Understand how target marketing depends upon the idea of heterogeneous demand among different market segments.

Note the advantages and disadvantages to segmentation and target markets. Understand the process of target market segmentation. Appreciate how segmenting business markets differs from segmenting consumer markets. Understand the issues that arise when segmenting global markets.

A deep understanding of a group of potential customers and a marketing plan specifically tailored for that group helps to ensure the success of a product. Example: Energy drinks, although popular in Europe for
over 20 years, were virtually unknown in the US until 1997, when Red Bull first appeared and created the energy drinks market.

Making the product available only at selected in places where young adults like to party. They also make use of consumer educators, who drive around in a silver, Red Bull off-road vehicle, passing out free samples who anyone who looks like they need a boost of energy. They sponsor extreme sporting events: snowboarding, skateboarding, mountain biking.

A market is any individual, group of individuals or organizations, willing, able and capable of purchasing a firms product. Example: you and your mother may both want a new car,
but your needs and wants may be totally different.

Generally, different groups of customers have differing needs from specific products, or heterogeneous demand.
For example: teens may want stylish blue jeans; workers want durable jeans, while older gray consumers want comfortable jeans.

Market segmentation consists of groups of consumers who are alike based on some characteristics. Each of the market segments that a company selects to reach with its marketing efforts is a target market.
The process of matching a specialized marketing mix with the needs of a specific market segment is critical to the marketing success of a product, and is called target marketing.

Mass Market

Niche

Micromarkets

The Individual

For Mass Markets, the marketing mix is standardized to reach all customers in the same way. The smaller the size of the segments targeted, the more customized or individualized the marketing efforts toward the market can be. Moving toward the middle of the continuum, firms may define a smaller segment, the niche, through niche marketing. Niche marketing is the process of targeting a relatively small market segment with a specific, specialized marketing mix.

Old Navy is a specialty store targeted at teenagers.

Foot Joy makes shoes for golfers.

Estee makes sugar free food products for diabetics.

The smaller segments of the market are known as micro-markets (small market segments, such as zip code areas or even neighborhoods), and marketing efforts aimed at this segment are called micromarketing.

Micromarketing is the process of targeting this small, narrowly defined market segments. For example: a large, upscale retail store may identify the
rich neighborhoods within a city, and send them by mail fliers, advertisements, inviting them to purchase from the respective store. Other examples of customized services are: wedding planners, hairstylists, doctors, and even Burger King, which invites customers to have it your way.

Advantages:
Identification of the market allows a company to know whom to analyze to better understand consumer potential. 2. A detailed analysis of the market allows a company to develop and implement a marketing mix tailored to the specific needs of the market. Example: in the USA, after a careful analysis, Honda was able to reduce the price of the cars by reducing the number of available options, making the total product better suited to the needs of the cars reliable target market.
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3. Identification of the market allows a company to assess potential demand for its products. Example: the total market for a Marketing textbook can be determined by looking at the number of college students enrolled in business programs.

4. Knowing the market allows firms to identify competing products in their specific market, and develop responsive competitive positions.
Example: Burger King and McDonalds recognize that they are direct competitors in the burger market, and each responds to changes in the others marketing efforts.

5. Targeting market segments with a marketing mix customized for specific market needs increases the effectiveness of sales. Foot Joy for example could maximize cost efficiency by advertising its golf shoes in Golf Digest where most readers are golf players.

6. Defining and analyzing a target market allows a firm to position its products to the market based on assessed needs and preferences.
7. Defining a target market allows a firm to identify opportunities.

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Targeting multiple markets generally increase marketing costs. Personalization and individualization of markets can lead to proliferation of products that can be costly to manage. Too small niches may be viewed cynically by the targeted individual, and negatively affect consumer response to marketing efforts. Narrowly segmenting a market to target may actually prevent a product from developing brand loyalty. Target marketers have been widely criticized for unethical or stereotypical activities.

Identify the Total Market

Determine Need for Segmentation

Determine Bases for Segmentation

Profile Each Selected Segment

Assess Potential Profitability of Each Segment and Select Segments for Targetin

Select Positioning Strategy

Develop and Implement Appropriate Marketing Mix

Monitor, Evaluate and Control

Is the first step in the target market selection process is to specifically define the total market of all potential customers for a product category. Purchase patterns of the market and whether the user of the product is the same person as the buyer are a few factors that should be considered when defining the total market. Example: a recent survey revealed the fact that 89% of mens clothing is purchased or influenced by women. The finding suggests that the market for mens clothing is not men, but rather women.

To determine if the total market needs to be divided into segments for the purpose of targeting with special marketing programs.
Example: the market for sugar is huge. Most kitchens stock sugar, but is there a need to segment markets when selling sugar? Probably not, because of the products homogeneity of demand and little perceived difference in brands.

Criteria for Successful Segmentation Heterogeneous - there are always differences in consumer preference, or heterogeneity of demand (e.g.: brown sugar, white sugar, double-refined sugar, artificial sweetener).

Measurable difference preferences for a product must be identifiable and capable of being related to measurable variables, such as age, gender, lifestyle, product usage, etc.

Substantial the proposed market segment must have enough size and purchasing power to be profitable. Example: in the US more than half of households have pets
around 58 million dogs and spend more than $5 billion every year. Segments within the pet market, such as anaconda owners, may not be substantial enough to warrant specialized marketing efforts.

