Transcript Target marketing strategy

Marketing: Real People, Real Decisions
Target Marketing Strategies
Chapter 8
Lecture Slides
Solomon, Stuart,
Carson, & Smith
Your name here
Course title/number
Date
Marketing: Real People, Real Decisions
Chapter Learning Objectives
When you have completed your study of this chapter,
you should be able to:
• Explain how marketers
• Understand the three steps of
develop a targeting strategy.
developing a target marketing
strategy.
• Understand how a firm
• Understand the need for market
develops and implements a
segmentation in today’s business
positioning strategy.
environment.
• Know the different dimensions
marketers use to segment consumer
markets.
• Understand the bases for
segmentation in business-tobusiness markets.
• Explain how marketers evaluate
and select potential market
segments.
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Marketing: Real People, Real Decisions
Introduction to the Topic
• If your product:
–
–
–
–
–
is completely unique,
has no substitute,
people need it to survive,
you have no competition,
and demand is without
limits,
– then market segmentation is
Figure 8.1
not likely to interest you.
– However, if your products are like the other 99.9% in
the market place, then listen up!
• This topic forms the basis for the vast majority of marketing
efforts by organizations, hence its importance to our study.
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Marketing: Real People, Real Decisions
Selecting and Entering a Market
• “You can have it any colour you want, as long as it is black.” This
famous quote is attributed to Henry Ford, who was providing his
opinion about the necessity of offering the customer a choice.
• Market fragmentation: creation of many consumer groups due
to a diversity of distinct need and wants in modern society.
• “Having it your way” is a good way to describe the
consumer’s desire for products that more closely suit
their tastes, rather than putting up with only one
version.
• Target marketing strategy: dividing the total
market into different segments based on customer
characteristics, selecting one or more segments, and
developing products to meet the needs of those specific
segments.
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Marketing: Real People, Real Decisions
Segmentation, Targeting, and Positioning
Identify bases for
segmenting market
Develop profiles of
resulting segments
Develop measures of
segment attractiveness
Select the
target segment(s)
Develop positioning
for each segment
Develop marketing mix
for each segment
Market
Segmentation
Market
targeting
Market
positioning
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Marketing: Real People, Real Decisions
The Process of Segmentation
• Segmentation: the process of dividing a larger market into smaller
pieces, based on one or more meaningful, shared characteristics.
• The purpose of segmenting a market
is to design a separate marketing mix
tailored to the specific desires of each
segment.
• Segmentation variables: bases
for dividing the total market into
fairly homogeneous groups, each with
different needs and preferences.
• Segmentation strategies can be based
on demographic, psychographic, or
behavioural factors.
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• Demographics: statistics that measure observable aspects of a
population, including age, gender, ethnic group, income, education,
occupation, and family structure.
• Demographic factors are
attractive to use as
segmentation variables
because they are
(relatively) easy to
identify and measure.
• Segmenting by age is
interesting due to
Canada’s unusual
population distribution,
caused by our recent
history.
1996 Canadian Population by Selected Age Group
75 plus
65 to 74
Population
Marketing: Real People, Real Decisions
Segmentation by Demographics
45 to 64
Female
Male
25 to 44
15 to 24
Under 15
0
1E+06 2E+06 3E+06 4E+06 5E+06
Age groups
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• Baby boomers: the largest age group in Canada, it includes
people born between 1947 and 1966. This trend is also repeated in
the United States, only ten times larger.
• Due to their numbers, the
needs of the baby
boomers have dominated
the marketplace and our
culture for the past 50
years, and will continue
to do so for another 30
years.
• Just be careful about
calling them old!
1996 Canadian Population by Selected Age Group
75 plus
65 to 74
Population
Marketing: Real People, Real Decisions
Segmentation by Demographics (continued)
45 to 64
Female
Male
25 to 44
15 to 24
Under 15
0
1E+06 2E+06 3E+06 4E+06 5E+06
Age groups
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Marketing: Real People, Real Decisions
Segmentation by Demographics (continued)
• Segmenting by gender will work for many products that are
actually gender-specific, but one must be careful not to make too
many assumptions in today’s politically correct marketplace.
• Family structure is a useful base
for segmentation as consumption
changes in relatively predictable ways
as a family begins and grows.
• The only problem is that today’s
definition of what a family is has
changed due to a number of social
trends.
• Income and social class can be
useful bases, but difficult to define
precisely.
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Marketing: Real People, Real Decisions
Segmentation by Demographics (continued)
Ethnic Origin
Number
Total Canadian Population
Total single origins
Total multiple origins
British alone
British alone or with other
French alone
French alone or with other
Single European
German
Italian
Ukrainian
Dutch
Polish
Portuguese
Greek
Hungarian
Aboriginal alone
Aboriginal alone or with other
Single Asian
Chinese
East Indian
Filipino
Vietnamese
Black
Jewish
Other single origins
26,994,045
19,199,790
7,794,250
5,611,050
12,047,920
6,129,680
8,389,180
4,146,065
911,560
750,055
406,645
358,180
272,810
246,890
151,150
100,725
470,615
1,002,670
1,607,230
586,645
324,840
157,250
84,005
214,265
245,840
1,446,355
Percent
100.0%
71.1%
28.9%
20.7%
44.6%
22.6%
31.1%
15.2%
3.4%
2.8%
1.5%
1.3%
1.0%
0.9%
0.6%
0.4%
1.7%
3.7%
5.9%
2.2%
1.2%
0.6%
0.3%
0.8%
0.9%
5.4%
• Segmenting by ethnic
origin can be useful, if we
know that consumption
behaviour is different
between groups.
