LHM 12e ch08 - PPT - IE

Chapter 8: Segmenting and Targeting Markets
Prepared & Designed by Laura Rush, B-Books Ltd.
Copyright Cengage Learning 2012 All Rights Reserved
Learning Outcomes
LO1 Describe the characteristics of markets and market segments Explain the importance of market segmentation
LO2 LO3
Discuss criteria for successful market segmentation Describe the bases commonly used to segment consumer markets
Copyright Cengage Learning 2012 All Rights Reserved 2
LO4
Learning Outcomes
LO5 LO6 LO7 LO8 Describe the bases for segmenting business markets List the steps involved in segmenting markets Discuss alternative strategies for selecting target markets Explain one-to-one marketing
LO9
Explain how and why firms implement positioning strategies and how product differentiation plays a role
Market Segmentation
Describe the characteristics of markets and market segments.
LO1
A Market Is...
(1)
(2) (3) (4)
people or organizations with

needs or wants, and with the ability and the willingness to buy.
A group of people that lacks any one of these characteristics is not a market.
LO1
The Concept of Market Segmentation
LO1
6
6
The Importance of Market Segmentation
Explain the importance of market segmentation.
LO2

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.
LO2
Review Learning Outcome

Market segmentation
More precise definition of customers needs and wants
More accurate marketing objectives
Improved resource allocation
Better marketing results
LO2
Criteria for Successful Segmentation
Discuss criteria for successful market segmentation.
LO3
10
Criteria for Segmentation

Substantiality
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.
Identifiability and Measurability

Accessibility
Responsiveness
Unless segment responds to a marketing mix differently, no separate treatment is needed.

11
LO3

Successful Market Segmentation
Useful segment?
Substantial Identifiable and measurable Accessible Responsive
Then, yes: Useful segmentation scheme
LO3
12
Bases for Segmenting Consumer Markets
Describe the bases commonly used to segment consumer markets.
LO4
13
Bases for Segmentation

Geography Demographics
Psychographics
Benefits Sought Usage Rate LO4
14
Geographic Segmentation
Region of the country or world Market size Market density Climate
LO4
15
Benefits of Regional Segmentation

LO4
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 Quicker reaction to competition
Demographic Segmentation
Age Gender
Income
Ethnic background Family life cycle LO4
Gender Segmentation
In U.S., women
Influence 80% of consumer purchases Make purchase decisions about variety of goods and services
New cars, hardware stores, electronics, etc.
Other brands that have targeted men are trying to target women
Nintendo, Gillette razors, Nike, Reebok, etc.
LO4
18
Income Segmentation
Income popular demographic variable for segmenting markets According to Nielsen study, affluent households (earning more than $100k/ year) are twice as likely to shop at warehouses Price-sensitive consumers
Walmart Money centers
LO4
Ethnic Segmentation
Largest ethnic markets are:
Hispanic Americans African Americans Asian Americans
LO4
20
Family Life Cycle
Age
Marital Status
Children
LO4
21
Family Life Cycle
LO4
22
Bases for Psychographic Segmentation

Personality
Motives
Lifestyles
Geodemographics
LO4
Lifestyle Segmentation
How time is spent
Importance of things around them
Beliefs
Socioeconomic characteristics
LO4
24
Geodemographic Segmentation
Geodemographic Segmentation Segmenting potential customers into neighborhood lifestyle categories. Combines geographic, demographic, and lifestyle segmentation
LO4
25
Benefit Segmentation
Benefit segmentation- The process of grouping customers into market segments according to the benefits they seek from the past.
LO4
26
Usage-Rate Segmentation
Usage-Rate Segmentation- Dividing a market by the amount of product bought or consumed.
80/20 Principle- A principle holding that 20 percent of all customers generate 80 percent of the demand.
LO4
27

Bases for Segmenting Consumer Markets
Geography
Demographics
Psychographics
Benefits
Usage Rate
Region Market size Market density Climate
Age Gender Income Race/ethnicity Family life cycle
Personality Motives Lifestyle Geodemographics
Benefits sought
Former Potential 1st time Light or irregular Medium Heavy
LO4
28
Bases for Segmenting Business Markets
Describe the bases for segmenting business markets.
LO5
29

Producers
Resellers
Government
Institutions Company Characteristics Buying Processes

30
LO5

Company Characteristics Geographic location Type of company Company size Volume of purchase
LO5
Product use
31
Buyer Characteristics
Demographic characteristics Decision style Tolerance for risk Confidence level Job responsibilities
LO5
32

Segmenting Business Markets
Company Characteristics
Producers Governments
Resellers Institutions
Buying Process
LO5
33
Steps in Segmenting a Market
List the steps involved in segmenting markets.
LO6
34

Steps in Segmenting Markets
Select a market for study
Choose bases for segmentation
Select descriptors
Profile and analyze segments
Select target markets
Design, implement, maintain marketing mix
LO6
35
Strategies for Selecting Target Markets
Discuss alternative strategies for selecting target markets.
LO7
36
Strategies for Selecting Target Markets
Undifferentiated Strategy LO7
Concentrated Strategy
Multisegment Strategy
37
Undifferentiated Targeting Strategy

Advantage:
Potential savings on production and marketing costs
Disadvantages:
Unimaginative product offerings
Undifferentiated Strategy LO7
Company more susceptible to competition
38
Concentrated Targeting Strategy

Advantages:
Concentration of resources Meets narrowly defined segment Small firms can compete Strong positioning
Disadvantages:

Concentrated Strategy
LO7
Segments too small, or changing Large competitors may market to niche segment
39
Multisegment Targeting Strategy

Advantages:
Greater financial success Economies of scale
Disadvantages:
High costs Cannibalization
Multisegment Strategy
LO7
Costs of Multisegment Targeting
Product design costs

Production costs Promotion costs
Inventory costs
Marketing research costs Management costs Cannibalization
LO7
41

Alternatives for Selecting Target Markets
Undifferentiated
Multisegment
Concentrated
LO7
42
One-to-One Marketing
Explain one-to-one marketing.
LO8
43
One-to-One Marketing is... Has a Goal of
Individualized Information-Intensive Long-Term Personalized
Cost Reduction Customer Retention Increased Revenue Customer Loyalty
LO8
44
Trends 1. One-size-fits all marketing no longer effective 2. Direct and personal marketing will grow to meet needs of busy consumers. 3. Consumers will be loyal to companies that have earnedand reinforcedtheir loyalty.
4. Mass-media approaches will decline as technology allows better customer tracking.