Actionable companies must be able to respond to difference preferences with an appropriate marketing mix.

Accessible the proposed market segment must be accessible and reachable with targeted programs.

Segmentation means dividing markets into homogeneous groups based on some related characteristics. a) Demographic segmentation age, income, occupation, level of education, race, gender, family life cycle, family size, religion. Example: Family life cycle - singles

buy canned vegetables in individual serving sizes, while families with babies buy fresh vegetables.

b) Geographic segmentation regions may be used to segment markets for specialized marketing efforts. Types of products vary and brands of products purchased vary according to regions of the world, country, state, city or neighborhood. Example: snow sleds are common purchases in the northern part of the US, while outdoor furniture is popular in the south.

c) Psychographic segmentation segmentation markets by social class, lifestyles, and psychological attitudes, such as attitudes, interests and opinion, and values creates a better picture of market segments than does demographics and geographics.
d) Benefits-sought segmentation markets can also be segmented based on consumer preference for a specific product attribute or characteristic. Example: toothpaste prevents cavities, provides gum care, is designed for consumers with teeth problems, whitens teeth, there are even special toothpastes for children, etc.

e) Situation segmentation there are different situations which affect the buying decision: task definition (is it a gift), temporal perspective (how much time do you intend to spend shopping?), etc.
f) Behavior or usage segmentation loyalty toward a product, the way the product is used, and usage patterns can serve as a basis for segmenting markets.

From the very beginning the marketer should understand the consumer profile their wants and needs, interests, attitudes, etc. a detailed picture of a market segment is called profile. Example: Dont Mess with Texas antilitter campaign.

Forecast Demand Once segments have been identified and distinguished, a firm must determine the profitability of customizing marketing efforts aimed at these segments. This involves first forecasting demand for the product, within each segmented target market. Example: at the beginning of 2008, McDonalds owned 43.1% market share and has a restaurant located within 4 minutes of most consumers. Competitors actions and other environmental factors that may affect future sales must also be carefully anticipated when forecasting potential demand.

Positioning is the image that customers have about a product, especially in relation to the products competitors.
Example: Mountain Dew, a PepsiCo product, whose sales rose to 13% in 1997, placing the brand on the 4th position in the carbonated drink market, ahead of Coca Colas Sprite, now ranked 5th. The success of Mountain Dew is attributed to a strong image that links teenagers, the major market segment, with outdoors, high-energy and thirst quenching properties of the drink. Mountain Dew has retained its strong position over the last 25 years.

Perceptual mapping is a commonly used, multidimensional scaling method of graphically depicting a products performance on selected attributes or the position of a product against its competitors on selected product traits. The map of consumer perceptions of product characteristics helps answer the where-are-we-now question, and the gaps help provide possible answers to the where-we-want-to-go question.

Products can be positioned by any of the following ways: Price/Quality Positioning by price/quality emphasizes the value derived from the product, either in terms of its quality or price, or both. Example: the advertisement for the Chevrolet Corvette is an example of positioning by quality.

Product Attributes the characteristics or attributes of a product may serve as the basis for positioning the product. Some Colgate-Palmolive toothpastes are positioned by their attributes: Colgate Tartar Plus
Whitening has both an antitartar and whitening formula for clean, white teeth, while Colgate Total toothpaste helps prevent cavities, gingivitis, plaque, and provides long-lasting fresh breath protection.

Product User the typical user of a product can also be used to position a product. Example: Marlboro cigarettes appealed for a long time to
the rugged individual with their Marlboro man. The latest Samsung mobile phone is positioned to appeal to the successful, individualistic business leader, so that they could compete with the IPhone, already famous by now.

Product Usage products can be positioned according to the ways in which they are typically used. Product Class some products are positioned against another type of product class. The advertisement hints that the nutritional, low-calorie energy bar Pria is an alternative to a chocolate candy bar.

Competition comparing your product to its competition, either directly or indirectly, is another form of product positioning. Burger King and McDonalds often compare their products to each other. It also happened with kitchen detergents, Coke and Pepsi, nowadays these techniques being partly forbidden by law. Symbol sometimes companies use a symbol or icon to position their product in the minds of the consumers. Over time, the symbol can become synonymous with the company or product.

The final step in the target market selection process is to develop and implement a marketing mix matched to the needs of the market segment selected for targeting and evaluating and controlling the plan. After putting the marketing mix into action, indicators of marketing effectiveness, such as sales and consumer perceptions, must be continually monitored and evaluated to determine effectiveness of the marketing mix in meeting desired plan objectives. New segments, new needs, and new opportunities may be identified through continual monitoring of target markets and changes in the mix made accordingly.

Target marketing is extremely important because it allows firms to identify and analyze their customers, develop tailored market mixes to meet customer needs, identify market demand, identify competition, increase operating efficiencies, improve product positioning and identify opportunities.

Identifying the total market; Determining the need for segmentation based on criteria for segmentation, strategic factors, and external factors; Determining the bases for segmentation using demographic, geographic, psychographic, benefits sought. Situation and behavior descriptors. Profiling each selected segment; Assessing potential profitability of each segment and selecting segments for targeting; Selecting the positioning strategy on the basis of price/quality, product attributes, product user, product usage, product class, competition, or symbols. Developing and implementing an appropriate marketing mix; Monitoring, evaluating and controlling the selection process.

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