2 Market Segmentation Market Segment Market Segment Market Segmentation Market Segmentation People or organizations with needs or wants and the ability and willingness to buy A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.
3 A Market is... (1) people or organizations with (2) needs or wants, and with (3) the ability and (4) the willingness to buy. A group of people that lacks any one of these characteristics is NOT a market.
4 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
5 Criteria for Segmentation SubstantialitySubstantialityIdentifiabilityMeasurabilityIdentifiabilityMeasurability AccessibilityAccessibility ResponsivenessResponsiveness 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.
6 Segmentation Bases Characteristics of individuals, groups, or organizations used to divide a total market into segments. (variables)
8 Geographic Segmentation Segmenting markets by region of the country/world region of the country/world market size market size market density market density climate climate
9 Benefits of Regional Segmentation New ways to generate sales in sluggish and competitive markets New ways to generate sales in sluggish and competitive markets Scanner/POS data allow assessment of best selling brands in region Scanner/POS data allow assessment of best selling brands in region Regional brands appeal to local preferences Regional brands appeal to local preferences React more quickly to competition React more quickly to competition
18 Lifestyle Segmentation How time is spent How time is spent Importance of things around them Importance of things around them Beliefs Beliefs Socioeconomic characteristics Socioeconomic characteristics
19 Geodemographic Segmentation Segmenting potential customers into neighborhood lifestyle categories. Combines geographic, demographic, and lifestyle segmentation.
23 Usage-Rate Segmentation Dividing a market by the amount of product bought or consumed.
24 The 80/20 Principle A principle holding that 20 percent of all customers generate 80 percent of the demand. Targetcustomers20% Share of customers Targetcustomers80% sales
25 Business Marketing Segmentation Four segments of business markets: Producers / manufacturers Producers / manufacturers Resellers Resellers Governments Governments Institutions Institutions
26 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 mktging mix
27 Target Market A group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges.
28 Undifferentiated Targeting Strategy Marketing approach that views the market as one big market with no individual segments and thus requires a single marketing mix.
29 Undifferentiated Targeting Strategy Advantages Advantages : Potential savings on production and marketing costs Disadvantages Disadvantages: Unimaginative product offerings Company more susceptible to competition
30 Concentrated Targeting Strategy A strategy used to select one segment of a market (a niche) for targeting marketing efforts.
31 Concentrated Targeting Strategy Advantages Advantages: Concentration of resources Meets narrowly defined segment Small firms can compete Strong positioning Disadvantages Disadvantages: Segments too small, or changing Large competitors may market to niche segment
32 Cannibalization Situation that occurs when sales of a new product cut into sales of a firm’s existing products.
33 Position The place a product, brand, or group of products occupies in consumers’ minds relative to competing offerings.
34 Positioning Developing a specific marketing mix to influence potential customers’ overall perception of a brand, product line, or organization in general.
35 Product Differentiation A positioning strategy that some firms use to distinguish their products from those of competitors.
36 Perceptual Mapping A means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers’ minds.
37 Perceptual Map and Positioning Strategy for Levi Strauss Products
38 Repositioning Changing consumers’ perceptions of a brand in relation to competing brands.