1. Chapter 7 Segmenting and Targeting Markets

2. The Importance of Market Segmentation
Markets have a variety of product needs and preferences
Marketers can better define customer needs
Decision makers can define objectives and allocate resources more accurately
Competitive
Advantage

3. Criteria for Segmentation
Substantiality
Identifiability
Measurability
Accessibility
Responsiveness
Segment must be large enough to warrant a special marketing mix.
Segments must be identifiable and their size measurable.
Members of targeted segments must be reachable with marketing mix.
Unless segment responds to a marketing mix differently, no separate treatment is needed.

4. Bases for Segmentation
Usage Rate
Benefits Sought
Psychographics
Demographics
Geography
Bases Used to Segment Consumer Markets

5. Geographic Segmentation
Region of the country or world
Market size
Market density
Climate

6. Bases for Demographic Segmentation
Age
Gender
Income
Ethnic background
Family Life Cycle

7. Ethnic Background Largest ethnic markets are:
African-American
Hispanic-American
Asian-American
Will comprise 1/3 of U.S. population by 2010 with buying power of a trillion dollars

8. Family Life Cycle
Age
Marital Status
Children

9. Bases for Psychographic Segmentation
Personality
Motives
Lifestyles
Geodemographics

10. Lifestyle Segmentation
How time is spent
Beliefs
Socioeconomic characteristics

11. Geodemographic Segmentation
Segmenting potential customers into neighborhood lifestyle categories.
Combines geographic, demographic, and lifestyle segmentation.

12. Quartiles of County Residents of Asian Descent

13. CLARTAS’ PRIZM 62 American clusters
Each cluster is a member of 15 social groups arranged by urbanization density and socio-economic standing.
County City
High
$ $
Low
RURAL TOWN 2nd CITY SUBURB URBAN

14. CLARTAS’ PRIZM 62 American clusters
Each cluster is a member of 15 social groups arranged by urbanization density and socio-economic standing.
01: BLUE BLOOD ESTATES 05: KIDS & CUL-DE-SACS
07: MONEY & BRAINS 09: AMERICAN DREAMS
12: UPWARD BOUND 14: COUNTRY SQUIRES
18: YOUNG INFLUENCIALS 28: BIG CITY BLEND
31: LATINO AMERICA 40: MILITARY QUARTERS
41: SHOTGUNS & PICKUPS 62: HARD SCRABBLE
To look up a ZIP code use
For definitions of each cluster, see for complete descriptions

15. VALS 2 Dimensions Abundant Resources Minimal Resources Principle-
oriented
Status-
oriented
Action-
oriented
Abundant Resources
Actualizers
Experi- encers
Fulfillers
Achievers
Believers
Strivers
Makers
Minimal Resources
Strugglers

16. Benefit Segmentation
The process of grouping customers into market segments according to the benefits they seek from the product .

17. Usage-Rate Segmentation
Dividing a market by the amount of product bought or consumed.

18. The 80/20 Principle
A principle holding that 20 percent of all customers generate 80 percent of the demand.
80/20

19. Steps in Segmenting a Market
Select a market for study
Choose bases for segmen-tation
Select descrip-tors
Profile and analyze segments
Select target markets
Design, imple- ment, maintain mkting mix

20. Strategies for Selecting Target Markets
Undifferentiated
Strategy
Concentrated
Strategy
Multisegment
Strategy

21. Undifferentiated Targeting Strategy
Advantages:
Potential savings on production and marketing costs
Disadvantages:
Unimaginative product offerings
Company more susceptible to competition

22. Concentrated Targeting Strategy
Advantages:
Concentration of resources
Meets narrowly defined segment
Small firms can compete
Strong positioning
Disadvantages:
Segments too small, or changing
Large competitors may market to niche segment

23. Multisegment Targeting Strategy
Advantages:
Greater financial success
Economies of scale
Disadvantages:
High costs
Cannibalization

24. Costs of Multisegment Targeting
Product design costs
Production costs
Promotion costs
Inventory costs
Marketing research costs
Management costs
Cannibalization

25. Cannibalization Situation that occurs when sales of a new product
cut into sales of a
firm’s existing products.

26. Positioning
Developing a specific marketing mix to influence potential customers’ overall perception of a brand, product line, or organization in general.

27. Effective Positioning
Assess the positions of competing products
Determine the dimensions of these positions
Choose an effective market position

28. Perceptual Mapping--Levi’s
High Price
Vintage
Red Line
Slates
Red Tab Elesco
Red Tab
Dry Goods
Dockers Premium
Silver Tab
Classic
Designer
501 L2
Dockers
Classics
Red Tab Basics
Old product
New product
Low Price

29. Positioning Bases Positioning Bases Attribute Price and Quality
Use or Application
Product User
Product Class
Competitor
Positioning Bases

30. Changing consumers’ perceptions of a brand
Repositioning
Changing consumers’ perceptions of a brand
in relation to
competing brands.

31. Guess Who Owns Theses Brands
Guess Who Owns Theses Brands? What are the segments that each is directed toward?
See

32. Product Positioning
High
PRICE
Low
Low
Richness
High

33. Why Do Consumers Purchase Technology?
Primary Motivation
Family Career Entertainment Status
Neo-
hearthminders
Fast
Forwards
Techno-
strivers
Mouse
Potatoes
Gadget
Grabbers
Cyber-snobs
X-techs
Technology pessimists Technology optimists
Disposable Income Disposable Income
Low High Low High
Traditionalists
Handshakers
Media
Junkies
Country
Clubbers
Sidelined Citizens
Source: Forrester Research, Inc.