LO8

LO8
46
Positioning
Explain how and why firms
implement positioning
strategies and how product differentiation plays a role.
LO9
47
Positioning
Developing a specific marketing mix to influence potential customers overall perception of a brand, product line, or organization in general.
LO9
48
Positioning of Procter & Gamble Detergents

Brand Tide Cheer Bold Gain Era Dash Dreft Ariel Positioning Tough, powerful cleaning Tough cleaning, color protection Detergent plus fabric softener Sunshine scent and odor-removing formula Stain treatment and stain removal Value brand Outstanding cleaning for baby clothes, safe Tough cleaner, aimed at Hispanic market Market Share 31.1% 8.2% 2.9% 2.6% 2.2% 1.8% 1.0% 0.7% 0.1%
Ivory Snow Fabric & skin safety on baby clothes
Effective Positioning
1. Assess the positions occupied by competing products Determine the dimensions underlying these positions Choose a market position where marketing efforts will have the greatest impact
2.
3.
LO9
50
Product Differentiation
A positioning strategy that some firms use to distinguish their products from those of their competitors.
Distinctions can be real or perceived.
LO9
51
Perceptual Mapping
LO9
52
Positioning Bases
Attribute Price and Quality Use or Application Product User Product Class Competitor
Emotion
LO9
Repositioning
Changing perceptions of a brand in relation to competing brands.
LO9
54

Positioning and Product Differentiation
Each car occupies a position in consumers minds. Cars can be positioned according to attribute (sporty, conservative, etc.), to price/quality (affordable, classy, etc.) or other bases. Cadillac has repositioned itself as a car for younger drivers with edgier ads.
LO9
55
Chapter 8 Company Clip

Although ReadyMade markets itself as a magazine catering to GenNest, the group of consumers ages 25 to 35, its readers actually spans a much wider age range. One challenge that causes is how to promote itself to advertisers who want to know their target market. http://www.cengage.com/marketing/book_content/ 9781111821647_lamb/videos/ch08.html
56

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Chapter 8: Segmenting and Targeting Markets

Prepared & Designed by Laura Rush, B-Books Ltd.

Copyright Cengage Learning 2012 All Rights Reserved

Describe the characteristics of markets and market segments.

Copyright Cengage Learning 2012 All Rights Reserved

people or organizations with

Copyright Cengage Learning 2012 All Rights Reserved

The Concept of Market Segmentation

Copyright Cengage Learning 2012 All Rights Reserved

The Importance of Market Segmentation

Explain the importance of market segmentation.

Copyright Cengage Learning 2012 All Rights Reserved

The Importance of Market Segmentation

needs and preferences.

and allocate resources more accurately.

Copyright Cengage Learning 2012 All Rights Reserved

Review Learning Outcome

More precise definition of customers needs and wants

More accurate marketing objectives

Improved resource allocation

Better marketing results

Copyright Cengage Learning 2012 All Rights Reserved

Criteria for Successful Segmentation

Discuss criteria for successful market segmentation.

Copyright Cengage Learning 2012 All Rights Reserved

Criteria for Segmentation

Segment must be large enough to warrant a special marketing mix.

Identifiability and Measurability

Unless segment responds to a marketing mix differently, no separate treatment is needed.

Copyright Cengage Learning 2012 All Rights Reserved

Review Learning Outcome

Substantial Identifiable and measurable Accessible Responsive

Then, yes: Useful segmentation scheme

Copyright Cengage Learning 2012 All Rights Reserved

Bases for Segmenting Consumer Markets

Describe the bases commonly used to segment consumer markets.

Copyright Cengage Learning 2012 All Rights Reserved

Bases for Segmentation

Copyright Cengage Learning 2012 All Rights Reserved

Benefits of Regional Segmentation

New ways to generate sales in sluggish and competitive markets

Copyright Cengage Learning 2012 All Rights Reserved

Copyright Cengage Learning 2012 All Rights Reserved

Family Life Cycle

Copyright Cengage Learning 2012 All Rights Reserved

Family Life Cycle

Copyright Cengage Learning 2012 All Rights Reserved

Bases for Psychographic Segmentation

Copyright Cengage Learning 2012 All Rights Reserved

Copyright Cengage Learning 2012 All Rights Reserved

Copyright Cengage Learning 2012 All Rights Reserved

Copyright Cengage Learning 2012 All Rights Reserved

Review Learning Outcome

Region Market size Market density Climate

Age Gender Income Race/ethnicity Family life cycle

Personality Motives Lifestyle Geodemographics

Former Potential 1st time Light or irregular Medium Heavy

Copyright Cengage Learning 2012 All Rights Reserved

Bases for Segmenting Business Markets

Describe the bases for segmenting business markets.

Copyright Cengage Learning 2012 All Rights Reserved

Bases for Segmenting Business Markets

Institutions Company Characteristics Buying Processes