Segment profitability Segment positioning Segment acid test Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -27

Effective Segmentation Criteria Measurable Substantial Accessible Differentiable Actionable Copyright © 2009 Pearson Education, Inc.

Effective Segmentation Criteria Measurable Substantial Accessible Differentiable Actionable Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -28

Figure 8. 4 Patterns of Target Market Selection Copyright © 2009 Pearson Education, Inc.

Figure 8. 4 Patterns of Target Market Selection Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -29

Figure 8. 4 Patterns of Target Market Selection Copyright © 2009 Pearson Education, Inc.

Figure 8. 4 Patterns of Target Market Selection Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -30

Figure 8. 4 Patterns of Target Market Selection Copyright © 2009 Pearson Education, Inc.

Figure 8. 4 Patterns of Target Market Selection Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -31

Crest Whitestrips Follows a Multisegment Strategy Copyright © 2009 Pearson Education, Inc. Publishing as

Crest Whitestrips Follows a Multisegment Strategy Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -32

Figure 8. 5 Segment-by-Segment Invasion Plan Copyright © 2009 Pearson Education, Inc. Publishing as

Figure 8. 5 Segment-by-Segment Invasion Plan Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -33

Pepsi used Megamarketing in India Copyright © 2009 Pearson Education, Inc. Publishing as Prentice

Pepsi used Megamarketing in India Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -34

Marketing Debate ü Is mass marketing dead? Take a position: 1. Mass marketing is

Marketing Debate ü Is mass marketing dead? Take a position: 1. Mass marketing is dead. 2. or 3. 2. Mass marketing is still a viable way to build 4. a profitable brand. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -35

Marketing Discussion ü Think of various product categories. ü How would you classify yourself

Marketing Discussion ü Think of various product categories. ü How would you classify yourself in terms of the various segmentation schemes? ü How would marketing be more or less effective for you depending upon the segment involved? Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8 -36