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Segmenting and Targeting Segmenting and Targeting MarketsMarkets
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Prepared byPrepared byDeborah BakerDeborah Baker
Texas Christian UniversityTexas Christian University
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Learning ObjectivesLearning Objectives
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1.1. Describe the characteristics of markets Describe the characteristics of markets and market segments.and market segments.
2. Explain the importance of market 2. Explain the importance of market segmentation.segmentation.
3. Discuss criteria for successful market 3. Discuss criteria for successful market segmentation.segmentation.
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Learning Objectives (continued)Learning Objectives (continued)
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4. Describe the bases commonly used to 4. Describe the bases commonly used to segment consumer markets.segment consumer markets.
5. Describe the bases for segmenting 5. Describe the bases for segmenting business markets.business markets.
6. List the steps involved in segmenting 6. List the steps involved in segmenting markets.markets.
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Learning Objectives (continued)Learning Objectives (continued)
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7. Discuss alternative strategies for 7. Discuss alternative strategies for selecting target markets.selecting target markets.
8.8. Explain how and why firms implement Explain how and why firms implement positioning strategies and how product positioning strategies and how product differentiation plays a role.differentiation plays a role.
9.9. Discuss global market segmentation Discuss global market segmentation and targeting issues.and targeting issues.
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Learning Objective Learning Objective 1
Describe the characteristics of Describe the characteristics of markets and market segments.markets and market segments.
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Market SegmentationMarket Segmentation
Market
MarketSegment
MarketSegmentation
People or organizations with needs or wants and the ability and
willingness to buy
A subgroup of people or organizations sharing one or more characteristics that cause them to
have similar product needs.
The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.
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A Market is...A Market is...(1) people or organizations with
(2) needs or wants, and with
(3) the ability and
(4) the willingness to buy.
A group of people that lacks any one of these characteristics is not a market.
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Learning Objective Learning Objective 2
Explain the importance Explain the importance of market segmentation.of market segmentation.
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The Importance of The Importance of Market SegmentationMarket Segmentation
Markets have a variety of product needs and preferences
Marketers can better define customer needs
Decision makers can define objectives and allocate resources more accurately
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Learning Objective Learning Objective
Discuss criteria for successful Discuss criteria for successful market segmentation.market segmentation.
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Criteria for Successful Criteria for Successful SegmentationSegmentation
Criteria Criteria for for
Market Market SegmentsSegments
Substantiality
Identifiability
Accessibility
Responsiveness
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Criteria for SegmentationCriteria for Segmentation
SubstantialitySubstantiality
IdentifiabilityIdentifiabilityMeasurabilityMeasurability
AccessibilityAccessibility
ResponsivenessResponsiveness
Segment must be large enough to warrant a special
marketing mix.
Segments must be identifiable and their size measurable.
Members of targeted segments must be reachable with
marketing mix.Unless segment responds to a marketing mix differently, no separate treatment is needed.
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Learning Objective Learning Objective
Describe the bases commonly Describe the bases commonly used to segment consumer markets.used to segment consumer markets.
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Segmentation BasesSegmentation Bases
Characteristics of individuals, groups,
or organizations used to divide a total market
into segments.(variables)
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Bases for SegmentationBases for Segmentation
Usage Rate
Benefits Sought
Psychographics
Demographics
Geography
Bases Bases Used toUsed toSegmentSegment
ConsumerConsumerMarketsMarkets
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Geographic SegmentationGeographic Segmentation
Segmenting markets by region of the country or
world, market size, market density, or climate.
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Geographic SegmentationGeographic Segmentation
Region of the country or world
Market size
Market density
Climate
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Benefits of Regional SegmentationBenefits of Regional Segmentation New ways to generate sales in
sluggish and competitive markets Scanner data allow assessment of
best selling brands in region Regional brands appeal to local
preferences React more quickly to competition
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Demographic SegmentationDemographic Segmentation
Segmenting markets by age, gender, income,
ethnic background, and family life cycle
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Bases for Bases for Demographic SegmentationDemographic Segmentation
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Age
Gender
Income
Ethnic background
Family Life Cycle
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Ethnic BackgroundEthnic Background Largest ethnic markets are:
African-AmericanHispanic-AmericanAsian-American
Will comprise 1/3 of U.S. population by 2010 with buying power of a trillion dollars
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Family Life CycleFamily Life Cycle
AgeAge
MaritalMaritalStatusStatus ChildrenChildren
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Psychographic SegmentationPsychographic Segmentation4
Market segmentation on the basis of personality, motives, lifestyles, and
geodemographics.
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Bases for Bases for Psychographic SegmentationPsychographic Segmentation
PsychographicPsychographicSegmentationSegmentation
Personality
Motives
Lifestyles
Geodemographics
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Lifestyle SegmentationLifestyle Segmentation4
How time is spent
Beliefs
Socioeconomic characteristics
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Geodemographic SegmentationGeodemographic Segmentation4
Segmenting potential customers into
neighborhood lifestyle categories.
Combines geographic, demographic, and lifestyle
segmentation.
