1. 8 Identifying Market Segments and Targets
MARKETING STRATEGY 8
Identifying Market
Segments and Targets

2. Process of Market Segmentation
Target Marketing
Differentiation and Positioning
Positioning for Competitive Advantage

3. Market Segmentation
Market segmentation is the process that companies use to divide large heterogeneous markets into small markets that can be reached more efficiently and effectively with products and services that match their unique needs

4. Market Segmentation Segmenting consumer markets
Segmenting business markets
Segmenting international markets
Requirements for effective segmentation

5. The Segmentation Process
Defining the market
Identifying the best market segmentation criteria
Applying the segmentation criteria and dividing the market
Analyzing and understanding the profile of the priority consumer segment

6. 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.

7. Four Levels of Micromarketing
Segments
Niches – more narrowly defined customer group
Local areas - neighborhoods
Individuals

8. Segment Marketing Targeting a group of customers
who share a similar set of
needs and wants ( e.g. young middle
income buyers
who are looking for an expensive car).

9. 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.
(e.g. the firm provides a platform, tools
And rents out to customers the means
To design their own product – DIY, IKEA)

10. Segmenting Consumer Markets
Geographic units – territories
Demographic – age and life cycle, gender, income
Psychographic – personality, life-style – activities, values
Behavioral – occasions, benefits, user status, usage rate, loyalty, attitudes

11. Demographic Segmentation
Demographic segmentation is the most popular segmentation method because consumer needs, wants, and usage often vary closely with demographic variables and are easier to measure than other types of variables
Age and Life Cycle
Life Stage
Gender
Income
Generation
Social Class

12. Demographic Segmentation- Segmenting Consumer Markets
Age and life-cycle stage segmentation is the process of offering different products or using different marketing approaches for different age and life-cycle groups
Income segmentation divides the market into affluent or low-income consumers
Gender segmentation divides the market based on sex (male or female)

13. Behavioral Segmentation
Decision Roles
Initiator
Influencer
Decider
Buyer
User
Behavioral Variables
Occasions
Benefits
User Status
Usage Rate
Buyer-Readiness
Loyalty Status
Attitude

14. Decision Roles
Initiator: The person who brings up the idea or identifies the need.
Influencer: The person who influences the outcome of the decision. Some people may be more motivated than others to get involved, and are more powerful to convince others of their choice.
Decider: The person who decides on any component of the purchase; when, what, how, who.
Buyer: The person who actually makes the purchase.
User: The person who winds up using the product or service.

15. Behavioral Segmentation
Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product
Occasion
Benefits sought
User status
Usage rate
Loyalty status

16. Behavioral Segmentation
Occasion segmentation divides buyers into groups according to occasions when they get the idea to buy, actually make purchases, or respond to a product e.g. buying an air ticket
Benefit segmentation requires finding the major benefits people look for in the product class, the kinds of people who look for each benefit, and the major brands that deliver each benefit e.g. buying a toothpaste
User status divides buyers into ex-users, potential users, first-time users, and regular users of a product

17. Behavioral Segmentation
Buyer-Readiness a market consists of people in different stages of readiness to buy the product; unaware, aware, informed, interested, desire or intend to buy the product
Usage rate divides buyers into light, medium, and heavy product users
Loyalty status divides buyers into groups according to their degree of loyalty
Attitude different attitude groups can be found in a market; enthusiastic, positive, indifferent, negative and hostile

18. Steps in Segmentation Process
Needs-based segmentation
Segment identification
Segment attractiveness
Segment profitability
Segment positioning
Marketing mix strategy

19. Effective Segmentation Criteria
Measurable: examples include the size, purchasing power, and profiles of the segments
Substantial: refers to the fact that the markets are large and profitable enough to serve
Accessible: refers to the fact that the market can be effectively reached and served
Differentiable: refers to the fact that the markets are conceptually distinguishable and respond differently to marketing mix elements and programs
Actionable: refers to the fact that effective programs can be designed for attracting and serving the segments

20. Market Targeting - Evaluating Market Segments
Segment structural attractiveness
Competition
Substitute products
Power of buyers
Power of suppliers

21. Market Targeting - Evaluating Market Segments
Company objectives and resources
Competitive advantage
Availability of resources
Consistent with company objectives

22. Market Targeting - Selecting Target Market Segments
Undifferentiated marketing
Differentiated marketing
Concentrated marketing
Micromarketing

23. Market Targeting - Selecting Target Market Segments
Undifferentiated marketing targets the whole market with one offer
Mass marketing
Focuses on common needs rather than what’s different

24. Market Targeting - Selecting Target Market Segments
Differentiated marketing targets several different market segments and designs separate offers for each
Goal is to achieve higher sales and stronger position
More expensive than undifferentiated marketing

25. Market Targeting - Selecting Target Market Segments
Concentrated marketing targets a small share of a large market
Limited company resources
Knowledge of the market
More effective and efficient

26. Market Targeting - Selecting Target Market Segments
Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations
Local marketing
Individual marketing

27. Market Targeting Selecting Target Market Segments
Local marketing
Challenges:
Increased manufacturing and marketing costs
Less economy of scale
Logistics

28. Market Targeting Selecting Target Market Segments
Individual marketing involves tailoring products and marketing programs to the needs and preferences of individual customers
Also known as:
One-to-one marketing
Mass customization
Markets-of-one marketing

29. Market Targeting Selecting Target Market Segments
Mass customization is the process through which firms interact one-to-one with masses of customers to design products and services tailor-made to meet individual needs. Has made relationships with customers important in the new economy.
Provides a way to distinguish the company against competitors

30. Market Targeting – Choosing a Targeting Strategy
Depends on:
Company resources
Product variability
Product life-cycle stage
Market variability
Competitor’s marketing strategies

31. Differentiation and Positioning
Product position is the way the product is defined by consumers on important attributes—the place the product occupies in consumers’ minds relative to competing products
Perceptions
Impressions
Feelings
Positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions

32. Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy
Identifying a set of possible competitive advantages to build a position
Choosing the right competitive advantages
Selecting an overall positioning strategy

33. Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy
Identifying a set of possible competitive advantages to build a position by providing superior value from:
Product differentiation
Service differentiation
Channels
People
Image

34. Differentiation and Positioning
Identifying Possible Value Differences and
Competitive Advantage
Competitive Advantage is the advantage over competitors gained by offering greater value either through lower prices or by providing more benefits that justify higher prices