1. Market Segmentation Most markets are comprised of various people, with heterogeneous needs. That is, different people have different needs and wants in regards to most products. Most markets are comprised of various people, with heterogeneous needs. That is, different people have different needs and wants in regards to most products. These markets can be divided into smaller segments of people with similar, more homogeneous needs. These markets can be divided into smaller segments of people with similar, more homogeneous needs. Hence, the term “market segment” Hence, the term “market segment”

2. Mass Market Approach Works well if all consumers have similar needs, and product is commodity-like. Works well if all consumers have similar needs, and product is commodity-like. Ex: bananas, oranges, gasoline Ex: bananas, oranges, gasoline Can target everyone (no need for segmentation) Can target everyone (no need for segmentation)

3. But, there are very few of these! But, there are very few of these! Example: Salt Example: Salt Table salt Table salt Rock salt Rock salt Sea salt Sea salt Kosher salt Kosher salt Iodized salt Iodized salt Pickling salt Pickling salt Flavored salts (e.g., garlic) Flavored salts (e.g., garlic) Example: Rice Example: Rice 40,000 varieties 40,000 varieties

4. But, even if the product is more of a commodity, you can still differentiate, or position, your product! But, even if the product is more of a commodity, you can still differentiate, or position, your product! Product positioning: creating a perceived difference in the minds of consumers Product positioning: creating a perceived difference in the minds of consumers Chiquita bananas Chiquita bananas Sunkist oranges Sunkist oranges Chevron gasoline Chevron gasoline

5. Segmentation Strategies Rolex: High-end watches Rolls-Royce: built by highly skilled craftsmen 1) Concentration strategy: Henredon: Upper-end furniture Henredon: Upper-end furnitureHenredon:

6. Segmentation Strategies 2) Multi-segment strategy: focus on two or more distinct segments focus on two or more distinct segments Ford: cars, trucks for all market segments. Ford: cars, trucks for all market segments. Noxell: Cover Girl makeup for younger women, Clarion for women age +30, Max Factor for professional makeup artists Noxell: Cover Girl makeup for younger women, Clarion for women age +30, Max Factor for professional makeup artists Lane Furniture: recliners from $499 - $1499 Lane Furniture: recliners from $499 - $1499

7. Multi-segment example: Ford: Cars, Trucks, SUV’s, Hybrids, Crossovers, Vans for distinct market segments. Multi-segment example: Ford: Cars, Trucks, SUV’s, Hybrids, Crossovers, Vans for distinct market segments.