3 - 2 Copyright 2007 by Prentice Hall Chapter Outline What Is Market Segmentation? Bases for Segmentation Criteria for Effective Targeting of Segments Implementing Segmentation Strategies
3 - 3 Copyright 2007 by Prentice Hall Market Segmentation The process of dividing a potential market into distinct subsets of consumers and selecting one or more segments as a target market to be reached with a distinct marketing mix.
3 - 4 Copyright 2007 by Prentice Hall Three Phases of Marketing Strategy Phase 2 Target Market and Marketing Mix Selection Phase 3 Product/Brand Positioning Phase 1 Market Segmentation
3 - 5 Copyright 2007 by Prentice Hall Segmentation Studies Discover the needs and wants of groups of consumers to develop specialized products to satisfy group needs Used to identify the most appropriate media for advertising
3 - 6 Copyright 2007 by Prentice Hall Ryka produces sneakers that meet the special needs of women’s feet.
3 - 7 Copyright 2007 by Prentice Hall Discussion Question Considering the largest bank in your college’s city or town: –How might consumers’ needs differ? –What types of products might meet their needs? –What advertising media makes sense for the different segments of consumers?
3 - 8 Copyright 2007 by Prentice Hall Bases for Segmentation Geographic Demographic Psychological Psychographic Sociocultural Use-Related Usage-Situation Benefit Sought Hybrid
3 - 9 Copyright 2007 by Prentice Hall Table 3.1 Market Segmentation Occupation SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Geographic Segmentation Climate Density of area City Size RegionSouthwest, Mountain States, Alaska, Hawaii Major metropolitan areas, small cities, towns Urban, suburban, exurban, rural Temperate, hot, humid, rainy Demographic Segmentation Income Marital status Sex AgeUnder 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+ Male, female Single, married, divorced, living together, widowed Under $25,000, $25,000-$34,999, $35,000-$49,999, $50,000-$74,999, $75,000-$99,999, $100,000 and over EducationSome high school, high school graduate, some college, college graduate, postgraduate Professional, blue-collar, white-collar, agricultural, military
Copyright 2007 by Prentice Hall Table 3.1, continued SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Psychological Segmentation Learning-involvement Perception Personality Needs-motivationShelter, safety, security, affection, sense of self-worth Extroverts, novelty seeker, aggressives, innovators Low-risk, moderate-risk, high-risk Low-involvement, high-involvement Psychographic Subcultures (Race/ethnic) Religion Cultures (Lifestyle) SegmentationEconomy-minded, couch potatoes, outdoors enthusiasts, status seekers American, Italian, Chinese, Mexican, French, Pakistani Catholic, Protestant, Jewish, Moslem, other African American, Caucasian, Asian, Hispanic Family life cycle Social classLower, middle, upper Bachelors, young married, full nesters, empty nesters AttitudesPositive attitude, negative attitude Sociocultural Segmentation
Copyright 2007 by Prentice Hall SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Use-Related Segmentation Brand loyalty Awareness status Usage rateHeavy users, medium users, light users, non users Unaware, aware, interested, enthusiastic None, some, strong Use-Situation Segmentation Location Objective TimeLeisure, work, rush, morning, night Personal, gift, snack, fun, achievement Home, work, friend’s home, in-store PersonSelf, family members, friends, boss, peers Benefit SegmentationConvenience, social acceptance, long lasting, economy, value-for-the-money PRIZM NE Geodemographics “Movers & Shakers,” “New Empty Nests,” “Boomtown Singles,” “Bedrock America” Demographic/ Psychographics Combination of demographic and psychographic profiles of consumer segments profiles SRI VALS TM Innovators, Thinkers, Believer, Achievers, Strivers, Experiencer, Makers, Survivors Hybrid Segmentation Table 3.1, continued
Copyright 2007 by Prentice Hall Geographic Segmentation The division of a total potential market into smaller subgroups on the basis of geographic variables (e.g., region, state, or city)
Copyright 2007 by Prentice Hall Demographic Segmentation Age Sex Marital Status Income, Education, and Occupation
Copyright 2007 by Prentice Hall Web sites for Singles Looking for a Match Match.com targets all singles The Right Stuff targets only Ivy League graduates weblink