• Canada has a diverse
population by ethnic origin,
and this trend will continue
in the future as the majority
of population growth
continues to be due to
immigration, and not birth
rate.
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Marketing: Real People, Real Decisions
Segmentation by Demographics (continued)
• Segmenting by geography means using different marketing mixes
to appeal to different regional tastes, such as offering stronger tasting
coffee in Western Canada.
• For most companies, segmenting by geography in Canada may be
impractical due to the small size of our regional markets.
• Geodemography: a
segmentation technique that
combines geography with
demographics.
• The basic assumption of
geodemography is that people who
live near one another tend to share
similar characteristics.
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Marketing: Real People, Real Decisions
Segmentation by Psychographics
• Psychographics: information
about the activities and interests,
and opinions of consumers that is
used to construct market
segments.
• VALS™ (Values and
Lifestyles): psychographic
system that divides people into
eight segments.
• The dimensions used are based on
psychological characteristics, such
as willingness to take risks and
innovativeness, and access to
resources.
• You can take the survey by
clicking on the link.
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Marketing: Real People, Real Decisions
Segmentation by Behaviour
• Behavioural segmentation: technique that divides consumers
into segments on the basis of how they act toward, feel about, or use a
product or service.
• Usage occasions: indicator used in
one type of market segmentation based
on when consumers use a product most.
• 80/20 Rule: a marketing rule of thumb
that 20% of purchasers account for 80%
of a product’s sales. Also known as the
concentration principle.
• This explains why beer companies seem
to be preoccupied with under-25 year old
males!
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Marketing: Real People, Real Decisions
Segmenting Business Markets
• Segmenting business customers can be done by industry using the
NAICS classification system (Chapter 7), or by their consumption
behaviour using various operating variables.
• Operating variables: the
production technology used, the
business customer’s degree of technical,
financial, or operations expertise,and
whether the prospect is a current user or
non-user of the product.
• Companies will also differentiate
customers based on how they buy, such
as the competitive bidding systems used
by governments.
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Marketing: Real People, Real Decisions
Targeting
• Target market: group or groups that a firm selects to turn into
customers as a result of segmentation and targeting.
• The objective of targeting is to choose
the segment(s) that the company can
most profitably serve, given its resources
and capabilities.
• Segment profile: a description of the
“typical” customer in a segment. This is
done to help determine the best way to
reach them.
• Market potential: the maximum
demand expected among consumers in a
segment for a product or service.
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Marketing: Real People, Real Decisions
Criteria for Evaluating Segments
• Measurable: can the buyer characteristics be easily
identified and segmented into groups at reasonable cost?
• Similarity of needs: buyers within the group have
similar needs and wants.
• Distinctness of needs: buyers in each group have
distinct needs and wants.
• Profit potential: is there greater potential for profit
by segmenting a market than attempting to serve the
mass market?
• Accessible: can the buyers in the segment be reached
effectively with a simple marketing action?
• Capability: does the company have the resources and
capability of satisfying the segment?
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Marketing: Real People, Real Decisions
Choosing a Targeting Strategy
• Differentiated targeting strategy: developing one or more
products for each of several distinct customer groups and making
sure these offerings are kept separate in the marketplace.
• Example: Black & Decker sell under own brand
name to homeowners and the DeWalt line to
professional contractor users.
• Undifferentiated targeting strategy:
appealing to a broad spectrum of people.
• Example: selling one version of the product to
many different markets, such as baking soda.
• Concentrated targeting strategy:
focusing a form’s efforts on offering one or more
products to a single segment.
• Example: Burton snowboards
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Marketing: Real People, Real Decisions
Choosing a Targeting Strategy (continued)
• Custom marketing strategy: approach that tailors specific
products and the messages about them to individual customers.
• As practiced by most professional service
providers, and some on-line retailers.
• Mass customization: approach that
modifies a basic product or service to
meet the needs of an individual.
• “Made to measure” has traditionally
meant expensive and low volume.
• Mass customization uses technology to
take this idea to a larger scale to bring the
costs down to a more affordable level.
• You can have a mountain bike built to
your exact measurements!
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Marketing: Real People, Real Decisions
Positioning
• Positioning: developing a marketing strategy aimed at influencing
how a particular market segment perceives a product or service in
comparison to the competition.
• Repositioning: redoing a product’s position to respond to
marketplace changes.
• Brand personality: a
distinctive image that
captures a product or
service’s character and
benefits.
• Perceptual map: a
picture of where products or
brands are “located” in
consumers minds.
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Figure 8.4
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Marketing: Real People, Real Decisions
Famous Last Words…
• The three processes of
segmentation, targeting, and
positioning form the
essence of marketing in
today’s competitive
environments.
• Without them, mass
marketing would be our
only alternative, and we
know how boring that can
be!
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