Transcript Chapter 1

Lamb, Hair, McDaniel
2012-2013
CHAPTER 8
Chapter 1
Copyright ©2012 by Cengage Learning Inc. All rights reserved
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© iStockphoto.com/Rubberball
Segmenting and
Targeting Markets
Learning Outcomes
1
Describe the characteristics of markets and market
segments
2
Explain the importance of market segmentation
3
Discuss criteria for successful market segmentation
4
Describe the bases commonly used to segment
consumer markets
5
Describe the bases for segmenting business markets
2
Learning Outcomes
6
List the steps involved in segmenting markets
7
Discuss alternative strategies for selecting target
markets
8
Explain one-to-one marketing
9
Explain how and why firms implement positioning
strategies and how product differentiation plays a
role
3
Market Segmentation
Describe the
characteristics
of markets and market
segments
1
4
Define a Market
1) People or Organizations with
2) Needs or Wants, and with
3) the Ability and
4) the Willingness to buy
A group of people that lacks any one of
these characteristics is NOT a market.
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1
Market Segmentation
Market
Market
Segment
People or organizations with needs or wants
and the ability and willingness to buy.
A subgroup of people or organizations sharing
one or more characteristics that cause them to
have similar product needs.
The process of dividing a market into
Market
meaningful, relatively similar, identifiable
Segmentation segments or groups.
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1
The Importance of Market Segmentation
Explain the
importance
of market
segmentation
2
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The Importance of
Market Segmentation
 Markets have a variety of product
needs and preferences
 Marketers can better define
customer needs
 Decision makers can define
objectives and allocate resources
more accurately
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2
Why Market Segmentation?
 Marketers can identify
customers with similar needs
 Marketers can design marketing
mixes matched to a specific segment
 Segmentation is consistent with the
marketing concepts of satisfying
customer needs and wants
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2
Criteria for Successful Segmentation
Discuss criteria for
successful market
segmentation
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Criteria for Segmentation
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Substantiality
Segment must be large enough to
warrant a special marketing mix
Identifiability
and Measurability
Segments must be identifiable and
their size measurable
Accessibility
Members of targeted segments must
be reachable with marketing mix
Responsiveness
Unless segment responds to a
marketing mix differently, no
separate treatment is needed
3
Bases for Segmenting
Consumer Markets
Describe the bases
commonly used
to segment
consumer markets
4
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Bases for Segmentation
1-Geography
2-Demographics
3-Psychographics
4-Benefits Sought
5-Usage Rate
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4
1-Geographic Segmentation
 Region of the
country or world
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
Market size

Market density

Climate
4
Benefits of
Regional Segmentation
New ways to generate sales in
sluggish and competitive
markets
2. Scanner data allow
assessment of best selling
brands in region
3. Regional brands tailored to
local preferences or tastes
4. Quicker reaction to competition
1.
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4
2-Demographic Segmentation
Age
Gender
Income
Ethnic
Family Life Cycle
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4
Age Segmentation
Remember Chapter 4?
•
•
•
•
•
•
•
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Tweens
Teens
Generation Y
Generation X
Baby Boomers
War Generation
Seniors, etc.
Gender Segmentation
• Women make 70% of
consumers goods
purchases annually
• Many marketers of maledominated arenas are
targeting women
• Increasing numbers of
marketers in female
dominated categories are
targeting men.
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Income Segmentation
• Determines consumer wants
• Determines buying power
• Retailers can appeal to:
– Low-income (Walmart)
– High-income (Neiman Marcus)
– Both (Costco, Target)
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Ethnic Segmentation
© Foodpix/Jupiterimages/Getty Images
The largest ethnic markets are:
 Hispanic Americans
 African Americans
 Asian Americans
Companies must make
products geared toward
specific ethnic groups as they
continue to expand.
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4
Family Life Cycle
Age
Marital
Status
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Children
4
Exhibit 8.1
Family Life Cycle
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3-Psychographic Segmentation
Psychographic
Segmentation
Market segmentation on the basis
of personality, motives, lifestyles,
and geodemographics.
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4
Bases for Psychographic
Segmentation
Personality
Motives
Lifestyles
Geodemographics
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4
Personality and Motive
Segmentation
Personality
Reflects a person’s traits, attitudes,
and habits.
Motives
Marketers might appeal to emotional,
rational, or status motives, among others.
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4
Lifestyle Segmentation
 How time is spent
 Importance of things
around them
 Beliefs
 Socioeconomic
characteristics
Very important, along with Geodemographic!
Remember our 21st. Century Nomad?
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4
Geodemographic Segmentation
Geodemographic
Segmentation
Segmenting potential
customers into
neighborhood lifestyle
categories.
Combines geographic,
demographic, and lifestyle
segmentation.
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4
4-Benefit Segmentation
Benefit
Segmentation
The process of grouping customers
into market segments according to
the benefits they seek from the
product.
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4
5-Usage-Rate Segmentation
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Usage-Rate
Segmentation
Dividing a market by the amount
of product bought or consumed.
80/20
Principle
A principle holding that 20
percent of all customers generate
80 percent of the demand.
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Bases for Segmenting
Business Markets
Describe the bases
for segmenting
business markets
5
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Bases for Segmenting Business
Markets (See Ch. 7)
Producers
Company
Characteristics
Resellers
Government
Buying
Processes
Institutions
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5
Steps in Segmenting a Market
List the steps
involved in
segmenting markets
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6 Steps in Segmenting Markets
1.
2.
3.
4.
5.
6.
Select a market or product category for study
Choose a basis for segmenting the market
Select the segmentation descriptors
Profile and analyze the segments
Select the target markets
Design, implement & maintain marketing mix
(product, price, promotion, place strategies)
Note that steps 5 and 6 are actually marketing activities
that follow market segmentation (steps 1 through 4).
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6
Strategies for Selecting
Target Markets
Discuss alternative
strategies for selecting
target markets
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Strategies for Selecting
Target Markets
Target
Market
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A group of people or
organizations for which an
organization designs,
implements, and maintains a
marketing mix intended to
meet the needs of that group,
resulting in mutually satisfying
exchanges.
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Strategies for Selecting
Target Markets
Undifferentiated
Strategy
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Concentrated
Strategy
Multisegment
Strategy
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Undifferentiated Targeting
Strategy
A marketing approach that
views the market as one big
market with no individual
segments and thus
uses a single
marketing mix.
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7
Undifferentiated Targeting
Strategy
View: The market is one big market
Pros: Potential savings on production
and marketing costs
Cons: Unimaginative product offerings
and the company may be more
susceptible to competition
Undifferentiated
Strategy
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7
Concentrated Targeting Strategy
A strategy used to select one
Concentrated
segment of a market for targeting
Targeting Strategy
marketing efforts.
Niche
One segment of
a market.
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Concentrated Targeting Strategy
Pros:




