Chapter 4 Identifying Market Segments and Selecting Target Markets

The Learning Objectives Levels and Patterns of Marketing Segmentation Marketing Target Positioning Strategy

Market Segmentation Dividing a market into distinct groups of buyers on the basis of needs,characteristics,or behavior who might require separate products or marketing mixes.

Segment Market A group of consumers who respond in a similar way to a given set of marketing effort.

Market targeting The process of evaluating each market segment’s attractiveness and selecting one or more segment to enter.

Marketing positioning Arranging for a product to occupy a clear,distinctive, and desirable place relative to competing products in the minds of target consumers.

Levels of market segmentation Mass marketing Segment marketing Niche marketing

micromarketing Local marketing Individual Marketing

Discussion 1. How do you think the relationship between local marketing and international marketing? 2. How to interpret One –one marketing? (eg. Del: smart marketing)

Steps in Market Segmentation, Targeting,and Positioning 5. Identify possible positioning concepts for each target segment 6. Select, develop, and communicate the chosen concept Market Positioning 3. Evaluate attractiveness of each segment 4. Select the target segment(s) Market Targeting 1. Identify segmentation variables and segment the market 2. Develop profiles of resulting segments Market Segmentation

Basic Market-Preference Patterns (b) Diffused preferences Creaminess Sweetness (c) Clustered preferences Creaminess Sweetness (a) Homogeneous preferences Sweetness Creaminess

Market-Segmentation Procedure Survey Motivations Attitudes Behavior Analysis Factors Clusters Profiling

Segmenting consumer markets(p252) Geographic Segmentation Demographic Psychographic Behavioral

Bases for Segmenting Consumer Markets Geographic Region, City or Metro Size, Density, Climate Demographic Age, Gender, Family size and Fife cycle, Race, Occupation, or Income ... Lifestyle or Personality Psychographic Occasions, Benefits, Uses, or Attitudes Behavioral

Discussion How to choose the segmenting variables? Consider the following products,please list the segmenting standard for each product and explain the reasons for them. 1.computer; 2.shampoo; 3. Life insurance; 4.book

Bases for Segmenting Business Markets Demographic Operating Variables Purchasing Approaches Situational Factors Personal Characteristics

Effective Segmentation Measurable Effective Segmentation Substantial Size, purchasing power, profiles of segments can be measured. Accessible Segments must be large or profitable enough to serve. Differential Segments can be effectively reached and served. Actionable Segments must respond differently to different marketing mix elements & actions. Must be able to attract and serve the segments.

Heavy and Light Users of Common Consumer Products HEAVY HALF LIGHT HALF PRODUCT (% USERS) 75% 71% Soups and detergents (94%) 25% 29% 79% 21% Toilet tissue (95%) Shampoo (94%) 75% 25% 17% Paper towels (90%) Cake mix (74%) Cola (67%) 83% 13% 5% 87% 19% Beer (41%) Dog food (30%) Bourbon (20%) 81% 95%

Additional Segmentation Criteria Ethical Choice of Market Targets Segment Interrelationships & Supersegments Segment-by-Segment Invasion Plans Intersegment Cooperation

Five Patterns of Target Market Selection Selective specialization M1 M2 M3 P1 P2 P3 Product specialization M1 M2 M3 P1 P2 P3 Single-segment concentration P1 P2 P3 M1 M2 M3 P = Product M = Market Market specialization M1 M2 M3 P1 P2 P3 M1 M2 M3 Full market coverage P1 P2 P3

2.Market Targeting Target market Undifferentiated marketing Concentrated Marketing

Undifferentiated Marketing A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer.

Differentiated marketing A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each.

Concentrated marketing A market-coverage strategy in which a firm goes after a large share of one or a few submarkets.

Discussion How to choose the Target market?

3.Positioning Product position Competitive advantage Value propositioning

Product Position The way the product is defined by consumers on important attributes----the place the product occupies in consumers’ minds relative to competing product.

The BCG Competitive Advantage Matrix Number of Approaches to Achieve Advantage Few Many Volume Specialized Size of the Advantage Small Large Stalemated Fragmented

Product Differentiation Form Fea- tures Perfor- mance Quality Conform- ance Quality Dura- bility Relia- bility Repair- ability Style Design

Services Differentiation Ordering Ease Installation Customer Consulting Miscellaneous Services Delivery Customer Training Maintenance & Repair

Differentiation Personnel Channel

Image Differentiation Media Symbols Atmosphere Events

Differences Worth Establishing Important Profitable Distinctive Differences Worth Establishing Affordable Superior Preemptive

Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the the target market’s mind. P 298

Perceptual Map Live shows Easy to reach Little waiting Good food 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 -1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 1.0 0.8 0.6 0.4 0.2 -0.2 -0.4 -0.6 -0.8 Economical Fun rides Exercise Fantasy Good food Easy to reach Educational, animals Little waiting Live shows Magic Mountain Japanese Deer Park Busch Gardens Knott’s Berry Farm Lion Country Safari Marineland of the Pacific Disneyland

Sales & Profit Life Cycles Time Sales & profits ($) Introduction Growth Maturity Decline

Four Introductory Marketing Strategies Price Low High Promotion Rapid- skimming strategy Slow- skimming strategy Rapid- penetration strategy Slow- penetration strategy

Case study 香港大班月饼 Background