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:hapter 7 Identifyingarket Segments andTargets

-KTG 6352 Strategic Marketing Management-KTG 6352 Strategic Marketing Management. Diana FlrezDiana Flrez

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e will address the:ollowing questions

hat are the different levels of markethat are the different levels of marketsegmentation?egmentation?2 ow can a company identify the segments thaow can a company identify the segments thaake up a market?ake up a market?3 ow should a company choose the most attracow should a company choose the most attracarget markets?arget markets?

.g 110

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dentifying Market Segments andTargets

hapter 9 will discuss Positioninghapter 9 will discuss Positioning

1. Identify Basesfor Segmenting the Market

2. Develop Profilesof Resulting Segments

3. Develop Measuresof Segment Attractiveness

4. Select TargetSegment(s)

5. Develop Positioningfor Each Target Segment

6. Develop MarketingMix for Each Target Segment Market

Positioning

MarketTargeting

Market Segmentation

.g 111

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arket Segmentationarket Segmentationevels of Market Segmentationevels of Market Segmentation

MassMarketing

Sameproducttoallconsumers(nosegmentation,i.eCoca-ColawithCokein6.5-ouncebottle)

MicromarketingDifferentproductstooneormoresegments

(somesegmentation,i.e.MarriottInternational)1.Marriott Suites Permanent vacationers2.Fairfield Inn Economy Lodging3.Residence Inn Extended Stay4.Courtyard Business Travelers

.g 111

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evels of Market Segmentationevels of Market SegmentationContinueontinuedSegmentMarketingSegmentMarketing

Groupofcustomerswhoshareasimilarsetofneedsandwants

(.)ieSiemensElectricalApparatusDivision

NicheMarketingNicheMarketing Groupofcustomersseekingadistinctivemixofbenefits(.-)ieEnterpriseCarRentalFirm

LocalMarketingLocalMarketing

Localcustomerswithsimilarneedsandwantsinparticularareas

(.)ieCitibankandCostco

IndividualMarketingIndividualMarketing,-SegmentsofoneCustomizedMarketingorOnetoone

Marketing(.)ieSignatureCycles

.g 111

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Marketsarketsases for segmenting Consumers Marketsases for segmenting Consumers Markets

.g 114

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ases for segmenting Consumers Marketsases for segmenting Consumers MarketsContinueontinued

It calls for dividing the market into,different geographical units such as nations

, , , ,states regions countries cities or.neighborhoods

Gee graphic Segmentationgraphic Segmentation

.g 114

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ases for segmenting Consumers Marketsases for segmenting Consumers MarketsContinueontinuedGee graphic Segmentationgraphic Segmentation

Hilton Hotels customizedrooms and lobbies

:according to location

Some hotels are sleekand some hotels are morerustic

.g 114

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ases for segmenting Consumers Marketsases for segmenting Consumers MarketsContinueontinuedDemem graphic Segmentationgraphic Segmentation

FamilyFamilyFamilyFamily

Income LevelIncome LevelIncome LevelIncome Level

EthnicityEthnicityEthnicityEthnicityEducationEducationEducationEducation

AgeAge

Demographic variables are used to segment consumer: , ,markets by Age and life cycle stage Life stage

, , , .Gender Income Generation and Social class

.g 114

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ases for segmenting Consumers Marketsases for segmenting Consumers MarketsContinueontinuedDemem graphic Segmentationgraphic Segmentation

Some products aremarketed to consumers

from specific ethnicbackgrounds

Colgate offers differentline of products to target,kids adults and older

consumers

.g 116

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ases for segmenting Consumers Marketsases for segmenting Consumers MarketsContinueontinuedPsychosycho raphic Segmentationraphic SegmentationBuyers are divided into differentgroups on the basis of

/ ,psychological personality traits, .lifestyle or values

V lues a d Lifestyles , a systemfor grouping consumers according topsychological and sociological

theories in order to predict theirbehavior in the purchase decision.process-e ed d ir ec te d-consumers who makepurchases based solely on need-u te r d ir ec te d -consumers who makepurchases based on their perceptions of

the way others view them-n ne r d ir ec te d -consumers who makepurchases out of some inner need

