Presentation on theme: "Market Segmentation, Targeting, and Positioning"— Presentation transcript:
1 Market Segmentation, Targeting, and Positioning Chapter 9Market Segmentation, Targeting, and Positioning
2 Chapter Objectives Identify the essential components of a market. Outline the role of market segmentation in developing a marketing strategy.Describe the criteria necessary for effective segmentation.Explain each of the four bases for segmenting consumer markets.Identify the steps in the market segmentation process.Discuss four basic strategies for reaching target markets.Summarize the types of positioning strategies.Explain the reasons for positioning and repositioning products.
3 Selecting a Target Market Before a marketing mix strategy can be implemented, the marketer must identify, evaluate, and select a target market.Market: people or institutions with sufficient purchasing power, authority, and willingness to buyTarget market: specific segment of consumers most likely to purchase a particular product
4 Types of MarketsConsumer products: goods or services purchased by an ultimate consumer for personal useBusiness products: goods or services purchased for use either directly or indirectly in the production of other goods and services for resaleThe key to classification is to identify the purchaser and the reasons for buying the goods.
5 P&G Courts Business Customers WSJ 1/26/07 P&G struggles to find significant sales growth in consumer householdsExpands its “Professional Division - sale to janitors, fast-food workers, maids, and launderersConducted marketing research at hotels and fast-food restaurantsU.S. market is $3.2 billion
6 KC MasterpieceProduct Targeted at Selected Consumers
7 Cattlemen’sProduct Targeted at the Business Market: Comes in 1 and 5 Gallon Containers. Introduced more than 40 years ago to meet the special needs of foodservice operators
8 The Role of Market Segmentation Market Segmentation Division of the total market into smaller, relatively homogeneous groupsNo single marketing mix can satisfy everyone. Therefore, separate marketing mixes should be used for different market segments.
13 Tom’s of MaineTargeting a Specific Marketing SegmentWhich segment?
14 Criteria for Effective Segmentation Market segmentation cannot be used in all cases. To be effective, segmentation must meet the following basic requirements.The market segments must be measurable in terms of both purchasing power and size.Marketers must be able to effectively promote to and serve a market segment.Market segments must be sufficiently large to be potentially profitable.The number of segments must match the firm’s capabilities.
15 Segmenting Consumer Markets Geographic Segmentation: Dividing an overall market into homogeneous groups on the basis of their locationsDoes not ensure that all consumers in a location will make the same buying decision.Help in identifying some general patterns.
17 PampersThis ad is an example of geographic segmentation. Why?
18 Urban Data Classified by U.S. Government Core Based Statistical Area (CBSA) – at least one urban area 10,000 or more populationMetropolitan Statistical Area (MSA) – urban center population of 50,000 and area population of over 100,000Micropolitan Statistical Area – at least one town 10,000 to 49,999 populationConsolidated Metropolitan Statistical Area (CMSA) – one of 25 urban giantsPrimary Metropolitan Statistical Area (PMSA) – urbanized county or counties, one million or more population [Seattle, Tacoma, Bremerton]
19 Using Geographic Segmentation Demand for some goods and services can vary according to the geographic regionMost major brands get percent of their sales from what are called core regionsClimate is another important segmentation factorNorthern consumers, for example, eat more soup than SouthernersSoutherners use more chlorine for their swimming pools than Northern residents
20 Figure 9.4Geographic Segmentation: The Importance of Suburban Homeowners’ Buying Habits
22 Geographic Information Service (GIS): computer technology that records several layers of data on a single mapSimplifies the job of analyzing marketing information by placing data in a spatial format The result of which is a geographic map overlaid with digital data about consumers in a particular area.
23 Segmenting Consumer Markets Demographic Segmentation: dividing consumer groups according to characteristics such as sex, age, income, occupation, education, household size, and stage in the family life cycleU.S. Census Bureau
24 Segmenting by GenderMarketers must ensure that traditional assumptions are not falseRecently, the lines have increasingly blurredSome companies market successfully to both genders
25 Segmenting by AgeIdentify market segments on the basis of ageProducts designed to meet the specific needs of certain age groupsDole: Developing a Product Specifically for Children
26 Tweens and TeensRapidly growing marketSignificant purchasing powerCohert EffectTendency among members of a generation to be influenced and drawn together by significant events occurring during their key formative years, roughly 17 to 22 years of age
27 Baby BoomersBorn from 1946 until 1965.Nearly 42 percent of U.S. adultsValues influenced both by the Vietnam War and the career-driven eraBaby boomers over the age of 50 will have a total disposable income of $1 trillion
28 Figure 9.6MasterCard: Appealing to Baby Boomers’ Nostalgia for Music
29 SeniorsBy 2025, 1 in 5 over age 65Median age is now 35.2 yearsLife expectancy is 74 for men and to 79 for womenHeads of households aged 55-plus control about three-quarters of the country’s total financial assets.
30 Segmenting by Ethnic Group By 2050, nearly half of the population of the US will belong to nonwhite minority groups.The three largest and fastest-growing racial/ethnic groups in the US are African Americans, Hispanics, and Asian Americans.
31 Ethnic Group Segmentation HispanicAfrican AmericansAsian AmericansNative AmericansPeople of Mixed Race
32 Figure 9.7Breakdown of U.S. Minority Populations
33 Family Life Cycle Stages Segmentation The process of family formation and dissolutionLife stage, not age per se, is the primary determinant of many consumer purchases
34 Figure 9.8Segmenting by Family Life Cycle Stage
35 Segmenting by Household Type Today’s U.S. households are very diverseMarried couples and their childrenBlended by divorce or loss of spouseHeaded by single parent, same-sex parents, grandparents
36 Segmenting by Income and Expenditure Patterns Engel’s Laws, as family income increases:A smaller percentage of expenditures go for foodThe percentage spent on housing and household operations and clothing remains constantThe percentage spent on other items (such as recreation and education) increases
37 Figure 9.9Princess Cruise Lines Targets People with Large Disposable Incomes
39 Demographic Segmentation Abroad Obtaining the data necessary for global demographic segmentation is often difficultMany countries do not operate regularly scheduled census programsFor example, the most recent census of Holland is now over 20 years old, and Germany skipped its census from 1970 to 1987Daily life cycle data is difficult to apply in global demographic segmentation efforts
40 Psychographic Segmentation Divides a population into groups that have similar psychological characteristics, values, and lifestylesLifestyle: people’s decisions about how to live their daily lives, including family, job, social, and consumer activitiesThe most common method for developing psychographic profiles of a population is to conduct a large-scale surveyAIO statements describe activities, interests, and opinionsVALS and VALS 2 [eight categories] “Values and Lifestyles”
42 Psychographic Segmentation of Global Markets like those done by Roper Starch can paint useful pictures of the residents of various countriesRoper found six psychographic consumer segments that are common to 35 nationsStriversDevoutsAltruistsIntimatesFun seekersCreatives
43 Using Psychographic Segmentation Psychographic profiles produce rich descriptions of potential target marketsGreater detail aids in matching a company’s image and its offerings with the types of consumers who are likely purchasers
44 Figure 9.11Appealing to Intimates and Fun Seekers
45 Product-Related Segmentation Dividing a consumer population into homogeneous groups based on characteristics of their relationships to the productCan take the form of segmenting based on:Benefits that people seek when they buy a productUsage rates for a product [80/20 principle]Consumers’ brand loyalty toward a product
46 BenefitsFocuses on the attributes that people seek in a good or service and the benefits that they expect to receive from that good or serviceGroups consumers into segments based on what they want a product to do for them
48 Usage RatesSegmenting by grouping people according to the amounts of a product that they buy and useMarkets often divided into heavy-user, moderate-user, and light-user segmentsThe 80/20 principle (“Praedo’s Law”) holds that a big percentage of a product’s revenues (roughly 80%) comes from a relative small, loyal percentage (around 20%) of total customers
49 Brand LoyaltySegmenting consumers grouped according to the strength of brand loyalty felt toward a productFrequent flyer programs of airlines and many hotels
50 Using Multiple Segmentation Bases Increase accuracy in reaching the right marketsCombine multiple basesGeographic and DemographicProduct-related with income and expenditure patterns
51 The Market Segmentation Process Develop a Relevant Profile for each SegmentForecast Market PotentialForecast Probable Market ShareSelect Specific Market Segments
52 Strategies for Reaching Target Markets Undifferentiated Marketing: when a firm produces only one product or product line and promotes it to all customers with a single marketing mixDifferentiated Marketing: when a firm produces numerous products and promotes them with a different marketing mix designed to satisfy smaller segments
53 Concentrated Marketing (niche marketing): when a firm commits all of its marketing resources to serve a single market segmentMicromarketing: involves targeting potential customers at a very basic level, such as by ZIP code, specific occupation, lifestyle, or individual household
54 Differentiated Marketing Procter and Gamble Practicing Differentiated Marketing
55 Selecting and Executing a Strategy No single, best choice strategy suits all firmsDeterminants of a market-specific strategy:Company resourcesProduct homogeneityStage in the product life-cycleCompetitors’ strategy
56 Positioning: a marketing strategy that emphasizes serving a specific market segment by achieving a certain position in buyers’ mindsAttributesPrice/qualityCompetitorsApplicationProduct userProduct class
57 Positioning map Graphic illustration that shows differences in consumers’ perceptions of competing productsReposition Marketing strategy to change the position of its product in consumers’ minds relative to the positions of competing products
58 Hypothetical Competitive Positioning Map for Selected Retailers