Marketing Management

Segmentation andTarget Marketing

Paul Dishman, Ph.D.Department of Business Management

Marriott School of Management

Brigham Young University

Lecture 10

Paul Dishman, Ph.D.

Marketing Management

DefinitionsDefinitions

• Mass Marketing vs. Mass Communications

• Market Segmentation– Different products to one or more

segments

• Target Marketing– Aiming (and modifying) the Marketing

Mix at a particular segment

Paul Dishman, Ph.D.

Marketing Management

Steps in Market Segmentation, Targeting, and Positioning (Fig. 7.1)

Market Segmentation

1. Identify bases for segmenting the market2. Develop segment profiles

Market Segmentation

1. Identify bases for segmenting the market2. Develop segment profiles

Market Targeting3. Develop measure of segment attractiveness4. Select target segments

Market Targeting3. Develop measure of segment attractiveness4. Select target segments

Market positioning5. Develop positioning for target segments6. Develop a marketing mix for each segment

Market positioning5. Develop positioning for target segments6. Develop a marketing mix for each segment

Paul Dishman, Ph.D.

Marketing Management

Bases for ConsumerSegmentationBases for ConsumerSegmentation

Geographic

Demographic

-Age

-Gender

-Family size or life cycle

-Income

-Occupation

-Education

-Religion

-Race

-Generation

-Nationality

Psychographic

-Social Class

-Life Style

-Personality

Behavioral

-Occasions

-Benefits

-User status

-Usage rate

-Loyalty status

-Readiness stage

-Attitude toward product

worksheet

Paul Dishman, Ph.D.

Marketing Management

Bases for ConsumerSegmentationBases for ConsumerSegmentation

Geographic Demographic

                    

 

Psychographic Behavioral

Paul Dishman, Ph.D.

Marketing Management

• Demographics

• Operating Variables

• Purchasing Variables

• Situational Variables

• Miscellaneous

Bases for IndustrialSegmentationBases for IndustrialSegmentation

Paul Dishman, Ph.D.

Marketing Management

Orange JuiceSegments by Behavior

• by Customer Benefits– Smooth taste– Want more body– Concerned about

osteoporosis– Don’t want it to

burn

Regular

ReducedAcid

AddedCalcium

AddedPulp

Market Segments

Paul Dishman, Ph.D.

Marketing Management

Orange Juice Segmentsby Psychographics

• by Customer Life Style– “traditionals”– “healthies”

Market Segments

“traditionals”

“healthies”

Paul Dishman, Ph.D.

Marketing Management

Orange Juice SegmentsWhat can we learn?

Market Segments

“traditionals”

“healthies”Regular

Added Pulp

Calcium

Reduced Acid

Paul Dishman, Ph.D.

Marketing Management

Evaluation of SegmentsEvaluation of Segments

• Size of market (potential) and our share

– in dollars, units, retail, dealer– our share– competitors’ share

• Forecasted market growth• Our sales potential• Structural attractiveness

Paul Dishman, Ph.D.

Marketing Management

Evaluation of SegmentsEvaluation of Segments

• Measurable (and mutually exclusive)

• Accessible

• Sustainable

• Actionable

Paul Dishman, Ph.D.

Marketing Management

Pantyhose Segmentation

• Everyday

• Professional

• Special Occasion

• Miscellaneous

Paul Dishman, Ph.D.

Marketing Management

Pantyhose Segments

Everyday Wear55%Professional Wear

25%

Special Occasion Wear19%

Miscellaneous Wear5%

Paul Dishman, Ph.D.

Marketing Management

Everyday Wear

• Priced close to $ .99

• Price is almost only consideration

• Discounters, grocery stores

• Lots of private labels

• Little brand loyalty

• Largest segment, most competitors

• Up to 25+ purchases a year

Paul Dishman, Ph.D.

Marketing Management

Professional Wear

• Priced close to $5.00• Officewear• Upward quality/label pressure• Department stores, specialty stores• Label class very important• Second largest segment• 10+ purchases per year• Many brands are subcontracted

Paul Dishman, Ph.D.

Marketing Management

Special Occasion

• Priced from $5.00 to $20.00• Bought to “feel feminine”• Specialty stores, department stores• Very label conscious• Segment may drive other segment choices• 3-5 purchases per year• Brands do subcontract

Paul Dishman, Ph.D.

Marketing Management

Miscellaneous

• Priced $10.00 to $40.00• Medical to exotic• Specialty Stores, catalogs• Brands known in some sub-segments• Few purchases per year• Sometimes only one brand in sub-

segment• Size?

Paul Dishman, Ph.D.

Marketing Management

Pantyhose Segments

Everyday

Professional

SpecialOccasion

Misc.

% of StructuralTMD $Size Environment GPM

55% $45M extensive 45%low-cost manf’sprice sens

25% $20M extensive 53%brand sens

19% $15M brand sens 57%

6% $5M no brand aware 81%sm manf’s

Paul Dishman, Ph.D.

Marketing Management

Simple Segmentation

1. Define the broad product-market

2. Decide on segmentation method and criteria

3. Draw a pie to insure mutual exclusivity

4. Identify and label segments

5. Go research for information

6. What insights or understandings might you gain if you were to use another segmentation method?

(example)

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Marketing Management

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing

Mix

CompanyMarketing Mix 1

CompanyMarketing Mix 1

CompanyMarketing Mix 2

CompanyMarketing Mix 2

CompanyMarketing Mix 3

CompanyMarketing Mix 3

MarketMarket

A. Undifferentiated Marketing

B. Differentiated Marketing

C. Concentrated Marketing

Market Coverage Strategies

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Marketing Management

Identifying Possible Competitive Advantages• Key to winning and keeping customers is to

understand their needs and buying processes better than competitors do and deliver more value.

• Competitive advantage is an edge over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits, that justify competitive advantage

Paul Dishman, Ph.D.

Marketing Management

Positioning StrategiesPositioning Strategies

• Competitive Advantage– Create Competitive differentia by:

Product

Personnel

Services Image

Unique Selling Proposition

Paul Dishman, Ph.D.

Marketing Management

Exercise

• Use the segmentation process to determine appropriate market segments for BYU’s marketing efforts to potential students

• (Make sure that the segments are mutual exclusive)

• Use this process in defending your answer in writing

• Due next class period• Color pie chart overhead transparency with one

page support