7

Segmentation & Target

Marketing

Dr. Close
 Finding Markets
• Markets = people with needs/wants and
the ability and willingness to buy
• Types of markets:
– Generic
• People with broadly similar needs (social)
• Diverse ways of satisfying (restaurants, movies)
– Products
• Very similar needs (thirsty for soft drinks)
• Very close substitutes (Coke vs. Pepsi, and what
else?)
Close substitutes or no?
Pepsi vs Coke
 What’s the Difference?
People
Peopleor
ororganizations
organizationswith
withneeds
needsor
orwants
wants
Market
Market and
andthe
theability
abilityand
andwillingness
willingnesstotobuy.
buy.

AAsubgroup
subgroupofofpeople
peopleorororganizations
organizationssharing
sharing
Market
Market one
oneorormore
morecharacteristics
characteristicsthat
thatcause
causethem
them
Segment
Segment to
tohave
havesimilar
similarproduct
productneeds.
needs.

The
Theprocess
processofofdividing
dividingaamarket
marketinto
into
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Market meaningful,
meaningful,relatively
relativelysimilar,
similar,identifiable
identifiable
Segmentation
Segmentation segments
segmentsor
orgroups.
groups.
 Market Segmentation
• Dividing market into meaningful, similar groups
(or aggregating those with similar needs)
• Why is segmentation important?....
• Markets have a variety of product preferences
• Marketers can better define customer needs
• Decision makers can define objectives and
allocate resources more accurately
 Criteria for Segmentation
Segment must be large enough to
Substantiality
warrant a special marketing mix.

Identifiability Segments must be identifiable and

and Measurability their size measurable.

Members of targeted segments must

Accessibility
be reachable with marketing mix.
Unless segment responds to a
Responsiveness marketing mix differently, no separate
treatment is needed.
 So, A Good Segment is…
• Homogenous within: members are similar
• Heterogeneous between: outsiders differ
(choose the best)
• Substantial: large enough for profit (Ned
Flanders)
• Operational: workable (identify then
access  China)
 Bases for Segmenting Markets
Geography Demographics Psychographics Benefits Usage Rate

• Region • Age • Personality • Benefits • Former

• Market size • Gender • Motives sought • Potential
• Market • Income • Lifestyle • 1st time
density • Ethnicity • Geodemo- • Light or
• Climate • Family life graphics irregular
cycle • Medium
• Heavy
Demographic Segmentation:
Family Life Cycle
 Psychographic Segmentation
• Personality (cars)
• Motives (emotions)
• Lifestyles (outdoor)
• Geodemographics (PRIZM)
 Benefit Segmentation
• Group consumers via needs/wants (NOT
by gender, age, lifestyle etc.)
• What do you want from your cell phone?
 Usage Rate Segmentation
• Group by amount/rate of consumption
• Former apple users
• Potential apple users
• Light apple users
• Heavy apple users
• 80/20 principle of demand
 6 Steps to Segment a Market

Select Choose Select Profile Select Design,

a market bases descriptors and target implement,
for for analyze markets maintain
study segmen- segments marketing
tation mix
 Strategies for Selecting Target
Markets
Options…
– Undifferentiated Targeting
• One market, one mix (plain toilet paper)
• Any other examples?
– Concentrated Targeting
• Multiple markets & mix for each
• Examples include Ford, Lincoln, Mercury, and what else?
– Multi-segment Targeting
• Multiple markets share mix (bad idea)
• Advantages = Greater financial success; Economies of scale
Disadvantages= High costs; Cannibalization
 Strategies for Selecting Target
Markets
• Options
– Undifferentiated Targeting
• One market, one mix (plain toilet paper)
• Any other examples?
– Concentrated Targeting
• Multiple markets & mix for each
• Examples include Ford, Lincoln, Mercury, and what else?
– Multi-segment Targeting
• Multiple markets share mix (bad idea)
• Example: network television and any more?
 One-to-One Marketing
One-to-One
One-to-One Has
Hasaa Goal
Goal of…
of…
Marketing
Marketingis...
is...

Individualized
Individualized Cost
Cost Reduction
Reduction

Information-Intensive
Information-Intensive Customer
Customer Retention
Retention

Long-Term
Long-Term Increased
Increased Revenue
Revenue

Personalized
Personalized Customer
Customer Loyalty
Loyalty
 One-to-One Marketing
Trends
Trends

•One-size-fits all marketing is lame.

•Direct/personal marketing will grow to meet
needs of busy consumers.
•We will be loyal to companies that have
earned—and reinforced—our loyalty.
•Mass-media approaches will decline as
technology allows better customer tracking.
 Marketing Strategy
• Matching opportunity with resources and
business objectives
• Goals:
1. SCA
• Enduring superiority of a business
• BEST: from many parts (Wal-Mart)
2. Breakthrough opportunity
• Conditions right for SCA
 Positioning
Developing a marketing mix
to influence potential
customers’ overall perception
of a brand, product line, or
organization in general.
How is Wal-Mart Positioned?
Positioning
Bases
Attribute
Attribute
Price
Price and
and Quality
Quality
Use
Use or
or Application
Application
Product
Product User
User
Product
Product Class
Class
Competitor
Competitor
Emotion
Emotion
 Positioning of
Procter & Gamble
Detergents
Market
Brand Positioning Share
Tide Tough, powerful cleaning 31.1%
Cheer Tough cleaning, color protection 8.2%
Bold Detergent plus fabric softener 2.9%
Gain Sunshine scent, odor-removing 2.6%
Era Stain treatment and stain removal 2.2%
Dash Value brand 1.8%
Oxydol Bleach-boosted formula, whitening 1.4%
Solo Detergent and fabric softener in liquid form 1.2%
Dreft Cleaning for baby clothes, safe 1.0%
LO 9
Ivory Snow Fabric & skin safety on baby clothes 0.7%
Ariel Tough cleaner, aimed at Hispanic market 0.1%
 Effective
Positioning
1. Assess the positions occupied by
competing products
2. Determine the dimensions underlying
these positions
3. Choose a market position where
marketing efforts will have the
greatest impact
 Product
Differentiation
A positioning strategy that some firms use
to distinguish their products from those of
competitors.

Are distinctions real or perceived?

Perceptual
Mapping
 Daimler Chrysler:
Do they need a reposition?
(Changing consumers’ perceptions of a brand
in relation to competing brands)
 Summary
• Generic vs product markets
• Segmentation: Criteria
• Bases for segmenting
• Strategies of segmentation
• (effective)Positioning/repositioning, bases
• Any questions?