Copyright 2007 by Prentice Hall Psychological Segmentation Motivations Personality Perceptions Learning Attitudes Harley-Davidson Video
Copyright 2007 by Prentice Hall Two High-End Watches for Different Psychological Segments
Copyright 2007 by Prentice Hall Psychographic Segmentation Also known as Lifestyle Analysis Psychographic variables include attitudes, interests, and opinions (AIOs)
Copyright 2007 by Prentice Hall Instructions: Please read each statement and place an “x” in the box that best indicates how strongly you “agree” or “disagree” with the statement. I feel that my life is moving faster and faster, sometimes just too fast. If I could consider the “pluses” and “minuses,” technology has been good for me. I find that I have to pull myself away from . Given my lifestyle, I have more of a shortage of time than money. I like the benefits of the Internet, but I often don’t have the time to take advantage of them.  Agree Completely Disagree Completely Table 3.6 Excerpts from AIO Inventory
Copyright 2007 by Prentice Hall weblink Opinions and Attitudes ADBUSTERS Web site is targeted to consumers with a certain attitude toward advertisers
Copyright 2007 by Prentice Hall Sociocultural Segmentation Family Life Cycle Social Class Culture, Subculture, and Cross-Culture
Copyright 2007 by Prentice Hall Family Life Cycle Advertising Video cameras are often purchased by young couples with children.
Copyright 2007 by Prentice Hall Target reaches out to the Latino market.
Copyright 2007 by Prentice Hall Discussion Questions What types of marketers might segment according to social class? What ethical issues might marketers have when marketing to different social classes?
Copyright 2007 by Prentice Hall Use-Related Segmentation Rate of Usage –Heavy vs. Light Awareness Status –Aware vs. Unaware Brand Loyalty –Brand Loyal vs. Brand Switchers
Copyright 2007 by Prentice Hall High Low Consumption High Low LoLows (starve) HiHighs (stroke) LowHighs (chase) HiLows (tickle) Segmenting Customers by Usage Table 3-8 Current Share
Copyright 2007 by Prentice Hall Usage-Situation Segmentation Segmenting on the basis of special occasions or situations Example Statements: –Whenever our daughter Jamie gets a raise, we always take her out to dinner. –When I’m away on business, I try to stay at a suites hotel. –I always buy my wife flowers on Valentine’s Day.
Copyright 2007 by Prentice Hall Benefit Segmentation Segmenting on the basis of the most important and meaningful benefit
Copyright 2007 by Prentice Hall Band-aid offers “flex” as a benefit to consumers.
Copyright 2007 by Prentice Hall Hybrid Segmentation Approaches Psychographic-Demographic Profiles Geodemographic Segmentation SRI Consulting’s VALS
Copyright 2007 by Prentice Hall Selected Demographic Profile of USA Today Excerpt from Table 3-10 USA TODAYUSA TODAY.COM USA TODAY NETWORK Men66%70%66% Women34%30%34% Age %73%64% Age %78%67% Age 55+27%18%25% Average Age Attended college or beyond 77%83%77% College graduate or beyond 55%65%56%
Copyright 2007 by Prentice Hall Selected Lifestyle Profile of USA Today Excerpt from Table 3-11 % Comp Index Tech Savvy Readers Use Internet more than once a day32%174 Internet access at home79%128 Online purchase for business or personal use in past 30 days 40%182 Household owns a PC84%119 Owns digital camera22%130 Leisure Activities Attended movies in last 6 months73%120 Bought music CD/tapes in last 12 months46%126 Book reading45%120 Entertain friends or relatives at home in last 12 months48%123 Household subscribes to cable69%112
Copyright 2007 by Prentice Hall VALS Framework Figure 3-7
Copyright 2007 by Prentice Hall Discussion Question How would you classify yourself according to VALS? Your parents? Do you think this represents you as a consumer? If so, for what products does this fit you as a consumer? Copy down the URL below to take the VALS survey tonight. See if you were right in your classification… bi.com/VALS/presurvey.s html weblink
Copyright 2007 by Prentice Hall Criteria for Effective Targeting of Market Segments Identification Sufficiency Stability Accessibility
Copyright 2007 by Prentice Hall Implementing Segmentation Strategies Concentrated Marketing –One segment Differentiated –Several segments with individual marketing mixes