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VALS 2 DimensionsVALS 2 DimensionsPrinciple-Principle-orientedoriented
Status-Status-orientedoriented
Action-Action-orientedoriented
Fulfillers
Believers
Actualizers
Achievers
Strivers
Strugglers
Experi-encers
Makers
Minimal Resources
Abundant Resources
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Benefit SegmentationBenefit Segmentation
The process of grouping customers into market segments according to the benefits they seek
from the product .
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Usage-Rate SegmentationUsage-Rate Segmentation
Dividing a market by the amount of product
bought or consumed.
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The 80/20 PrincipleThe 80/20 Principle
A principle holding that 20 percent of all customers
generate 80 percent of the demand.
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Learning Objective Learning Objective
Describe the bases for Describe the bases for segmenting segmenting
business markets.business markets.
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MacrosegmentationMacrosegmentation
The process of dividing business markets into
segments based on general characteristics such as
geographic location, customer type, customer
size, and product use.
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MicrosegmentationMicrosegmentation
The process of dividing business markets into segments based on the
characteristics of decision-making units within a
macrosegment.
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Business Marketing SegmentationBusiness Marketing SegmentationGeographic
Customer Type
Customer Size
Product UseBusinessBusinessMarketsMarkets
Purchasing Criteria
Purchasing Strategy
Importance
Personal Characteristics
Micro- segmentation
Macro- segmentation
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Learning Objective Learning Objective 6
List the steps involved List the steps involved in segmenting markets.in segmenting markets.
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Steps in Segmenting a MarketSteps in Segmenting a Market
Select a
market for
study
Choosebases
for segmen-
tation
Selectdescrip-
tors
Profileand
analyzesegments
Selecttarget
markets
Design,imple-ment,
maintainmkting
mix
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Learning Objective Learning Objective
Discuss alternative strategies Discuss alternative strategies for selecting target markets.for selecting target markets.
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Target MarketTarget MarketA group of people or
organizations for which an organization designs,
implements, and maintains a marketing mix intended to
meet the needs of that group, resulting in mutually
satisfying exchanges.
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Strategies for SelectingStrategies for SelectingTarget MarketsTarget Markets
ConcentratedStrategy
UndifferentiatedStrategy
MultisegmentStrategy
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Undifferentiated Undifferentiated Targeting StrategyTargeting Strategy
Marketing approach that views the market as one big
market with no individual segments and thus requires
a single marketing mix.
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Undifferentiated Undifferentiated Targeting StrategyTargeting Strategy
AdvantagesAdvantages: Potential savings on
production and marketing costs
DisadvantagesDisadvantages: Unimaginative product
offerings Company more
susceptible to competition
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Concentrated Concentrated Targeting StrategyTargeting Strategy
A strategy used to select one segment of a market for targeting marketing efforts.
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NicheNiche
One segment ofa market.
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Concentrated Concentrated Targeting StrategyTargeting Strategy
AdvantagesAdvantages: Concentration of resources Meets narrowly defined
segment Small firms can compete Strong positioning
DisadvantagesDisadvantages: Segments too small, or
changing Large competitors may market
to niche segment
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Multisegment Multisegment Targeting StrategyTargeting Strategy
A strategy that chooses two or more well-defined
market segments and develops a distinct
marketing mix for each.
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AdvantagesAdvantages: Greater financial success Economies of scale
DisadvantagesDisadvantages: High costs Cannibalization
Multisegment Multisegment Targeting StrategyTargeting Strategy
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Costs of Multisegment TargetingCosts of Multisegment Targeting$ Product design costs
$ Production costs
$ Promotion costs
$ Inventory costs
$ Marketing research costs
$ Management costs
$ Cannibalization
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CannibalizationCannibalization
Situation that occurs when sales of a new product
cut into sales of a firm’s existing products.
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Learning Objective Learning Objective
Explain how and why firms implement Explain how and why firms implement positioning strategies and positioning strategies and how product differentiation how product differentiation
plays a role.plays a role.
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PositioningPositioning
Developing a specific marketing mix to influence
potential customers’ overall perception of a brand,
product line, or organization in general.
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PositionPosition
The place a product, brand, or group of products
occupies in consumers’ minds relative to competing
offerings.
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Effective PositioningEffective Positioning
Assess the positions of competing products
Determine the dimensions of these positions
Choose an effective market position
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Product DifferentiationProduct Differentiation
A positioning strategy that some firms use to
distinguish their products from those of competitors.
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Perceptual MappingPerceptual Mapping
A means of displaying or graphing, in two or more
dimensions, the location of products, brands, or groups of products in customers’
minds.
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Perceptual Mapping--Levi’sPerceptual Mapping--Levi’s8
High PriceHigh Price
Low PriceLow Price
Cla
ssic
Cla
ssic
Designer
Designer
Old productNew product
Vintage
Red Line
Silver Tab
Slates
DockersPremium
DockersClassics
501 Red Tab
Basics
Red TabDry Goods
L2
Red TabElesco
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Positioning BasesPositioning BasesAttribute
Price and Quality
Use or Application
Product User
Product Class
Competitor
Positioning Positioning BasesBases
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RepositioningRepositioning
Changing consumers’ perceptions of a brand
in relation to competing brands.
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Learning Objective Learning Objective
Discuss global market segmentation Discuss global market segmentation and targeting issues.and targeting issues.
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Global IssuesGlobal Issues
Global Market Standardization
Trends
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