.g 117

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ases for segmenting Consumers Marketsases for segmenting Consumers MarketsContinueontinuedehavioral Segmentationehavioral SegmentationConsumers are divided into groups on the basis of their, , ,knowledge of attitude toward use of or response to a

product

:n i t i a t o r Wifeinitiates a purchase byrequesting a new

-treadmill for her B dayHusband seeks info and

(asks to a friend e yi n f l u e n c e r )Husband purchases wife s

(preferred model -e ci de r B uy er )which ends up being use by the

entire family ( )s er,Different people are playing different roles but all

are crucial in the decision process and ultimate

consumer satisfaction .g 117

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ases for segmenting Consumers Marketsases for segmenting Consumers MarketsContinueontinuedehavioral Segmentationehavioral SegmentationBehavioralVariables

OccasionsOccasions BenefitsBenefits User StatusUser Status Usage ratesUsage rates

-Buyer Readiness Stage-Buyer Readiness Stage Loyalty StatusLoyalty Status AttitudeAttitude

.g 118

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ases for segmenting Business Marketsases for segmenting Business MarketsBusiness marketers identify segments through a sequential

:processLUMINUM COMPANYLUMINUM COMPANY

Semifinished

Material

uildingComponentsAluminum

Mobile Homes

Automobile everagesContainers

Customersbuying On

Price

ustomersuying OnService

Customersbuying On

Quality

MACROSE

GMENTA

TION

MACROSE

GMENTA

TION

MICROSEGMENTATIONMICROSEGMENTATION

.g 119

Residential

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arket Targetingarket Targeting- ,Once the firm has identified its market segment opportunities it

.has to decide how many and which ones to target Some experts-advocate a needs based market segmentation approach to identify, -smaller better defined target groups

ffective Segmentationffective SegmentationCriteriariteria :easurable , ,Size purchasing power and characteristics :ubstantial Segments are large and profitable enough to

.serve :ccessible Segments can be effectively reached and

.served :ifferentiable Segments are conceptually evident and

- .respond differently to marketing mix elements and programs

.g 120

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Firm gains leadership and

can gain a high ROI

valuating and Selectingva uating an Se ectingarket Segmentsarket Segments

, : In this process company must look at two factors the segment s overall .attractiveness and the company s objectives and resources Having

,evaluated different segments the company can consider five patterns of

target market selectionive Patterns of Target Marketive Patterns of Target MarketSelectionelection

Single-segmentconcentration

P1

P2

P3

M1 M2 M3

The firm can gain a detailedunderstanding of the chosen

segment s needs and achieve a strongmarket presence

Segment may turn sour becauseof changes in buying patternsor new competition

.g 123

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Selectivespecialization

M1 M2 M3

P1

P2

P3

,A firm selects a number of segmentseach objectively attractive and

appropriate

There may be little or no,synergy among the segments but

each one promises to be amoneymaker

This strategy diversifies the firm s risk

Productspecialization

M1 M2 M3

P1

P2

P3

Another approach is to specialize in

making a certain product for several.segmentsThe downside risk is that the

product may be supplanted by anentirely new technology

.g 123

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M1 M2 M3

Full marketcoverage

P1

P2

P3

Marketspecialization

M1 M2 M3

P1

P2

P3

The firm concentrates on serving many.needs of a particular customer group

The firm gains a strong reputationin serving this customer needs

group and becomes a channel foradditional products the customergroup can use

The customer may suffer budget cutsor shrink in size

The firm attempts to serve allcustomer groups with all the products

they might need

Firms can make use of

DifferentiatedUndifferentiatedMarketing

It leads to higher sales

It leads to Higher operatingcosts

.g 123

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ifferentiatedifferentiatedMarketingarketing ifferentiatedifferentiatedMarketingarketingAn organization targets

multiple market segmentsand develops segment

specific mixes

Undnd fferentiatedfferentiatedMarketingarketingUndnd fferentiatedfferentiatedMarketingarketing

An organization develops onestrategy appropriate for allmembers of the total market

.g 124