Chapter 9 Identifying Market Segments and Selecting Target

Chapter 9 Identifying Market Segments and Selecting Target Markets Power. Point by Karen E. James Louisiana State University - Shreveport © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 0

Objectives § Learn how companies identify the segments that make up a market. § Understand the criteria companies use to choose the most attractive market segments. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 1

Target Marketing § Target marketing requires marketers to take three major steps: – Market segmentation: Identifying and profiling distinct groups of buyers who differ in their needs and preferences. – Market targeting: Selecting one or more market segments to enter. – Market positioning: Establishing and communicating the key distinctive benefit(s) of the company’s market offering to each target. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 2

Using Market Segmentation § Mass marketing is losing popularity § Micromarketing can be undertaken at four levels: – Segment marketing – Niche marketing – Local marketing – Individual marketing © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 3

Using Market Segmentation § Three patterns of preference segments are typically identified: – Homogeneous preferences – Diffused preferences – Clustered preferences © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 4

Using Market Segmentation Needs-based Segmentation Process § Needs-based segmentation § Segment profitability § Segment identification § Segment positioning § Segment attractiveness § Segment “acid test” § Marketing-mix strategy © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 5

Using Market Segmentation § Useful market segments share certain characteristics: – Measurable – Substantial – Accessible – Differentiable – Actionable © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 6

Segmenting Consumer Markets Bases for Segmentation § Nation or country § State or region § Geographic § Demographic § City or metro size § Psychographic § Density § Behavioral § Climate © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 7

Segmenting Consumer Markets Bases for Segmentation § Age, race, gender § Income, education § Family size § Geographic § Family life cycle § Demographic § Occupation § Psychographic § Behavioral © 2003 Prentice Hall, Inc. § Religion, nationality § Generation § Social class To accompany A Framework for Marketing Management, 2 nd Edition 8

Segmenting Consumer Markets Bases for Segmentation § Geographic § Lifestyle – Activities – Interests – Opinions § Demographic § Personality § Psychographic § Core values § Behavioral © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 9

Segmenting Consumer Markets Bases for Segmentation § Geographic § Demographic § Occasions § Benefits § User status § Usage rate § Loyalty status § Psychographic § Buyer-readiness § Behavioral § Attitude © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 10

Segmenting Consumer Markets § Multi-attribute segmentation via geoclustering combines multiple variables to identify smaller, betterdefined target groups – PRIZM Geoclustering system uses demographic, geographic, lifestyle, and behavioral characteristics © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 11

Segmenting Business Markets Bases for Segmentation § Operating variables § Situational factors § Purchasing approaches § Personal characteristics § Demographic variables © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 12

Segmenting Business Markets § Rackman and Vincentis proposed a segmentation scheme that classifies business buyers into three groups: – Price-oriented customers: best served via transactional selling – Solution-oriented customers: best served by means of consultative selling – Strategic-value customers: best served by means of enterprise selling © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 13

Market Targeting Strategies § Evaluating and selecting market segments requires assessing the segment’s overall attractiveness in light of company’s objectives and resources. § Five patterns of target market selection can then be considered. © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 14

Market Targeting Strategies Patterns of Target Market Selection § Single-segment concentration § Product specialization § Selective specialization § Market specialization §Full market coverage © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 15

Market Targeting Strategies § Targeting multiple segments may result in cost economies § Supersegment targeting may be appropriate § Blocked markets often require megamarketing countermeasures § Be aware of ethical concerns © 2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2 nd Edition 16