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Enterprise Marketing
Edward Gallagher MBA
[email protected]
Identifying Market Segments
and Targets
Review:
 Marketing is expensive, time consuming and
resource intensive.
 Resources, time and money are limited
Therefore:
 Target your market: Identify your market
segment and focus your marketing efforts
towards it.
Market Segmentation:
Case Study: Reebok
 Question:
 Is there the perfect running shoe (sneaker)?
 Answer: No
 Instead, there are perfect running shoes.
Case Study: Reebok
 Sneakers industry sales are a $16 billion
per year in the US.
 Key competitors: Nike, Reebok, Adidas,
Puma, New Balance.
 100’s of models. Large consumer choice
 How do you do you differentiate your
products?
Examples of differentiation:
 Nike’s Swooshless line: Low cost ($40)
sold exclusively at Wal-Mart
 Adidas 1: incorporating a computer and
thin sensor to monitor shock and adjust sole
stiffness. ($250)
 Puma for teenagers: target teenagers with
cool, fashionable, low-tech sneakers sold at
teen stores
 New Balance: target seniors with
comfortable walking shoes with choices of
wider and narrower widths
Reebok: Targets a new market
segment
 Recognizes that many urban youths wear
sneakers as a fashion statement.
 They have little interest in athletics
 Dominant competitor is this segment is
Nike.
 Reebok develops a new segments called,
“Street Fashion”
 Reebok calls the product line: S. Carter
collection
Celebrity Endorsements
 Nike revolutionized the sneaker industry
with celebrity endorsements
 Nike signed famous athletes such as
Michael Jordan to promote their products.
 Celebrities are “social proof.”
Reebok: S. Carter Collection
 Reebok deviated from the tradition of
signing famous athletes.
 Instead, they signed hip hop star: Jay-Z to
promote the S. Carter Collection.
 The result: $100 million in sales and the
fastest selling shoes in Reebok’s history.
Reebok’s other endorsement
deals
 Reebok signed with Chinese basketball star
Yao Ming to promote basketball shoes in
China.
 Yao Ming’s contact is worth $70 million
dollars.
 Yao Ming agrees to help Reebok market
their products in his native country: China.
Reebok’s other endorsement
deals.
 Reebok signed Venus Williams to promote
their tennis product line.
 Reebok signed with the NBA and the NFL
to be their exclusive team uniform
providers.
 Reebok will offer NBA and NFL branded
shoes and clothing to consumers.
Definitions
 Market Segmentation: Sorting potential
buyers into groups that have common
needs and will respond similarly to a
marketing action
 Product Differentiation: Strategy of
using different marketing mix activities,
such as product features and advertising, to
help consumers perceive a product as being
different and better than competing
products
Ways Reebok Segments Markets
 Age segments: Teenagers are more than 32% of
total sales
 Gender segments: Men segment buys more but
Women segment has higher growth
 Price segments: 62% of sneakers cost less than $50
 Sports segments: Running shoes are #1 (29%)
sales, basketball shoes #2 (21%), cross trainers #3,
(13%). Basketball shoes sales increasing, cross
trainers declining slightly.
 Lifestyle segments: 75% of sales are for casual,
non-athletic use. Athletic shoes are more profitable
with prices rising dramatically.
Reebok: Market Product grid
Group
Running
shoes
Runners
P
Exercise
Aerobic
shoes
Tennis
shoes
Basket
ball shoes
Walking
shoes
Crosstraining
P
P
Tennis
P
P
Basket
ball
P
P
P
Walkers
S
S
S
S
P
P
Comfort/
style
S
S
S
S
S
S
Street
fashion
S. Carter
P
Segmentation: Linking needs to Actions
Identify Market
Needs
Features
Benefits
Cost
Quality
Convenience
Process of
segmenting
and
targeting
markets
Execute
Marketing
Program
Product
Price
Promotion
Place
When should the market be
segmented?
 There is a potential for increased profit
 There is similarity of needs within a
market segment
 There is a difference of need among
market segments
 Potential of marketing action to reach a
segment
 Simplicity and cost of assigning potential
buyers to a segment
Ways to segment markets
 Geographic customer characteristics
 Demographic customer characteristics
 Psychographic customer characteristics:
lifestyle.
 Buying situations
 Benefits/features sought
 Usage/patronage
Executing segment Marketing
 Group products to be sold in categories
based on: features, benefits, price
 Develop a Market-Product grid, estimate
the size of the market
 Select target markets
 Take marketing actions to reach target
markets
Positioning
 Definition: The space a product occupies
in consumers’ minds on important features,
relative to competitors
 Examples:
 7-up The Un-cola
 Volvo Safety
Homework:
 Watch lecture from Malcolm Gladwell “What
We Can Learn From Spaghetti Sauce”
http://www.vidoemo.com/yvideo.php?i=aUlpQU
FocWuRpVWVSNlk&malcolm-gladwell-whatwe-can-learn-from-spaghetti-sauce=