Mayur

Market Segmentation and Target Markets
chapter 7
Harcourt, Inc.
Objectives
Understand
the concepts: market, segmentation, and target markets Learn the advantages and disadvantages of target marketing Explain the steps in target market selection
Dr. Rosenbloom
Objectives
Discuss
segmentation criteria, strategies, bases, and information sources Understand market profiling and positioning strategies Discuss differences for business and international marketing
Dr. Rosenbloom
What is a market?
Individuals
or organizations
who:
Are willing, able, and capable of purchasing a firms product Segmentation is critical because demand is often heterogeneous
Dr. Rosenbloom
What is market segmentation?
Market
Segmentation
Process of dividing a large market into smaller target markets, or customer groups with similar needs and/or desires
Dr. Rosenbloom
Market Segmentation
Mass Market Niche Micromarketing The Individual
Standardized Marketing Mix
Niche
Micromarketing
Dr. Rosenbloom
Personalization
Target Marketing
Advantages
Easier analysis of potential and actual consumers Tailoring of products to market Assessment of demand potential Identify competing products Increased sales effectiveness and cost efficiencies Product positioning and easy identification of opportunities
Dr. Rosenbloom
Target Marketing
Disadvantages
Increased marketing costs Personalization can become burdensome to manage Faux segmentation may be viewed cynically Narrow segmentation can impact brand loyalty Ethics and stereotyping issues
Dr. Rosenbloom
Target Market Selection

Identify Total Market
Determine Need for Segmentation Determine Bases for Segmentation Profile Each Selected Segment
Assess Potential Profitability of Segment and Select Target Segment
Select Positioning Strategy

Develop and Implement Appropriate Marketing Mix
Dr. Rosenbloom
Monitor, Evaluate and Control
Market Criteria
Segmentable
markets are:
Heterogeneous Measurable Substantial Actionable

Companies must be able to respond to preferences with an appropriate marketing mix
Accessible
Market must be efficiently reachable
Dr. Rosenbloom
External Factors
Stage
in product life cycle Competition Product specific issues Market for the product
Dr. Rosenbloom
Segmentation Variables
Demographic Segmentation Geographic Segmentation
Psychographic Benefits-Sought
Segmentation
Situation Segmentation
Behavior/Usage
Segmentation
Segmentation
Dr. Rosenbloom
Demographic Segmentation
Age
Income Level
Family
Education
Dr. Rosenbloom
Ethnicity
Age
Some products are marketed to specific age groups
Dr. Rosenbloom
Age
Some products are marketed to specific age groups
Dr. Rosenbloom
Income
Level
Some products are marketed to consumers with different income levels
Dr. Rosenbloom
Income
Level
Some products are marketed to consumers with different income levels
Dr. Rosenbloom
Bartles and James
Dr. Rosenbloom
Hal Riney and Partners
Family
Some products are marketed to consumers with special family consideration

Family Life Cycle Bachelor, marriage, married with children, retired, etc.
Dr. Rosenbloom
Functions Of Advertising
KinderCare
Dr. Rosenbloom
The Martin Agency
Family
Some products are marketed to consumers with special family consideration

Family Life Cycle Bachelor, marriage, married with children, retired, etc.
Dr. Rosenbloom
Education
Some products are marketed to consumers with certain educational levels
Dr. Rosenbloom
Ethnicity
Some products are marketed to consumers from specific ethnic backgrounds
Dr. Rosenbloom
Ethnicity
Some products are marketed to consumers from specific ethnic backgrounds
Dr. Rosenbloom
Segmentation Variables
Segmentation
Behavior/Usage
Segmentation
Segmentation
Dr. Rosenbloom
Geographic Segmentation
When
an organization localizes its marketing efforts to accommodate the unique needs of specific geographic regions
Dr. Rosenbloom
When
an organization localizes its marketing efforts to accommodate the unique needs of specific geographic regions
Dr. Rosenbloom
Metropolitan
Statistical Areas
An urbanized area of 50,000 and a total metropolitan area population of at least 100,000
Charlottesville, Virginia
Dr. Rosenbloom
Primary
Metropolitan Statistical
Areas
An urbanized county or cluster of counties with a population of more than 1 million

Gary/Hammond, Indiana
Dr. Rosenbloom
Consolidated
Metropolitan Statistical Area
A metropolitan area that includes at least two PMSAs

Baltimore, Maryland and Washington, D.C.
Dr. Rosenbloom
Segmenting Consumer Markets

Segmentation
Behavior/Usage
Segmentation
Segmentation
Dr. Rosenbloom
Psychographic Segmentation
Grouping customers together based on social class, lifestyles and psychological characteristics (attitudes, interests and opinions) PRIZM analysis from Claritas
Dr. Rosenbloom

