Transcript Chap005
Chapter 5 Market Segmentation Key Terms Marketing Segmentation, Post Hoc Segmentation, Priori Segmentation, Benefit Segmentation, Psychographic Segmentation, Vertical Dimension, Horizontal Dimension, Geodemographic Segmentation, Positioning Map, Marketing Mix McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Understanding Market Segmentation Based on the idea that a single product item can seldom meet the needs and wants of all consumers Viable market – One that can be profitably served by a firm Market segmentation can be defined as the process of dividing a market into groups of similar consumers and selecting the most appropriate group(s) for the firm to serve Target market – Group or market segment that a company selects to focus on McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Understanding Market Segmentation A Model of the Market Segmentation Process McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Understanding Market Segmentation Delineate the firm’s current situation Intended to be a reminder of tasks to be performed prior to marketing planning Determine consumer needs and wants Successful marketing strategies depend on meeting consumer needs and wants Industry within which firm operates specifies boundaries of firm’s need satisfaction activities At a strategic level, need and wants usually are translated into more operational concepts McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Dimensions for Market Division Three important questions to be considered are Should the segmentation be a priori or a post hoc? How does one determine the relevant dimensions or bases to use for segmentation? What are some bases for segmenting consumer and organizational buyer markets? McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved A Priori versus Post Hoc Segmentation A priori segmentation – An approach where the marketing manager has decided on the appropriate basis for segmentation in advance of doing any research on a market Post hoc segmentation – An approach in which people are grouped into segments on the basis of research findings McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Relevance of Segmentation Dimensions At least some initial dimensions can be determined from Previous research Purchase trends Managerial judgment Consideration and research of sought benefits are a strongly recommended approach McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Bases for Segmentation Useful Segmentation Bases for Consumer Markets McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Bases for Segmentation Useful Segmentation Bases for Consumer Markets McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Bases for Segmentation Useful Segmentation Bases for Organizational Buyer Markets McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Bases for Segmentation Benefit segmentation – Focuses on benefits sought by consumers Is a market-oriented approach Psychographic segmentation – Focuses on consumer lifestyles Lifestyles are measured on the bases of activities, interests and opinions (AIO) of consumers Best-known type of segmentation is VALSTM (“values and lifestyles”) Product of SRI Consulting Business Intelligence McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Bases for Segmentation VALS™ Framework and Segments McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Bases for Segmentation Toothpaste Market Benefit Segments McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Bases for Segmentation Geodemographic Segmentation – Identifies specific households in a market by focusing on local neighborhood geography PRIZM NE – Potential Ranking Index by ZIP Markets – New Evolution Assumes that consumers in particular neighborhoods are similar in many respects and that the best prospects are those who actually use a product Classifies every U.S. neighborhood into a total of 66 distinct segments McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Develop Product Positioning Positioning can be achieved through any one of these strategies Superiority to competitive products on one or more product attributes Positioned by use or application Positioned in terms of particular types of users Positioned relative to a product class Positioned directly against particular competitors Position mapping – Visual depiction of customer perceptions of competitive products, brands, or models McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Positioning Map for Automobiles McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Market Segmentation Strategies Firm may decide to do the following Not to enter the market To segment but to be a mass marketer Market is so small that it is not profitable to market to one portion of it Heavy users comprise such a large proportion of sales that they are the only relevant target Product is a dominant brand, and targeting to a few segments is not beneficial To market to one segment To market to more than one segment and design a separate marketing mix for each McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Market Segmentation Strategies Criteria to base a firm’s segmentation strategy decisions are Measurable – Firm must be capable of measuring its size and characteristics Meaningful – Large enough to deliver sufficient sales and growth potential Marketable – Can be reached and served in an efficient manner McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Market Segmentation Strategies Selecting Target Markets: Some Questions Marketing Managers Should Answer McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Market Segmentation Strategies Selecting Target Markets: Some Questions Marketing Managers Should Answer McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Design Marketing Mix Strategy Selection of target market and designing the market should go hand in hand Marketing mix decisions should have already been carefully considered Product positioning has many implications for promotion and channel distribution McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved