Transcript - Safaa-Dalloul

Principles of Marketing
Unit 4
Instructor: Safaa S. Y. Dalloul
Market
Segmentation and
Targeting
Elements of Lecture
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Marketing Segmentation
Level of Market Segmentation
Segmenting Consumer Market
Descriptive Characteristics
Behavioral Segmentation
Segmenting Business Market
Market Targeting
Effective Segmentation Criteria
Evaluating and Selecting the Market Segments
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Marketing
Segmentation
Marketing Segmentation
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 Mass marketing is the maximum exposure of product
advertising to consumers. It's the opposite of niche
marketing.
 In mass marketing, the seller engages in the mass
production, mass distribution, and mass promotion of
one product for all buyers
Marketing Segmentation
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 Micromarketing is a type of marketing strategy that
has to do with targeting specific customers within a
niche market.
 Most companies are turning to micromarketing at one
of four levels: segments, niches, local areas, and
individuals.
Marketing Segmentation
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 So we distinguish between car buyers who are
primarily seeking low-cost basic transportation, those
seeking a luxurious driving experience, and those
seeking driving thrills and performance.
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Level of Market
Segmentation
Level of Market Segmentation
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 Segment Marketing
 Market
Segment:
consists
of
a
group
of
customers who share a similar set of needs and
wants.
 Marketer
doesn’t
identify & target it.
create
the
segment
but
Level of Market Segmentation
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 Segment Marketing
Creaminess
Sweetness
Patterns of Market Segmentation
Level of Market Segmentation
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 Niche Marketing
 Group of customers seeking a distinctive mix of benefits who
are ready to pay extra premium.
 Marketers usually identify niches by dividing a segment into
sub segments.
Level of Market Segmentation
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 Niche Marketing
 For example, Progressive, a Cleveland auto insurer, sells
"nonstandard" auto insurance to risky drivers with a record
of auto accidents, charges a high price for coverage and
makes a lot of money in the process.
Level of Market Segmentation
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 Niche Marketing Traits
 Distinct needs.
 Less Competition
 Niche has size, profit and growth potential.
 Pay Premium
ROLLS ROYCE CAR
Level of Market Segmentation
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 Local Marketing
 Marketing programs tailored to the needs and wants of local
customer
groups
(trading
areas,
neighborhoods,
even
individual stores).
 Example:
Spiderman
Movie
different language in India.
Part
3
was
released
in
5
Level of Market Segmentation
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 Customerization
 Ultimate segmentation – segments of 1 or customized
marketing or one to one marketing.
 Today customers are taking more individual initiative in
determining what and how to buy.
HW: Compare between segments of 1, customized marketing and one
to one marketing.
Level of Market Segmentation
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 Customerization
 Customers log onto the Internet;
 Look up information and evaluations of product or service offers.
 Dialogue with suppliers, users, and product critics.
 Design the product they want.
Level of Market Segmentation
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 Customerization
 Customerization empowers consumers to design the product
and service offering of their choice.
Level of Market Segmentation
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 Customerization
 A company is customized when it is able to respond to
individual customers by customizing its products, services,
and messages on a one-to-one basis.
 Customerization is certainly not for every company: It may
be very difficult to implement for complex products such as
automobiles. Customierzation can raise the cost of goods by
more than the customer is willing to pay.
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Segmenting
Consumer Market
Segmenting Consumer Market
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 Two broad groups of variables are used to segment
consumer markets.
 Descriptive characteristics: geographic, demographic, and
psychographic.
 Behavioral considerations, such as consumer responses to
benefits, use occasions, or brands.
Segmenting Consumer Market
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 Regardless of which type of segmentation scheme is
employed, the key is that the marketing program can
be
profitably
differences.
adjusted
to
recognize
customer
Segmenting Consumer Market
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 Descriptive Characteristics
 Geographic Segmentation
 Demographic Segmentation
 Psychographic Segmentation
 Behavioral Segmentation
Segmenting Consumer Market
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 Descriptive Characteristics
 Geographic Segmentation
 Geographic segmentation calls for dividing the
market into different geographical units such as
nations,
states,
neighborhoods.
regions,
counties,
cities,
or
Segmenting Consumer Market
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 Descriptive Characteristics
 Geographic Segmentation
 The company can operate in one or a few areas, or
operate in all but pay attention to local variations.

Ex.- Mcdonalds globally, sell burgers aimed at local markets, for
example, burgers are made from lamb in India rather then beef
because of religious issues. In Mexico more chilli sauce is added
and so on.
Segmenting Consumer Market
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 Descriptive Characteristics
 Geographic Segmentation
 Demographic Segmentation
 In demographic segmentation, the market is divided into
groups on the basis of variables such as age, family size,
family life cycle, gender, income, occupation, education,
religion, race, generation, nationality, and social class.
Segmenting Consumer Market
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 Descriptive Characteristics
 Geographic Segmentation
 Demographic Segmentation
 There
are
several
reasons
for
the
popularity
demographic variables to distinguish customer groups.
of
Segmenting Consumer Market
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 Descriptive Characteristics
 Geographic Segmentation
 Demographic Segmentation
 One reason is that consumer needs, wants, and usage rates
and product and brand preferences are often associated
with demographic variables. Another is that demographic
variables are easier to measure.
Segmenting Consumer Market
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Income
Age
Life Stage
Gender
Demographic
Variables
Generation
Social Class
Segmenting Consumer Market
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Age
Social Class
Segmenting Consumer Market
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Life Stage
Social Class
Segmenting Consumer Market
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Gender
Social Class
Segmenting Consumer Market
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Income
Social Class
Segmenting Consumer Market
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Generation
Segmenting Consumer Market
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Social Class
Social Class
Segmenting Consumer Market
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 Descriptive Characteristics
 Geographic Segmentation
 Demographic Segmentation
 Psychographic Segmentation

Psychographics
is
the
science
of
using
psychology
and
demographics to better understand consumers.

In psychographic segmentation, buyers are divided into different
groups on the basis of psychological/personality traits, lifestyle, or
values.
Segmenting Consumer Market
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 Descriptive Characteristics
 Geographic Segmentation
 Demographic Segmentation
 Psychographic Segmentation
 People within the same demographic group can exhibit very
different psychographic profiles.
Segmenting Consumer Market
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 Behavioral Segmentation: In behavioral segmentation,
buyers are divided into groups on the basis of their
knowledge of, attitude toward, use of, or response to a
product.
 Decision Roles: It is easy to identify the buyer for many
products.
Segmenting Consumer Market
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 People play five roles in a buying decision: Initiator,
Influencer, Decider, Buyer, Users.
 Different people are playing different roles, but all are
crucial in the decision process and ultimate consumer
satisfaction.
HW: Explain the five roles that people play in a buying decision?
Segmenting Consumer Market
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 Behavioral Variables
 Many marketers believe that behavioral variables- occasions,
benefits, user status, usage rate, loyalty status, buyer-
readiness stage, and attitude-are the best starting points for
constructing market segments.
Segmenting Consumer Market
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 Behavioral Variables | Occasions
 Occasions can be defined in terms of the time of day, week,
month, year, or in terms of other well-defined temporal
aspects of a consumer's life.
 Marketers also can try to extend activities associated
with certain holidays to other times of the year.
Segmenting Consumer Market
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 Behavioral Variables | Occasions
 For instance, while Christmas, Mother's Day, and Valentine's
Day are the three major gift-giving holidays, these and other
holidays account for just over half of the gifters' budgets.
 That leaves the rest available throughout the year for
occasion-driven
gift-giving:
birthdays,
weddings,
anniversaries, housewarming, and new babies.
Segmenting Consumer Market
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 Behavioral Variables | Benefits
 Buyers can be classified according to the benefits they seek.
Even car drivers who want to stop for gas may seek different
benefits.
Segmenting Consumer Market
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 Behavioral Variables | User Status
 Markets can be segmented into nonusers, ex-users, potential
users, first-time users, and regular users of a product.
 Blood banks cannot rely only on regular donors to supply
blood; they must also recruit new first-time donors and
contact ex-donors.
Segmenting Consumer Market
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 Behavioral Variables | Usage Rate
 Markets can be segmented into light, medium, and heavy
product users. Heavy users are often a small percentage of
the market but account for a high percentage of total
consumption.
Segmenting Consumer Market
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 Behavioral Variables | Buyer- Readiness Stage
 A market consists of people in different stages of readiness to
buy a product. Some are unaware of the product, some are
aware, some are informed, some are interested, some desire
the product, and some intend to buy. The relative numbers
make a big difference in designing the marketing program.
Segmenting Consumer Market
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 Behavioral Variables | Loyalty Status
 Buyers can be divided into four groups according to brand
loyalty status:
– Hard-core loyals - Consumers who buy only one brand all the time.
– Split loyals - Consumers who are loyal to two or three brands.
– Shifting loyals - Consumers who shift loyalty from one brand to
another.
– Switchers - Consumers who show no loyalty to any brand.
Segmenting Consumer Market
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 Behavioral Variables | Attitude
 Five attitude groups can be found in a market: enthusiastic,
positive, indifferent, negative, and hostile.
Segmenting Business Market
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 Bases for Segmenting Business Markets
 Business markets can be segmented with some of the same
variables used in consumer market segmentation, such as
geography, benefits sought, and usage rate, but business
marketers also use other variables.
Segmenting Business Market
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 Demographic
 Industry: Which industries should we serve?
 Company size: What size companies should we serve?
 Location: What geographical areas should we serve?
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 Operating Variables
 Technology: What customer technologies should we focus
on?
 User or nonuser status: Should we serve heavy users,
medium users, light users, or nonusers?
 Customer capabilities: Should we serve customers needing
many or few services?
Segmenting Business Market
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 Purchasing Approaches
 Purchasing-function
companies
with
organization:
highly
Should
centralized
or
we
serve
decentralized
purchasing organizations?
 Power structure: Should we serve companies that are
engineering dominated, financially dominated, and soon?
Segmenting Business Market
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 Purchasing Approaches
 Nature of existing relationships: Should we serve companies
with which we have strong relationships or simply go after the
most desirable companies?
Segmenting Business Market
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 Purchasing Approaches
 Nature of existing relationships: Should we serve companies
with which we have strong relationships or simply go after the
most desirable companies?
Segmenting Business Market
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 Purchasing Approaches
 General purchase policies: Should we serve companies that
prefer leasing? Service contracts? Systems purchases?
Sealed bidding?
 Purchasing criteria: Should we serve companies that are
seeking quality? Service? Price?
Segmenting Business Market
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 Situational Factors
 Urgency: Should we serve companies that need quick and
sudden delivery or service?
 Specific application: Should we focus on certain applications
of our product rather than all applications?
 Size of order: Should we focus on large or small orders?
Segmenting Business Market
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 Personal Characteristics
 Buyer-seller similarity: Should we serve companies whose
people and values are similar to ours?
 Attitudes toward risk: Should we serve risk-taking or riskavoiding customers?
 Loyalty: Should we serve companies that show high loyalty to
their suppliers?
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