1. Kelley Fall 2001 129 Marketing Management Market Segmentation Definitions Market - people or organizations with (1) needs to satisfy, (2) money to spend and (3) willingness to spend it. Market segments - groups of buyers with different needs, buying preferences or product-use behavior. Target market - the market segment that the marketer aims its marketing efforts.

2. Kelley Fall 2001 129 Marketing Management Market Segmentation Process Segmentation process must meet three conditions. Characteristics used to categorize buyers must be measurable and the data obtainable. The segment must be accessible. Each segment must be large enough to generate profitable sales volume.

3. Kelley Fall 2001 129 Marketing Management Segmenting Consumer Markets Geographic Demographic Psychographic Behavioral

4. Kelley Fall 2001 129 Marketing Management Methods of Segmenting the Consumer Market Geographic Regional distribution is important because people tend to share the same values, attitudes and style preferences. Urban, suburban and rural

5. Kelley Fall 2001 129 Marketing Management Methods of Segmenting the Consumer Market Demographic Demographic segmentation is the most common means of segmenting a market because it is the easiest to measure. Social class segmentation is a combination of the characteristics of the level of education, occupation, and type of neighborhood.

6. Kelley Fall 2001 129 Marketing Management Methods of Segmenting the Consumer Market Psychographic Personality characteristics - difficult to measure, difficulty in accessibility Life styles - no commonly accepted set of life style categories, difficult to measure, difficulty in accessibility at a reasonable cost. Values - VALS (Values and Lifestyles) by SRI International. Divides U.S. into nine segments based on similarities of beliefs, desires, prejudices and lifestyles.

7. Kelley Fall 2001 129 Marketing Management Methods of Segmenting the Consumer Market Behavioral Desired benefits Product usage rates (nonusers, light users, medium users and heavy users)

8. Kelley Fall 2001 129 Marketing Management Segmenting the Business Market Customer Location Type of business customer Size - sales volume, number of employees, number of sales offices, etc. Industry Purchase organization (type of buying center) Purchase criteria

9. Kelley Fall 2001 129 Marketing Management Segmenting the Business Market Type of transaction Straight rebuy, modified rebuy, new buy Usage rate (heavy, light, nonuser) Purchase procedure

10. Kelley Fall 2001 129 Marketing Management Target Market Strategies Market aggregation - treat market as a single segment, target with a single marketing mix. Multiple segment - target two or more groups with multiple products and marketing mixes. Single segment - specialize in one market segment.

11. Kelley Fall 2001 129 Marketing Management Guidelines for Selecting a Target Market Target market must be compatible with the organization’s goals. Target market opportunity must match the company’s resources. Target market must yield acceptable level of profitability. Target market should offer least competitive resistance.