CHAPTER 9 IDENTIFYING MARKET SEGMENTS AND SELECTING TARGET

CHAPTER 9 IDENTIFYING MARKET SEGMENTS AND SELECTING TARGET MARKETS

IMPORTANT TOPICS OF THIS CHAPTER Elements of market segmentations n Different levels of market segmentation n Segmentation procedure n Segmentation in consumer market n Segmentation in business market n Requirements for effective segmentation n Market targetting n

MARKET SEGMENTATION Market Segmentation Identify segment Develop profiles Market Targeting Market Positioning Evaluate Positioning Select Communicate

MARKET SEGMENTATION n Levels of Segmentation: » Mass Marketing: n » Segment Marketing: n » Narrowly defined market Local Marketing: n » Identifiable segment Niche Marketing: n » Mass production, mass distribution and mass promotion Satisfy needs of local customers Individual Marketing: n Customized or one-to-one marketing

MARKET SEGMENTATION (CONT. ) n Patterns of Segmentation: » Homogeneous: n » Diffused: n » Similar preferences: no clear segment No clear preferences : scattered around Clustered: n Distinct preferences: concentrated market

MARKET SEGMENTATION (CONT. ) n Segmentation Procedures: » Survey stage: n » Analysis stage: n » Exploratory: – Focus group interviews. Multivariate techniques: – Cluster Analysis, Factor analysis. Profiling stage: n Description of the segment by age, income, education, hobbies, etc.

BASES FOR SEGMENTATION IN CONSUMER MARKETS n Segmentation by consumer characteristics: » Geographic: n » Demographic: n » Life style and personality Behavioral: n » Age and life cycle, gender, income, generation(baby boomers) and social class. Psychographics: n » East, West, North, Europe, Asia Occasions, benefits, usage rate and status, loyalty Multi-Attribute Segmentation (Geoclustering): n PRIZM cluster ( clustering by zip codes)

BASES OF SEGMENTING IN BUSINESS MARKETS n Micro Segmentation-firm bases: » » n Macro Segmentation-market bases: » » n Purchasing process/decision style Decision making style-participative/nonparticipative Location, size and number of employees Total market share in the industry Purchasing Process-first-time buyers, novice and sophisticates buyers.

SEGMENTATION IN BUSINESS MARKETS n Programmed buyers: » Routine purchase n Relationship buyers: » Knowledgeable about competition n Transaction buyers: » Price and service sensitive buyers n Bargain hunters: » Ready to switch to competition

SEGMENTATION IN BUSINESS MARKET (CONT. ) n First-time prospects: » Customers who have not purchased yet. n Novices: » Customers who are starting their relationships n Sophisticates: » Established customers

REQUIREMENTS FOR EFFECTIVE SEGMENTATION n Measurable: » Size and power must be measured. n Substantial: » Large enough to make profit. n Accessible: » Easily reached and served. n Differentiable: » Distinguishable and respond differently to different marketing mix. n Actionable: » Open to service.

MARKET TARGETING n Evaluating the Segments: » Overall attractiveness: n » n Size, growth and risk factor Suitable for company’s objectives and resources Selecting the Segments: » » Single segment concentration Selective specialization: n » Product specialization: n » Number of segments Consumer Vs government Market specialization: n Consumer Vs government

MARKET TARGETING (CONT. ) » Full market coverage (IBM, Coca Cola, GM, GE) n n Undifferentiated marketing: – standardization and mass production Differentiated marketing: – cost factor- production, manufacturing, administrative, inventory and promotion

ADDITIONAL CONSIDERATION n Ethical Choices of Market Target: » n Segment Interrelationships and Super-segments: » n Toothpaste Segment-by-Segment Invasion: » n Cigarettes, beer Toyota and Nissan Inter-segment Cooperation: » cooperation within the company