Segmentation Works Because... bNot all buyers alike bSubgroups may be identified bSubgroups smaller and more homogeneous bEasier to satisfy smaller groups
Major Steps in Segmentation & Targeting 1. Break market down 2. Group into segments TARGET MARKET 3. Choose target market
Choosing Market Segments Distinguishing/stable characteristic Significant size Accessible with distribution & promotion Responsive (similar needs) Measurable potential We need a YES response to each of these!
Gender FM Age Geography Japan Western Europe U.S. Segment Cross-Classification: Aerobic Shoes
Matching the Marketing Mix to Target Market Our target market: Women aged living in the United States The right… Product? Price? Promotion? Place?
Possible Strategies for Target Marketing ¬Undifferentiated marketing
Possible Strategies for Target Marketing Concentrated Marketing b80 / 20 Principle bMajority fallacy
80/20 Rule uA relatively small percentage of customers accounts for a disproportionately large share of the salesTargetcustomers20% Share of customers Targetcustomers80% sales
Possible Strategies for Target Marketing ®Differentiated marketing Multiple market segmentation
Possible Strategies for Target Marketing ¯Custom Marketing: “To each his/her own.”
Custom Marketing bOne-to-one marketing bUses data based- marketing and information technology bFor example... Your name Room preferences Special requests Smoking or non smoking Credit card number Frequent hotel user discount FOR REPEAT HOTEL GUESTS
Bases for Segmenting Business Markets Geography Organizational charateristics Purchase behavior Usage patterns Organizational predispositions
Positioning bThe way consumers perceive the brand relative to its competition bID competitive advantage bStress salient characteristics bDifferentiate
Market Positioning Map: Tea s IcedHot Traditional flavor Unique flavor l Luzianne l Lipton l Tetley l Celestial Seasons l Nestea
Repositioning: Tea - Late 1990s IcedHot Traditional flavor Unique flavor l Luzianne l Lipton l Tetley l Celestial Seasons l Nestea l Arizona Iced Tea l Snapple l Lipton Rounds l Tetley Rounds l Lipton Natural Teas l Lipton Flavored