Identifying Market Segments and Targets 8 Identifying Market Segments and Targets Marketing Management, 13th ed

Chapter Questions What are the different levels of market segmentation? How can a company divide a market into segments? How should a company choose the most attractive target markets? What are the requirements for effective segmentation? Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-2

Baby Boomers: A Lucrative Market Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-3

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Factors influencing firm’s marketing strategy 6. Develop marketing mix for each target segment Market Positioning 5. Develop positioning for each target segment 4. Select the target segment (s) Market Targeting 3. Develop measures of segment attractiveness 2. Develop profiles of resulting segments Market Segmentation 1. Identifying bases for segmenting the market Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-5

Effective Targeting Requires… Identify and profile distinct groups of buyers who differ in their needs and preferences Select one or more market segments to enter Establish and communicate the distinctive benefits of the market offering Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-6

Ford’s Model T Followed a Mass Market Approach Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-7

Four levels of Micromarketing Segments Niches Local areas Individuals Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-8

What is a Market Segment? A market segment consists of a group of customers who share a similar set of needs and wants. Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-9

Gather.com: A Niche Social Networking Site Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-10

Flexible Marketing Offerings Naked solution: Product and service elements that all segment members value Discretionary options: Some segment members value options but not all Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-11

Preference Segments Homogeneous preferences exist when consumers want the same things Diffused preferences exist when consumers want very different things Clustered preferences reveal natural segments from groups with shared preferences Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-12

Figure 8.1 Basic Market Preference Patterns Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-13

Niche Marketers Enterprise Rent-A-Car targets the insurance- replacement market Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-14

Baskin Robbins Focuses on Local Marketing Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-15

The Long Tail Chris Anderson explains the long tail equation: The lower the cost of distribution, the more you can economically offer without having to predict demand; The more you can offer, the greater the chance that you will be able to tap latent demand for minority tastes; and Aggregate enough minority taste, and you may find a new market. Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-16

What is Customerization? Customerization combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice. Video icon links to Marriott snippet on offering different brands for specific segments. Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-17

Segmenting Consumer Markets Geographic Demographic Psychographic Behavioral Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-18

Claritas’ Prizm Education and affluence Family life cycle Urbanization Race and ethnicity Mobility Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-19

Demographic Segmentation Age and Life Cycle Life Stage Gender Income Generation Social Class Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-20

Toyota Scion Targets Gen Y Consumers Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-21

Dove Targets Women Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-22

Figure 8.1 The VALS Segmentation System Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-23

Behavioral Segmentation Decision Roles Initiator Influencer Decider Buyer User Behavioral Variables Occasions Benefits User Status Usage Rate Buyer-Readiness Loyalty Status Attitude Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-24

The Brand Funnel Illustrates Variations in the Buyer-Readiness Stage Aware Ever tried Recent trial Occasional user Regular user Most often used Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-25

Loyalty Status Split loyals Shifting loyals Switchers Hard-core Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-26

Figure 8.3 Behavioral Segmentation Breakdown Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-27

The Conversion Model Nonusers Users Convertible Shallow Average Entrenched Nonusers Users Strongly unavailable Weakly unavailable Ambivalent Available Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-28

Segmenting for Business Markets Demographic Operating Variable Purchasing Approaches Situational Factors Personal Characteristics Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-29

Steps in Segmentation Process Needs-based segmentation Segment identification Marketing-Mix Strategy Segment attractiveness Segment profitability Segment positioning Segment acid test Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-30

Effective Segmentation Criteria Measurable Substantial Accessible Differentiable Actionable Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-31

Figure 8.4 Patterns of Target Market Selection Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-32

Figure 8.4 Patterns of Target Market Selection Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-33

Figure 8.4 Patterns of Target Market Selection Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-34

Crest Whitestrips Follows a Multisegment Strategy Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-35

Figure 8.5 Segment-by-Segment Invasion Plan Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-36

Pepsi used Megamarketing in India Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-37

Marketing Debate Is mass marketing dead? Take a position: Mass marketing is dead. or 2. Mass marketing is still a viable way to build a profitable brand. Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-38

Marketing Discussion Think of various product categories. How would you classify yourself in terms of the various segmentation schemes? How would marketing be more or less effective for you depending upon the segment involved? Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 8-39