8 Segmentation Target Marketing Dr Close Finding Markets

8 Segmentation & Target Marketing Dr. Close

Finding Markets • Markets = people with needs/wants and the ability and willingness to buy • Types of markets: – Generic • People with broadly similar needs (social) • Diverse ways of satisfying (restaurants, movies) – Products • Very similar needs (thirsty for soft drinks) • Very close substitutes (Coke vs. Pepsi, and what else? ) Close substitutes or no?

Pepsi vs Coke

What’s the Difference? Market Segment People or organizations with needs or wants and the ability and willingness to buy. A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. The process of dividing a market into Market meaningful, relatively similar, identifiable Segmentation segments or groups.

Market Segmentation • Dividing market into meaningful, similar groups (or aggregating those with similar needs) • Why is segmentation important? . . • Markets have a variety of product preferences • Marketers can better define customer needs • Decision makers can define objectives and allocate resources more accurately

Criteria for Segmentation Substantiality Segment must be large enough to warrant a special marketing mix. Identifiability and Measurability Segments must be identifiable and their size measurable. Accessibility Members of targeted segments must be reachable with marketing mix. Responsiveness Unless segment responds to a marketing mix differently, no separate treatment is needed.

So, A Good Segment is… • Homogenous within: members are similar • Heterogeneous between: outsiders differ (choose the best) • Substantial: large enough for profit (Ned Flanders) • Operational: workable (identify then access China)

Bases for Segmenting Markets Geography • Region • Market size • Market density • Climate Demographics • • • Age Gender Income Ethnicity Family life cycle Psychographics • • Personality Motives Lifestyle Geodemographics Benefits • Benefits sought Usage Rate • • Former Potential 1 st time Light or irregular • Medium • Heavy

Demographic Segmentation: Family Life Cycle

Psychographic Segmentation • • Personality (cars) Motives (emotions) Lifestyles (outdoor) Geodemographics (PRIZM)

Benefit Segmentation • Group consumers via needs/wants (NOT by gender, age, lifestyle etc. ) • What do you want from your cell phone?

Usage Rate Segmentation • • • Group by amount/rate of consumption Former apple users Potential apple users Light apple users Heavy apple users 80/20 principle of demand

6 Steps to Segment a Market Select a market for study Choose bases for segmentation Select descriptors Profile and analyze segments Select target markets Design, implement, maintain marketing mix

Strategies for Selecting Target Markets Options… – Undifferentiated Targeting • One market, one mix (plain toilet paper) • Any other examples? – Concentrated Targeting • Multiple markets & mix for each • Examples include Ford, Lincoln, Mercury, and what else? – Multi-segment Targeting • Multiple markets share mix (bad idea) • Advantages = Greater financial success; Economies of scale Disadvantages= High costs; Cannibalization

Strategies for Selecting Target Markets • Options – Undifferentiated Targeting • One market, one mix (plain toilet paper) • Any other examples? – Concentrated Targeting • Multiple markets & mix for each • Examples include Ford, Lincoln, Mercury, and what else? – Multi-segment Targeting • Multiple markets share mix (bad idea) • Example: network television and any more?

One-to-One Marketing is. . . Has a Goal of… Individualized Cost Reduction Information-Intensive Customer Retention Long-Term Increased Revenue Personalized Customer Loyalty

One-to-One Marketing Trends • One-size-fits all marketing is lame. • Direct/personal marketing will grow to meet needs of busy consumers. • We will be loyal to companies that have earned—and reinforced—our loyalty. • Mass-media approaches will decline as technology allows better customer tracking.

Marketing Strategy • • Matching opportunity with resources and business objectives Goals: 1. SCA • • Enduring superiority of a business BEST: from many parts (Wal-Mart) 2. Breakthrough opportunity • Conditions right for SCA

Positioning Developing a marketing mix to influence potential customers’ overall perception of a brand, product line, or organization in general. How is Wal-Mart Positioned?

Positioning Bases Attribute Price and Quality Use or Application Product User Product Class Competitor Emotion

Positioning of Procter & Gamble Detergents Brand Positioning Tide Cheer Bold Gain Era Dash Oxydol Solo Dreft 9 Ivory Snow LO Ariel Tough, powerful cleaning Tough cleaning, color protection Detergent plus fabric softener Sunshine scent, odor-removing Stain treatment and stain removal Value brand Bleach-boosted formula, whitening Detergent and fabric softener in liquid form Cleaning for baby clothes, safe Fabric & skin safety on baby clothes Tough cleaner, aimed at Hispanic market Market Share 31. 1% 8. 2% 2. 9% 2. 6% 2. 2% 1. 8% 1. 4% 1. 2% 1. 0% 0. 7% 0. 1%

Effective Positioning 1. Assess the positions occupied by competing products 2. Determine the dimensions underlying these positions 3. Choose a market position where marketing efforts will have the greatest impact

Product Differentiation A positioning strategy that some firms use to distinguish their products from those of competitors. Are distinctions real or perceived?

Perceptual Mapping

Daimler Chrysler: Do they need a reposition? (Changing consumers’ perceptions of a brand in relation to competing brands)

Summary • • • Generic vs product markets Segmentation: Criteria Bases for segmenting Strategies of segmentation (effective)Positioning/repositioning, bases Any questions?