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IDENTIFYING MARKET

SEGMENTSAND TARGETS

CHAPTER

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AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

1. Explain what market segmentation is, when to use it.

2. Identify the five steps involved in segmenting and targeting markets.

3. Recognize the different factors used to segment consumer and organizational markets.

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AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

4. Know how to develop a market-product grid to identify a target market and recommend resulting actions.

5. Explain how marketing managers position products in the marketplace.

6. Describe three approaches to developing a sales forecast for a company.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

WHY SEGMENT MARKETS?

Slide 9-7

• What Market Segmentation Means

Market Segments

Product Differentiation

Segmentation: Linking Needs to Actions

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FIGURE 9-2FIGURE 9-2 Market-product grid showing how different Reebok shoes reach segments of customers with different needs

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Anheuser-Busch

• Budweiser Family– Budweiser (1876)– Bud Light (1982)– Bud (Light) Ice (1994)– Budweiser Select (2004)

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Anheuser-Busch

• Michelob Family– Michelob (1896)– Michelob Light (1978)– Michelob Amber Bock (1995)– Michelob Honey Lager (1997)– Michelob Ultra (2002)– Michelob Ultra Amber (2005)

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Anheuser-Busch• Busch Family

– Busch (1955)– Busch Light (1989)– Busch Ice (1995)

• Natural Family– Natural Light (1977)– Natural Ice (1995)– Natty Up (2005)

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Anheuser-Busch• Non-Alc

– O’Doul’s (1989)– O’Doul’s Amber (1998)– Busch NA (1994)

• Specialty– Bare Knuckle Stout (2003)– Anheuser World Lager (2003)– Tilt, Tequiza, ZiegenBock, malt liquors, energy

drinks, Bacardi, etc.

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Nissan USA

• Maxima

• Altima

• Sentra

• Versa

• Z

• Quest

• Armada

• Pathfinder

• Murano

• Titan

• Frontier

• Xterra

• (Infiniti)

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FIGURE 9-4 FIGURE 9-4 Segmentation variables and breakdowns for U.S. consumer markets

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FIGURE 9-7 FIGURE 9-7 Segmentation variables and breakdowns for U.S. organizational markets

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MARKETING NEWSNET

Apple’s Segmentation Strategy—Camp Runamok No Longer

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Group ActivityRetail Stores that Sell Electronics

• A store that caters to businesses and organizations

• A store that caters to home theater enthusiasts

• A store that caters to mobile audio (auto) enthusiasts

• A store that caters to college students and young people

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Group ActivityRetail Stores that Sell Electronics

1. Come up with a name for each business.

2. Come up with an advertising slogan for the business.

3. Short list of products/services available at each of the businesses.

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Market Segments

Market segments are the relatively homogeneous groups of prospective buyers that result from the market segmentation process.

Market segments are the relatively homogeneous groups of prospective buyers that result from the market segmentation process.

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Product Differentiation

Product differentiation is a strategythat involves a firm’s using different marketing mix activities to help consumers perceive the product asbeing different and better thancompeting products.

Product differentiation is a strategythat involves a firm’s using different marketing mix activities to help consumers perceive the product asbeing different and better thancompeting products.

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Market-Product Grid

A market-product grid is a framework to relate the market segments of potential buyers to products offered or potential marketing actions by the firm.

A market-product grid is a framework to relate the market segments of potential buyers to products offered or potential marketing actions by the firm.

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Synergy

Synergy is the increased customer value achieved through performing organizational functions more efficiently.

Synergy is the increased customer value achieved through performing organizational functions more efficiently.

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Usage Rate

Usage rate is the quantity consumed or patronage (store visits) during a specific period of time.

Usage rate is the quantity consumed or patronage (store visits) during a specific period of time.

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80/20 Rule

The 80/20 rule is a concept that suggests 80 percent of a firm’s sales are obtained from 20 percent of its customers.

The 80/20 rule is a concept that suggests 80 percent of a firm’s sales are obtained from 20 percent of its customers.

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Product Positioning

Product positioning refers to the place an offering occupies in consumers’ minds on important attributes relative to competitive products.

Product positioning refers to the place an offering occupies in consumers’ minds on important attributes relative to competitive products.

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Product Repositioning

Product repositioning involveschanging the place an offeringoccupies in a consumer’s mindrelative to competitive products.

Product repositioning involveschanging the place an offeringoccupies in a consumer’s mindrelative to competitive products.

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Perceptual Map

A perceptual map is a means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands relative to its own and then take marketing actions.

A perceptual map is a means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands relative to its own and then take marketing actions.

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Market Potential

Market potential is the maximum total sales of a product by all firms to a segment during a specified time period under specified environmental conditions and marketing efforts of the firm. Also called industry potential.

Market potential is the maximum total sales of a product by all firms to a segment during a specified time period under specified environmental conditions and marketing efforts of the firm. Also called industry potential.

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Industry Potential

Industry potential is the maximum total sales of a product by all firms to a segment during a specified time period under specified environmental conditions and marketing efforts of the firm. Also called market potential.

Industry potential is the maximum total sales of a product by all firms to a segment during a specified time period under specified environmental conditions and marketing efforts of the firm. Also called market potential.

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Sales Forecast

A sales forecast refers to the total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts. Also called company forecast.

A sales forecast refers to the total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts. Also called company forecast.

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Company Forecast

A company forecast refers to the total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts. Also called sales forecast.

A company forecast refers to the total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts. Also called sales forecast.

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Direct Forecast

A direct forecast involves estimating the value to be forecast without any intervening steps.

A direct forecast involves estimating the value to be forecast without any intervening steps.

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Lost-Horse Forecast

A lost-horse forecast involves making a forecast using the last known value and modifying it according to positive or negative factors expected in the future.

A lost-horse forecast involves making a forecast using the last known value and modifying it according to positive or negative factors expected in the future.

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Survey ofBuyers’ Intentions Forecast

A survey of buyers’ intentions forecast involves asking prospective customers if they are likely to buy the product during some future time period.

A survey of buyers’ intentions forecast involves asking prospective customers if they are likely to buy the product during some future time period.

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Salesforce Survey Forecast

A salesforce survey forecast involves asking the firm’s salespeople to estimate sales during a coming period.

A salesforce survey forecast involves asking the firm’s salespeople to estimate sales during a coming period.

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Trend Extrapolation

Trend extrapolation involves extending a pattern observed in past data into the future.

Trend extrapolation involves extending a pattern observed in past data into the future.

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Linear Trend Extrapolation

Linear trend extrapolation involves using a straight line to extend a pattern observed in past data into the future.

Linear trend extrapolation involves using a straight line to extend a pattern observed in past data into the future.