Concentration of resources
Meets the needs of a narrowly
defined segment
Small firms can compete
Strong positioning
Cons:
Concentrated
Strategy
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


Segments may be too small
Market may change
Large competitors may
market to niche segment
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Multisegment Targeting Strategy
Multisegment
Targeting
Strategy
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A strategy that
chooses two or
more well-defined
market segments
and develops a
distinct marketing
mix for each.
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Multisegment Targeting Strategy
Pros:
 Greater financial success
 Economies of scale
Cons:
 Higher costs **
Multisegment
Strategy
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 Cannibalization
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Costs of Multisegment Targeting
Strategy **
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
Product design costs

Production costs

Promotion costs

Inventory costs

Marketing research costs

Management costs

Cannibalization
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One-to-One Marketing
An individualized
approach that uses
customer information
to build long term
relationships
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One-to-One Marketing
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One-to-One
Marketing is...
Has a Goal of…
Individualized
Cost Reduction
Information-Intensive
Customer Retention
Long-Term
Increased Revenue
Personalized
Customer Loyalty
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One-to-One Marketing Trends
•Personalization: “One-size-fits all” is no longer relevant
•Time Savings: Direct and personal marketing efforts will
grow to meet the needs of busy consumers
•Loyalty: Consumers will be loyal to companies that have
earned—and reinforced—their loyalty
•Technology: Mass-media approaches will decline as
advances in research allow better customer tracking
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Positioning
Explain how and why firms
implement positioning
strategies and how product
differentiation
plays a role
9
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Positioning
Positioning
Developing a specific marketing mix to influence
potential customers’ overall perception of a
brand, product line, or organization in general.
Position: The place a product or group of
products occupies in the consumers’ minds
relative to competing offerings.
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Positioning of Procter & Gamble Detergents
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Brand
Positioning
Tide
Tough, powerful cleaning
Cheer
Tough cleaning, color protection
Bold
Detergent plus fabric softener
Gain
Sunshine scent and odor-removing formula
Era
Stan treatment and stain removal
Dash
Value brand
Solo
Detergent and fabric softener in liquid form
Dreft
Outstanding cleaning for baby clothes, safe
Ivory
Fabric and skin safety on baby clothes
Ariel
Tough cleaner, aimed at Hispanic market
© 2013 by Cengage Learning Inc. All Rights Reserved.
Product Differentiation
Product Differentiation
A positioning strategy
that some firms use to
distinguish their products
from those of competitors.
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Perceptual
Mapping
Perceptual Mapping
A means of displaying or
graphing, in two or more
dimensions, the location
of products, brands, or
groups of products in
customers’ minds.
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Exhibit 8.3
Perceptual Map and Positioning Strategy for Saks’
Department Stores
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SOURCE: Vanessa O’Connell, “Park Avenue Classic or Soho Trendy
?Wall Street Journal, April 20, 2007, B1.
Positioning Bases
Firms use a variety of bases for positioning
One or more position bases is often used
1.Attribute:
The product’s features or benefits
2.Price/quality: High price=quality, or low price=value
3.Use:
Stressing use or application of the product
4.Product user: What is the personality or type of user
5.Product class: Associated w/a specific category of products
6.Competitor: How the product compares to competitors
7.Emotion:
How the product makes customers feel
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Repositioning
Repositioning
Changing consumers’
perceptions of a brand in
relation to competing brands.
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