CHAPTER THREE Market Segmentation and Strategic Targeting At

CHAPTER THREE Market Segmentation and Strategic Targeting

At the end of this Topic you will: 1. Understand Why Market Segmentation Is Essential. 2. Understand the Criteria for Targeting Selected Segments Effectively. 3. Understand the Bases for Segmenting Consumers. 4. Understand How Segmentation and Strategic Targeting Are Carried Out. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 2

What Kind of Consumer Does This Ad Target? Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 3

This Ad Targets Runners Who Are Physically Active People and Also Relish the Outdoors. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 4

Why Segmentation is Necessary • Consumer needs differ • Differentiation helps products compete • Segmentation helps identify media Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 5

Positioning The value proposition, expressed through promotion, stating the product’s or service’s capacity to deliver specific benefits. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 6

Criteria for Effective Targeting Identifiable Sizeable Stable Accessible Congruent with the company’s objectives and resources Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 7

Which Distinct Benefit Does Each of the Two Brands Shown in This Figure Deliver? Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 8

The Dentyne Ad’s Benefit is Fresh Breath and the Nicorette Ad is Whitening and Smoking Cessation Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 9

Bases for Segmentation Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 10

Discussion Questions • Considering the largest bank in your college’s city or town: – How might consumers’ needs differ? – What types of products might meet their needs? – What advertising media makes sense for the different segments of consumers? Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 11

Consumer-Rooted Segmentation Bases Demographics Geodemographic Personality Traits Lifestyles Sociocultural Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 12

Demographic Segmentation Age Gender Marital Status Family Lifecycle Income, Education, and Occupation Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 13

Discussion Questions • What types of marketers might segment according to social class? • What ethical issues might marketers have when marketing to different social classes? Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 14

Geodemographic Segmentation • Based on geography and demographics • People who live close to one another are similar • “Birds of a feather flock together” Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 15

One PRIZM Segment - Table 3. 4 (excerpt) MOVERS & SHAKERS • 1. 59 of U. S. households, Median household income: $95, 372, Predominant employment: Professional • Social group: Elite suburbs, Life stage group: Midlife success, Key education level: College grad+ • Adult age range: 35– 64 CHARACTERISTICS • Movers & Shakers is home to America’s up-and-coming business class: a wealthy suburban world of dual-income couples who are highly educated, typically between the ages of 35 and 54 and often with children. Given its high percentage of executives and white-collar professionals, there’s a decided business bent to this segment: Movers & Shakers rank number-one for owning a small business and having a home office. LIFESTYLE TRAITS: • Go scuba diving/snorkeling, Plan travel on the Internet • Read PC Magazine, Listen to adult contemporary radio • Drive a Porsche Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 16

Personality Traits • People often do not identify these traits because they are guarded or not consciously recognized • Consumer innovators – Open minded – Perceive less risk in trying new things Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 17

Lifestyles • Psychographics • Includes activities, interests, and opinions • They explain buyer’s purchase decisions and choices Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 18

Discussion Questions • How might you differ from a person with similar demographics to yourself? • How would this be important for marketers? Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 19

Two Views of Post-Retirement Lifestyle Table 3. 6 (excerpt) AS AN OPPORTUNITY TO MAKE A NEW START • This group regards retirement as an exciting time. Work will have been largely unrewarding, so the transition is seen as a freedom from the constraints of their former role. Retirement will invigorate such people and inspire them toward undertaking activities that work largely prevented them from pursuing. AS A CONTINUATION OF THEIR PRE-RETIREMENT LIFESTYLE • To such people, retirement is not perceived as signaling a drastic change. Work life has not been as unsatisfying as for others, hence its ending is not greeted with euphoria. There is, however, some satisfaction that retirement permits more opportunity to devote time to existing activities outside of their working role. The future is likely to see an increase in such activities but no real desire to engage in new ones. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 20

VALS – Figure 3. 4 Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 21

Socio-Cultural Values and Beliefs • Sociological = group • Anthropological = cultural • Include segments based on – Cultural values – Sub-cultural membership – Cross-cultural affiliations Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 22

Consumption-Specific Segmentation Bases Usage rate Usage situation Benefit segmentation Perceived brand loyalty Brand relationship Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 23

Consumption-Specific Segmentation Usage-Behaviour • Usage rate – Awareness status – Level of involvement Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 24

Consumption-Specific Segmentation Usage-Behaviour • Usage-situation segmentation – Segmenting on the basis of special occasions or situations – Example : When I’m away on business, I try to stay at a suites hotel. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 25

Which Consumption-Related Segmentation Is Featured in This Ad? Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 26

This is an Example of a Situational Special Usage Segmentation. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 27

Benefits Segmentation • Benefits sought represent consumer needs • Important for positioning • Benefits of media Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 28

Benefits Visiting Tourists Seek in National Park – Table 3. 13 (excerpt) Segment Description Environmentalists Interested in an unpolluted, un-spoilt natural environment and in conservation. Not interested in socializing, entertainment, or sports. Desire authenticity and less man-made structures and vehicles in the park. Want-it-all Tourists Value socializing and entertainment more than conservation. Interested in more activities and opportunities for meeting other tourists. Do not mind the “urbanization” of some park sections. Independent Tourists Looking for calm and unpolluted environment, exploring the park by themselves, and staying at a comfortable place to relax. Influenced by word of mouth in choosing travel destinations. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 29

Brand Loyalty and Relationships • Brand loyalty includes: – Behavior – Attitude • Frequency award programmes are popular • Customer relationships can be active or passive • Retail customers seek: – Personal connections vs. functional features • Banking customers seek: – Special treatment – Confidence benefits – Social benefits Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 30

Implementing Segmentation Strategies • Micro- and behavioural targeting – Personalized advertising messages – Narrowcasting • Email • Mobile – Use of many data sources Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 31

Sample Acxiom Clusters - Table 3. 16 (excerpt) Shooting Stars • Still relatively young at a mean age of 36, and with top rankings for income, college education, home value and net worth, these consumers have the world by the tail. Feeling financially secure with large investment portfolios, Shooting Stars spend their disposable Income making life a comfortable one, focusing on health, exercise, gourmet food, golf, and travel. Tots & Toys • Two things—work and family—consume these professional working couples. They’re putting their college degrees into action, climbing the corporate ladder for lucrative careers, while saving for their children’s education through do-it-yourself home improvements and trips to the zoo for entertainment. With time at a premium, it’s not surprising that the radio is the most relied-upon source for news and entertainment. Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 32

Implementing Segmentation Strategies • Concentrated Marketing – One segment • Differentiated – Several segments with individual marketing mixes • Countersegmentation Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 33

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