Segmentation
Behavior/Usage
Segmentation
Segmentation
Dr. Rosenbloom
Benefits-Sought Segmentation
Markets
can be segmented based on the benefits that consumers desire from using a specific product
Dr. Rosenbloom
Benefits-Sought Segmentation
American Pork Council
Dr. Rosenbloom
Bozell, Incorporated

Segmentation
Behavior/Usage
Segmentation
Segmentation
Dr. Rosenbloom
Purchase

situation or occasion
Physical surroundings Social surroundings Temporal perspective

How much time to make a purchase?
Task definition Pre-purchase attitude

Dr. Rosenbloom

Segmentation
Behavior/Usage
Segmentation
Segmentation
Dr. Rosenbloom
Behavior/Usage Segmentation
Markets can be segmented by how often or how heavily consumers use a specific product
80/20 Principle - 80% of revenue generated by 20% of customers

Light Users 80%
Heavy Users 20%
Dr. Rosenbloom
Segmentation Data
Internal
sources
In-house customer and marketing databases Data mine to explore patterns and relationships in collected data
External
sources
Lists of catalog/magazine subscribers U.S. Census information Mediamark, CACI Marketing Systems, etc.
Dr. Rosenbloom
Positioning Strategy
Differentiation
through:
Price/quality emphasize value in terms of quality, price, or both
Dr. Rosenbloom
Differentiation Differentiation
through:
through:
Product attributes characteristics as a positioning base Product usage positioning based on a products typical use
Dr. Rosenbloom
Symbol - use of a symbol or icon to position a product in the consumer consciousness
Differentiation
through:
Product user - the typical user of a product
Dr. Rosenbloom
Differentiation
through:
Product class positioning against another type of product or product class
Dr. Rosenbloom
Differentiation
through:
Competition comparisons to a products competition (directly or indirectly)

Dr. Rosenbloom
Segmenting Business Markets

Demographics
Industry size, growth potential, etc.
Operating
Characteristics Approaches
Technology, brand-user status, etc. Purchasing policies, size of orders, etc.

Dr. Rosenbloom
Purchasing
Segmenting Business Markets

Product
Use or Usage Situation
The way the product will be used and customer service levels required
Situational
Factors
Urgency, special product uses
Buyers
Personal Characteristics
Dr. Rosenbloom
Segmenting Global Markets

Economic
Stage of development in a host country Regulations and laws Language barriers, differences in consumer customs
Dr. Rosenbloom
Political/Legal
Cultural
Segmenting Global Markets

Some
segments transcend national borders

Rich around the world Older and comfortable Indulged kids Emerging middle class Women employed outside the house
Dr. Rosenbloom
Market Segmentation
Differentiated Concentrated Undifferentiated
Dr. Rosenbloom
Differentiated Marketing
Differentiated
Marketing
An organization targets multiple market segments and develops segment specific mixes
Dr. Rosenbloom
Concentrated Marketing
Concentrated
Marketing
When an organization concentrates its marketing efforts on a smaller segment of a larger market
Dr. Rosenbloom
Undifferentiated Marketing
Undifferentiated
Marketing
An organization develops one strategy appropriate for all members of the total market
Dr. Rosenbloom

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Market Segmentation and Target Markets

What is market segmentation?

Standardized Marketing Mix

Target Market Selection

Select Positioning Strategy

Monitor, Evaluate and Control

Heterogeneous Measurable Substantial Actionable

Some products are marketed to specific age groups

Some products are marketed to specific age groups

Some products are marketed to consumers with different income levels

Some products are marketed to consumers with different income levels

Hal Riney and Partners

Some products are marketed to consumers with special family consideration

The Martin Agency

Some products are marketed to consumers with special family consideration

Some products are marketed to consumers with certain educational levels

Some products are marketed to consumers from specific ethnic backgrounds

Some products are marketed to consumers from specific ethnic backgrounds

An urbanized county or cluster of counties with a population of more than 1 million

Metropolitan Statistical Area

A metropolitan area that includes at least two PMSAs

Segmenting Consumer Markets

Segmenting Consumer Markets

Segmenting Consumer Markets

Physical surroundings Social surroundings Temporal perspective

Task definition Pre-purchase attitude

Segmenting Consumer Markets

80/20 Principle - 80% of revenue generated by 20% of customers

Heavy Users 20%

Price/quality emphasize value in terms of quality, price, or both

Symbol - use of a symbol or icon to position a product in the consumer consciousness

Product user - the typical user of a product

Product class positioning against another type of product or product class

Competition comparisons to a products competition (directly or indirectly)

Segmenting Business Markets

Industry size, growth potential, etc.

Technology, brand-user status, etc. Purchasing policies, size of orders, etc.

Segmenting Business Markets

Use or Usage Situation

Urgency, special product uses

Segmenting Global Markets

Segmenting Global Markets

segments transcend national borders

Differentiated Concentrated Undifferentiated

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