1. Marketing Management Segmentation and Target Marketing Paul Dishman, Ph.D. Department of Business Management Marriott School of Management Brigham Young University Lecture 10

2. Paul Dishman, Ph.D. Marketing Management Definitions Mass Marketing vs. Mass Communications Market Segmentation –Different products to one or more segments Target Marketing –Aiming (and modifying) the Marketing Mix at a particular segment

3. Paul Dishman, Ph.D. Marketing Management Steps in Market Segmentation, Targeting, and Positioning (Fig. 7.1) Market Segmentation 1. Identify bases for segmenting the market 2. Develop segment profiles Market Segmentation 1. Identify bases for segmenting the market 2. Develop segment profiles Market Targeting 3. Develop measure of segment attractiveness 4. Select target segments Market Targeting 3. Develop measure of segment attractiveness 4. Select target segments Market positioning 5. Develop positioning for target segments 6. Develop a marketing mix for each segment Market positioning 5. Develop positioning for target segments 6. Develop a marketing mix for each segment

4. Paul Dishman, Ph.D. Marketing Management Bases for Consumer Segmentation Geographic Demographic -Age -Gender -Family size or life cycle -Income -Occupation -Education -Religion -Race -Generation -Nationality Psychographic -Social Class -Life Style -Personality Behavioral -Occasions -Benefits -User status -Usage rate -Loyalty status -Readiness stage -Attitude toward product worksheet

5. Paul Dishman, Ph.D. Marketing Management Bases for Consumer Segmentation GeographicDemographic PsychographicBehavioral

6. Paul Dishman, Ph.D. Marketing Management Demographics Operating Variables Purchasing Variables Situational Variables Miscellaneous Bases for Industrial Segmentation

7. Paul Dishman, Ph.D. Marketing Management Orange Juice Segments by Behavior by Customer Benefits –Smooth taste –Want more body –Concerned about osteoporosis –Don’t want it to burn Regular Reduced Acid Added Calcium Added Pulp Market Segments

8. Paul Dishman, Ph.D. Marketing Management Orange Juice Segments by Psychographics by Customer Life Style –“traditionals” –“healthies” Market Segments “traditionals” “healthies”

9. Paul Dishman, Ph.D. Marketing Management Orange Juice Segments What can we learn? Market Segments “traditionals” “healthies” Regular Added Pulp Calcium Reduced Acid

10. Paul Dishman, Ph.D. Marketing Management Evaluation of Segments Size of market (potential) and our share –in dollars, units, retail, dealer –our share –competitors’ share Forecasted market growth Our sales potential Structural attractiveness

11. Paul Dishman, Ph.D. Marketing Management Evaluation of Segments Measurable (and mutually exclusive) Accessible Sustainable Actionable

12. Paul Dishman, Ph.D. Marketing Management Pantyhose Segmentation Everyday Professional Special Occasion Miscellaneous

13. Paul Dishman, Ph.D. Marketing Management Pantyhose Segments Everyday Wear 55% Professional Wear 25% Special Occasion Wear 19% Miscellaneous Wear 5%

14. Paul Dishman, Ph.D. Marketing Management Everyday Wear Priced close to $.99 Price is almost only consideration Discounters, grocery stores Lots of private labels Little brand loyalty Largest segment, most competitors Up to 25+ purchases a year

15. Paul Dishman, Ph.D. Marketing Management Professional Wear Priced close to $5.00 Officewear Upward quality/label pressure Department stores, specialty stores Label class very important Second largest segment 10+ purchases per year Many brands are subcontracted

16. Paul Dishman, Ph.D. Marketing Management Special Occasion Priced from $5.00 to $20.00 Bought to “feel feminine” Specialty stores, department stores Very label conscious Segment may drive other segment choices 3-5 purchases per year Brands do subcontract

17. Paul Dishman, Ph.D. Marketing Management Miscellaneous Priced $10.00 to $40.00 Medical to exotic Specialty Stores, catalogs Brands known in some sub-segments Few purchases per year Sometimes only one brand in sub- segment Size?

18. Paul Dishman, Ph.D. Marketing Management Pantyhose Segments Everyday Professional Special Occasion Misc. % of Structural TMD $Size EnvironmentGPM 55%$45Mextensive45% low-cost manf’s price sens 25%$20Mextensive53% brand sens 19%$15Mbrand sens57% 6%$5Mno brand aware81% sm manf’s

19. Paul Dishman, Ph.D. Marketing Management Simple Segmentation 1.Define the broad product-market 2.Decide on segmentation method and criteria 3.Draw a pie to insure mutual exclusivity 4.Identify and label segments 5.Go research for information 6.What insights or understandings might you gain if you were to use another segmentation method? (example)

20. Paul Dishman, Ph.D. Marketing Management Segment 1 Segment 2 Segment 3 Segment 1 Segment 2 Segment 3 Company Marketing Mix Company Marketing Mix Company Marketing Mix Company Marketing Mix Company Marketing Mix 1 Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 2 Company Marketing Mix 3 Company Marketing Mix 3 Market A. Undifferentiated Marketing B. Differentiated Marketing C. Concentrated Marketing Market Coverage Strategies

21. Paul Dishman, Ph.D. Marketing Management Identifying Possible Competitive Advantages Key to winning and keeping customers is to understand their needs and buying processes better than competitors do and deliver more value. Competitive advantage is an edge over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits, that justify competitive advantage

22. Paul Dishman, Ph.D. Marketing Management Positioning Strategies Competitive Advantage –Create Competitive differentia by: Product Personnel ServicesImage Unique Selling Proposition

23. Paul Dishman, Ph.D. Marketing Management Exercise Use the segmentation process to determine appropriate market segments for BYU’s marketing efforts to potential students (Make sure that the segments are mutual exclusive) Use this process in defending your answer in writing Due next class period Color pie chart overhead transparency with one page support