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Steps in the Target Marketing Process
7-1
Step 1: Segmentation
• Segmentation is the process of dividing
a larger market into smaller pieces
based on one or more meaningful,
shared characteristics
• Segmentation variables are used to
divide the market into smaller slices
7-2
Segmenting Consumer Markets
Demographics
Psychographics
Behavior
7-3
Vans
Young shredders
are a profitable
target segment
7-4
Demographic Dimensions
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Age
Gender
Family structure
Income and social class
Race and ethnicity
Geography
7-5
Age Groups
Children
Teens
Generation X
Baby Boomers
Elderly
7-6
Avon Mark
Avon is
targeting a
younger
consumer with
its “mark”
brand
7-7
Nip Tuck
The show Nip/Tuck shows how far some baby
boomers will go for a youthful appearance
7-8
Psychographics
• Psychographics segments markets in
terms of shared attitudes, interests, and
opinions
• Segments include demographic
information such as age and income,
but also includes richer descriptions
• Some organizations develop their own
psychographic segments for their
consumers, but others utilize national
systems (VALS by SRI International)
7-9
VALS
7-10
Segmenting by Behavior
• Behavioral segmentation slices
consumers on the basis of how they act
toward, feel about, or use a product
– Users versus nonusers
– Heavy, moderate, light users
– Usage occasions
7-11
Tropicana
Tropicana
Essentials targets
consumers who
want extra vitamins
and no sodium
7-12
Segmenting Industrial Markets
• Organizational demographics
– firm size
– number of facilities
– domestic or multinational
– type of business
– production technology utilized
7-13
Hoovers Online
Hoovers Online
provides
marketing
intelligence on
private and
public companies
7-14
Step 2: Targeting
• Evaluating Market Segments
• Developing Segment Profiles
• Choosing a Targeting Strategy
7-15
Evaluating Market Segments
• A viable target segment should satisfy
these requirements:
– Are members of the segment similar to each
other but different from other segments?
– Can marketers measure the segment?
– Is the segment large enough to be profitable?
– Can marketing communications reach the
segment?
– Can the marketer serve the segment’s needs?
7-16
Developing Segment Profiles
• A profile is a description of the typical
customer in that segment
– RJ Reynolds’ “Dakota” Profile of the “Virile
Female”: Her favorite pastimes are
cruising, partying, going to hot-rod shows
and tractor pulls with her boyfriend, and
watching evening soap operas. Her chief
aspiration is to get married in her early
twenties.”
7-17
Choosing a Targeting Strategy
Differentiated
Marketing
Undifferentiated
Marketing
Concentrated
Marketing
Customized
Marketing
7-18
Undifferentiated Marketing
• Appeals to a broad spectrum of people
• Efficient due to economies of scale
• Effective when most consumers have
similar needs
• Example: Wal-Mart, Gas stations (S-Oil)
• HomeEver?
7-19
Differentiated Marketing
• Develops one or more products for each of several
customer groups with different product needs
• Appropriate when consumers are choosing among
well-known brands with distinctive images and it is
possible to identify one or more segments with
distinct needs for different types of products
• Example: Elseve, L’Oreal, Lancome
Hyundai, Kia
7-20
Concentrated Marketing
• Entails focusing efforts on offering one
or more products to a single segment
• Useful for smaller firms that do not have
the resources to serve all markets
• Example: Hard Candy
7-21
Hard Candy
Hard Candy uses a
concentrated
targeting strategy
to target
twenty-something
women
7-22
Customized Marketing
• Segments are so precisely defined that
products are offered to exactly meet the
needs of each individual
– Example: hair stylists
• Mass customization is a related approach in
which a company modifies a basic good to
meet the needs of an individual
– Example: Proctor & Gamble’s products at
Reflect.com
– Dell Computers
7-23
Developing a Positioning Strategy
• Analyze the competitors’ positions in the
marketplace
• Offer a product with a competitive
advantage
• Finalize the marketing mix
• Evaluate the target market’s response
so modifications to the positioning
strategy can be made (repositioning)
7-24
The Brand Personality
• A positioning strategy attempts to create
a brand personality for a product - a
distinctive image that captures its
character and benefits
• How do marketers determine where
their products actually stand in the
minds of consumers?
– Perceptual mapping
7-25
Maui
Brand
personalities
often are
reflected in
logos
7-26
Perceptual Map
7-27
Customer Relationship Management
• A CRM strategy allows a company to
identify its best customers, stay on top
of their needs, and increase their
satisfaction
• CRM is about communicating with
customers one on one
• CRM views customers as partners
7-28
Steps in the CRM Process
Identify customers
Differentiate customers
Interact with customers
Customize for your customers
7-29
Characteristics of CRM
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Share of Customer
Lifetime Value of the Customer
Customer Equity
A Greater Focus on High-Value
Customers
7-30