9 CHAPTER IDENTIFYING MARKET SEGMENTS AND TARGETS 2003

9 CHAPTER IDENTIFYING MARKET SEGMENTS AND TARGETS © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: • Explain what market segmentation is, when to use it, and the five steps involved in segmentation. • Recognize the different factors used to segment consumer and organizational markets. © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: • Understand the significance of heavy, medium, and light users and nonusers in targeting a market. • Develop a market-product grid to use in segmenting and targeting a market. © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: • Interpret a cross-tabulation to analyze market segments. • Understand how marketing managers position products in a market. © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

IDENTIFYING MARKET SEGMENTS AND TARGETS SNEAKERS MARKETING WARS: HEELYS, AIR PUMPS, AND 3 BILLION TRILLION CHOICES • Finding the Segments • Competitive Trends © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

WHY SEGMENT MARKETS? • What Market Segmentation Means § Market segments § Product differentiation • Segmentation: Linking Needs to Action © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

WHY SEGMENT MARKETS? • What Market Segmentation Means (cont) • How Reebok’s Segmentation Strategy Developed © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

WHY SEGMENT MARKETS? • What Market Segmentation Means (cont) • Using Market-Product Grids © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

WHY SEGMENT MARKETS? • When to Segment Markets • One Product and Multiple Market Segments • Multiple Products and Multiple Market • • Segments of One: Mass Customization The Segmentation Trade Off: CRM versus synergies © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

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 of a firm. © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

Concept Check 2. What is product differentiation? A: The two related meanings are a firm’s (1) using different marketing mix activities to help consumers perceive the product as being different and better than competing products and (2) selling two or more products with different features targeted to different market segments. © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

Concept Check 3. The process of segmenting and targeting markets is a bridge between what two marketing activities? A: Between (1) identifying market needs and (2) taking marketing actions. © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

STEPS IN SEGMENTING AND TARGETING MARKETS • Form Prospective Buyers into Segments • Criteria to Use in Forming the Segments § Potential for increased profit and ROI § Similarity of needs of potential buyers in a segment § Difference of needs of buyers among segments § Feasibility of a marketing action reaching segment § Simplicity and cost of assigning buyers to markets © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

STEPS IN SEGMENTING AND TARGETING MARKETS • Form Prospective Buyers into Segments (cont) • Ways to Segment Consumer Markets © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

STEPS IN SEGMENTING AND TARGETING MARKETS • Ways to Segment Consumer Markets (cont) § Usage rate § 80/20 rule © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

STEPS IN SEGMENTING AND TARGETING MARKETS • Ways to Segment Organizational Markets © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

STEPS IN SEGMENTING AND TARGETING MARKETS • Form Products to Be Sold into Groups • Develop a Market-Product Grid and Estimate Size of Markets © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

STEPS IN SEGMENTING AND TARGETING MARKETS • Select Target Markets • Criteria to Use in Picking the Target Segments § Market size § Expected growth § Competitive position § Cost of reaching the segment § Compatibility with objectives and resources • Choose the Segments © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

STEPS IN SEGMENTING AND TARGETING MARKETS • Take Marketing Actions to Reach Target Markets • Your Wendy’s Segmentation Strategy © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

STEPS IN SEGMENTING AND TARGETING MARKETS • Take Marketing Actions to Reach Target Markets (cont) • Apple’s Ever-Changing Segmentation Strategy © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

Concept Check 1. What are some of the variables used to segment consumer markets? A: As shown in FIGURE 9 -4, variables used include geography (region or city size), demographics (age, gender), benefits sought, and usage rate. © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

Concept Check 2. What are some criteria used to decide which markets to choose for targets? A: They include market size, expected growth, competitive position, cost of reaching the segments, and compatibility with the organization’s objectives and resources. © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

Concept Check 3. Why is usage rate important in segmentation studies? A: Because the heavier a potential customer’s usage rate of a product, the more important that potential customer’s purchases are to a seller. © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

ANALYZING MARKET SEGMENTS USING CROSS-TABULATIONS • Developing Cross-Tabulations • Pairing the Questions • Forming Cross-Tabulations © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

ANALYZING MARKET SEGMENTS USING CROSS-TABULATIONS • Interpreting Cross-Tabulations • Value of Cross-Tabulations © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

POSITIONING THE PRODUCT • Two Approaches to Product Positioning § Head-to-head positioning § Differentiation positioning © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

POSITIONING THE PRODUCT • Product Positioning Using Perceptual Maps § Evaluations of important attributes for a product class § Judgments of existing brands with the important attributes § Ratings of an ideal brand’s attributes © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

POSITIONING THE PRODUCT • Product Positioning Using Perceptual Maps (cont) • GM’s Positioning Nightmare • Repositioning Chocolate Milk for Adults © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

Concept Check 1. What is cross-tabulation? A: Cross tabulation is a method of presenting and relating data having two or more variables. © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

Concept Check 3. Why do marketers use perceptual maps in product positioning decisions? A: Marketers use perceptual maps to obtain a graphic presentation of how their product is perceived by consumer relative to competitors’ products. © 2003 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin