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Chapter 10 Target Markets: Segmentation, Evaluation, and Positioning

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2 Chapter 10 Target Markets: Segmentation, Evaluation, and Positioning

3 Objectives Learn what a market is
Understand differences among targeting strategies Become familiar with segmentation variables Know what segment profiles are and how they are used Evaluate market segments Identify factors that influence selection of specific market segments Understand positioning Become familiar with sales forecasting methods

4 What are Markets Group of people seeking products in a specific product category (see Ch. 2 definition) Can be… specific location (flea market) large geographic area relationship between supply and demand (market for given product) action word, as in market a product

5 Market Requirements Need/desire for a particular product
Have ability to purchase product Willing to use buying power Have authority to buy specific products

6 Target Market Selection Process

7 Step 1: Targeting Strategy

8 Undifferentiated Targeting Strategy
A strategy in which an organization defines an entire market for a particular product as its target market, designs a single market mix, and directs it at that market.

9 Homogeneous Market A market in which a large portion of customers have similar needs for a product.

10 Concentrated Targeting Strategy Through Market Segmentation

11 Heterogeneous Market A market made up of individuals or organizations with diverse needs for products in a specific product class.

12 Market Segmentation The process of dividing a total market into groups with relatively similar product needs to design a marketing mix that matches those needs.

13 Market Segment Individuals, groups, or organizations sharing one or more similar characteristics that cause them to have similar product needs.

14 Conditions For Successful Market Segmentation
Customer product needs are heterogeneous Segments identifiable and divisible Market divided so segments can be compared on sales potential, costs, and profits At least one segment has potential to justify marketing expense Segment can be reached with a particular marketing mix

15 Concentrated Target Strategy
Market segmentation strategy in which an organization targets a single market segment using one marketing mix

16 Differentiated Targeting Strategy Through Market Segmentation

17 Differentiated Targeting Strategy
A strategy in which an organization targets two or more segments by developing a marketing mix for each segment.

18 Step 2: Determine Which Segmentation Variables to Use
characteristics of individuals, groups, or organizations used to divide a market into segments

19 Variables for Segmenting Consumer Markets

20 Demographic Variables
Age Gender Race Ethnicity Income Education Occupation Family size Family life cycle Religion Social class

21 Age Group Spending Levels

22 Life Cycle Stages

23 Family Life Cycle Stages
Source: Jason Fields, “America’s Families and Living Arrangements: 2003,” Current Population Reports, U.S. Census Bureau, 2003.

24 Geographic Variables Climate Terrain City size Population density
Urban/rural areas Getty Images

25 Market Density The number of potential customers within a unit of land area.

26 Geodemographic Segmentation
A method of market segmentation that clusters people in zip code areas and smaller neighborhood units based on lifestyle and demographic information.

27 Micromarketing An approach to market segmentation in which organizations focus precise marketing efforts on very small geographic markets.

28 Psychographic Variables
Personality characteristics Motives Lifestyles

29 VALS Types Take the VALS Survey

30 Behavioristic Variables
Dividing a market according to some feature of consumer behavior toward a product

31 Benefit Segmentation The division of a market according to benefits that consumers want from the product.

32 Segmenting Business Markets
Geographic Location Type of Organization Customer Size Product Use

33 Step 3: Develop Market Segment Profiles
Similarities among potential customers Differences among people and organizations in different segments

34 Step 4: Evaluate Relevant Market Segments
Sales Estimates Market potential Company sales potential (breakdown and buildup) Competitive Assessment Cost Estimates © Microsoft

35 Step 5: Select Specific Target Markets
Choose market segmentation Available resources to compete in market segmentation Confirm requirements of market segment Long-term growth of market segment

36 Product Positioning and Repositioning
creating and maintaining a certain concept of a product in customers minds. Perceptual Mapping Bases for Positioning Repositioning

37 Toothpaste Product Positions

38 Perceptual Map For Pain Relievers

39 Developing Sales Forecast
The amount of a product a company expects to sell during a specific period at a specified level of marketing activities.

40 Executive Judgment A sales forecasting method based on the intuition of one or more executives.

41 Surveys Customer Forecasting Sales Force Forecasting
Expert Forecasting Delphi Technique Time Series Analysis Trend Analysis Regression Analysis

42 Time Series Analysis Time series analysis – historical sales data used to discover patterns in sales over time Trend analysis – aggregate sales data over many years to determine trends in annual sales Cycle analysis – analysis over 3-5 years to ascertain whether sales fluctuate in a consistent manner

43 Time Series Analysis (cont’d)
Seasonal analysis – daily, weekly, or monthly sales figure to evaluate sales influences of seasonal factors Random factor analysis – attributing erratic sales variations to random events

44 Regression Analysis Predicting sales based on finding a relationship between past sales and one or more independent variables, such as population or income

45 Market Test Making a product available to buyers in one or more test areas and measuring purchases and consumer responses to marketing efforts. McDonald’s Market Tests Chicken Breast Strips

46 Using Multiple Forecasting Methods
Diverse product lines Product sold to different market segments Variation in length of needed forecasts Verifying results of one method by using others

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