bk12e ch09 basic

8/6/2019 BK12e Ch09 Basic

1/38

Copyright 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Part 3: Target Market SelectionPart 3: Target Market Selection

8. Marketing Research, Decision-

Support Systems, and SalesForecasting

9. Market Segmentation, Targeting,

and Positioning

10.Relationship Marketing,

Customer Relationship

Management (CRM), and One-to-

One Marketing


2/38

Copyright 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Chapter 9Chapter 9

MarketMarketSegmentation,Segmentation,

Targeting, andTargeting, and

PositioningPositioning


3/38

Copyright 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 9-3

Chapter ObjectivesChapter Objectives

1. Identify the essential components of a market.2. Outline the role of market segmentation in developing a

marketing strategy.

3. Describe the criteria necessary for effectivesegmentation.

4. Explain each of the four bases for segmenting consumermarkets.

5. Identify the steps in the market segmentation process.

6. Discuss four basic strategies for reaching target

markets.7. Summarize the types of positioning strategies.

8. Explain the reasons for positioning and repositioningproducts.


4/38


Selecting a Target MarketSelecting a Target Market

Before a marketing mix strategy can beimplemented, the marketer must identify,

evaluate, and select a target market.

Market:Market: people or institutions with

sufficient purchasing power, authority,

and willingness to buy

Target market:Target market: specific segment of

consumers most likely to purchase aparticular product


5/38


Types of MarketsTypes of Markets

Consumer products:Consumer products: goods or servicespurchased by an ultimate consumer for

personal use

Business products:Business products: goods or services

purchased for use either directly orindirectly in the production of other goods

and services for resale

The key to classification is to identify the

purchaser and the reasons for buying the

goods.


6/38


The Role of Market SegmentationThe Role of Market Segmentation

Market SegmentationMarket SegmentationDivision of the total market into smaller,relatively homogeneous groups

No single marketing mix can satisfyeveryone. Therefore, separate marketingmixes should be used for different marketsegments.


7/38


No Market SegmentationNo Market Segmentation


8/38


Segmented by SexSegmented by Sex


9/38


Segmented by AgeSegmented by Age


10/38


Criteria for Effective SegmentationCriteria for Effective Segmentation

Market segmentation cannot be used in allcases. To be effective, segmentation must

meet the following basic requirements.

The market segments must be measurablein terms of both purchasing power andsize.

Marketers must be able to effectivelypromote to and serve a market segment.

Market segments must be sufficiently large

to be potentially profitable.The number of segments must match the

firms capabilities.


11/38


Segmenting Consumer MarketsSegmenting Consumer Markets

Geographic Segmentation:

Geographic Segmentation: Dividing anoverall market into homogeneous groups on

the basis of their locations

Does not ensure that all consumers in alocation will make the same buyingdecision.

Help in identifying some general patterns.


12/38


Urban Data ClassifiedUrban Data Classified

Core Based Statistical Area (CBSA)

Metropolitan Statistical Area (MSA)

Micropolitan Statistical Area

Consolidated Metropolitan Statistical Area(CMSA)

Primary Metropolitan Statistical Area

(PMSA)


13/38


Using Geographic SegmentationUsing Geographic Segmentation

Demand for some goods and services canvary according to the geographic region

Most major brands get 40-80 percent oftheir sales from what are called coreregions

Climate is another important segmentationfactor

Northern consumers, for example, eatmore soup than Southerners

Southerners use more chlorine for theirswimming pools than Northern residents


14/38


Geographic Information Service (GIS):Geographic Information Service (GIS):computer technology that records several

layers of data on a single map

Simplifies the job of analyzing

marketing information by placing datain a spatial format . . .

The result of which is a geographic

map overlaid with digital data about

consumers in a particular area.


15/38


Segmenting Consumer MarketsSegmenting Consumer Markets

Demographic Segmentation:Demographic Segmentation: dividingconsumer groups according tocharacteristics such as sex, age, income,occupation, education, household size,

and stage in the family life cycle

A primary source for demographic data inthe United States is the Census Bureau


16/38


Segmenting by GenderSegmenting by Gender

Marketers must ensure thattraditional assumptions are not false

Recently, the lines have increasingly

blurred

Some companies marketsuccessfully to both genders


17/38


Segmenting by AgeSegmenting by Age

Identify market segments on thebasis of age

Products designed to meet thespecific needs of certain age groups


18/38


Tweens and TeensTweens and Teens

Rapidly growing market

Significant purchasing power

Cohert Effect

Tendency among members of ageneration to be influenced and drawntogether by significant events occurringduring their key formative years, roughly17 to 22 years of age


19/38


Baby BoomersBaby Boomers

Born from 1946 until 1965

Nearly 42 percent of U.S. adultsValues influenced both by the Vietnam War and

the career-driven era

Huge disposable income

SeniorsSeniors

By 2025, 1 in 5 over age 65

Median age is now 35.2 years

Life expectancy 74 for men and 79 for womenHeads of households aged 55-plus control about

three-quarters of the countrys total financial

assets.


20/38


Segmenting by Ethnic

GroupSegmenting by Ethnic

Group

By 2050, nearly half of the population ofthe US will belong to nonwhite minoritygroups.

HispanicAfrican Americans

Asian Americans

Native Americans

People ofMixed Race


21/38


Family Life Cycle Stages SegmentationFamily Life Cycle Stages Segmentation

The process of family formation and

dissolutionLife stage, not age per se, is the primary

determinant of many consumer purchases

Segmenting by Household TypeSegmenting by Household Type

Todays U.S. households are very diverse

Married couples and their children

Blended by divorce or loss of spouseHeaded by single parent, same-sex

parents, grandparents


22/38


Segmenting by Income and ExpenditureSegmenting by Income and Expenditure

PatternsPatternsEngels Laws,Engels Laws, as family income increases:

A smaller percentage of expenditures go

for food

The percentage spent on housing and

household operations and clothing

remains constant

The percentage spent on other items(such as recreation and education)

increases


23/38


Demographic Segmentation AbroadDemographic Segmentation Abroad

Obtaining the data necessary for globaldemographic segmentation is oftendifficult

Many countries do not operate regularlyscheduled census programs

For example, the most recent censusof Holland is now over 20 years old,and Germany skipped its censusfrom 1970 to 1987

Daily life cycle data is difficult to apply inglobal demographic segmentationefforts


24/38


Psychographic SegmentationPsychographic Segmentation

Divides a population into groups that havesimilar psychological characteristics,values, and lifestyles

Lifestyle: peoples decisions about how tolive their daily lives, including family, job,

social, and consumer activitiesThe most common method for developing

psychographic profiles of a population is toconduct a large-scale survey

AIO statementsVALS and VALS 2

Values and Lifestyles


25/38



26/38


Psychographic Segmentation ofGlobalPsychographic Segmentation ofGlobalMarketsMarkets like those done by Roper Starch

can paint useful pictures of the residents ofvarious countries

Roper found six psychographic consumersegments that are common to 35 nations

Strivers

Devouts

Altruists

IntimatesFun seekers

Creatives


27/38


UsingUsingPsychographicPsychographicSegmentationSegmentation

Psychographicprofiles producerich descriptions ofpotential target

marketsGreater detail aids

in matching acompanys image

and its offeringswith the types ofconsumers whoare likelypurchasers


28/38


ProductProduct--Related SegmentationRelated Segmentation

Dividing a consumer population intohomogeneous groups based oncharacteristics of their relationships to theproduct

Can take the form of segmenting based on:Benefits that people seek when they buy

Usage rates for a product

Consumers brand loyalty toward a

product


29/38


BenefitsBenefits

Focuses on the attributes that people seek in

a good or service and the benefits that theyexpect to receive from that good or service

Groups consumers into segments based onwhat they want a product to do for them

Usage RatesUsage Rates

Segmenting by grouping people according to

the amounts of a product that they buy and

use

Markets often divided into heavy-user,

moderate-user, and light-user segments

The 80/20 principle (Praedos Law)


30/38


Brand LoyaltyBrand Loyalty

Segmenting consumers grouped accordingto the strength of brand loyalty felt toward a

product

Frequent flyer programs of airlines and

many hotels


31/38


Using Multiple Segmentation

Bases

Using Multiple Segmentation

Bases

Increase accuracy in reaching the right

markets

Combine multiple bases

Geographic and Demographic

Product-related with income and

expenditure patterns

Others


32/38


The Market Segmentation ProcessThe Market Segmentation Process

Develop a Relevant Profile for eachSegment

Forecast

Market Potential

Forecast Probable Market Share

Select Specific Market Segments


33/38


Strategies for ReachingStrategies for Reaching

Target MarketsTarget Markets

Undifferentiated Marketing:Undifferentiated Marketing: when a firm

produces only one product or product line

and promotes it to all customers with a single

marketing mix

Differentiated Marketing:Differentiated Marketing: when a firm

produces numerous products and promotesthem with a different marketing mix designed

to satisfy smaller segments


34/38


Concentrated Marketing (nicheConcentrated Marketing (nichemarketing):marketing): when a firm commits all of its

marketing resources to serve a single market

segment

Micromarketing:Micromarketing: involves targeting potentialcustomers at a very basic level, such as byZIP code, specific occupation, lifestyle, or

individual household


35/38


Selecting and Executing a StrategySelecting and Executing a Strategy

No single, best choice strategy suits allfirms

Determinants of a market-specific strategy:

Company resourcesProduct homogeneity

Stage in the product life-cycle

Competitors strategy


36/38


Positioning:Positioning: a marketing strategy that

emphasizes serving a specific marketsegment by achieving a certain position

in buyers minds

Attributes

Price/qualityCompetitors

Application

Product userProduct class


37/38


Positioning mapPositioning mapGraphic illustration that shows differences

in consumers perceptions of competing

products

RepositionReposition

Marketing strategy to change the position

of its product in consumers minds relative

to the positions of competing products

bk12e ch09 basic

Documents