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Unformatted text preview: Market Segmentation Market
The Art of Creating Target Markets Importance of Segmentation Importance
Executives say segmentation is the hardest aspect of marketing. q Segmentation determines the success of the marketing mix. q If segmentation is done poorly, nothing works right.
q The Heterogeneity of Demand The
A firm must decide the extent to which demand in its marketplace is uniform. q Every marketplace falls along a continuum from totally heterogeneous to totally homogeneous q Pockets of Homogeneity
q How does the firm view How consumer demand? consumer
Totally Homogeneous Totally Heterogeneous Basic Market-Preference Patterns
(a) Homogeneous preferences (b) Diffused preferences (c) Clustered preferences Price Price Price Prestige Prestige Prestige The Firm’s View of Demand The
If demand is viewed as homogeneous, the firm will use an UNDIFFERENTIATED STRATEGY. q If demand is viewed as heterogeneous, the firm will use a DIFFERENTIATED STRATEGY.
q The Extent of Differentiation The
q Aspects of the company determine the extent to which it can use a differential strategy. Firm’s Objectives Firm’s Resources Basis for Differential Advantage Differentiating Company and Competition in Eye of Customer Competition
Customer Technological Environment Economic Environment Political/Legal Environment Marketing Strategy: Achieving maximum positive differentiation over competition in meeting customer needs. Competition Offering Social Environment Company Offering Maximize Target Marketing--Three Major Steps
Market Segmentation 1. Identify segmentation variables and segment the market 2. Develop profiles of resulting segments Market Targeting Market Positioning 5. Identify possible positioning concepts for each target segment 6. Select, develop, and communicate the chosen positioning concept. 3. Evaluate the attractiveness of each segment 4. Select the target segments Bases for Segmentation Bases
C h a r Ca uc st ot me er ri s t i c s Market Measures Objective
General Subjective 2 1 Specific 3 4 General Characteristics/ Objectively Measured Objectively
q q Geographical Variables Demographic Variables – DINKS – Occupation – Sex – Religion – Ethnicity – Age--Generation Y vs. Boomers Values Example Baby Boomers vs.Generation Y
q q q q q q q q q q q q q q q Lexus LS400 Major League Baseball GAP ER Superbowl Ads Harrison Ford Estee Lauder L. L. Bean Palm Pilot Nick at Nite Political Activism The Beatles Pepsi David Letterman New Balance q q q q q q q q q q q q q q q VW Jetta Skateboard Triple Crown Delia’s Smallsville Vans Warp Tour Heath Ledger Hard Candy The North Face Motorola Flex Pagers WB Network Volunteerism Destiny’s Child Mountain Dew Carson Daily Vans General Characteristics/ Subjectively Measured Subjectively
Personality Measures q Psychographics
q – AIO Analysis – Lifestyle Analysis – VALS Typology Situation Specific/ Objectively Measured Objectively
q Consumption Patterns
– Heavy Half Theory in Consumer Products – 80/20 Rule in Industrial Products – Brand Loyalty--Purchasing Patterns Heavy and Light Users of Common Consumer Products
PRODUCT (% USERS) Soaps and Soaps detergents (94%) Toilet tissue (95%) Shampoo (94%) Paper towels (90%) Cake mix (74%) Cola (67%) Beer (41%) Dog food (30%) Bourbon (20%) HEAVY HALF LIGHT HALF 75% 71% 79% 75% 83% 83% 87% 81% 95% 25% 29% 21% 25% 17% 17% 13% 19% 5% Situation Specific/ Situation Subjectively Measured
Benefit Segmentation--segment the market based on the needs and wants satisfied by the product q Different customer groups extract different benefits from the product/service. q Most closely aligned to the marketing concept
q Creating Segment Strategies
Just because marketers obtain data that can be used to segment markets does not ensure a good execution. q Here, we walk through an example of data obtained on Monosodium Glutamate and attempt to determine a strategy for each segment.
q The Monosodium Glutamate Example Example
None Light Heavy Family Age Size large 50+ large small 35-54 24-35 Income Location low mid E,SE W,SW high NE q Non-users: get them to try the product.
– How? Coupons – Where? East and Southeast – Who? Low Income and Large Families What is the Proper Strategy? What q Light Users: come up with new uses.
– How? Recipes – Where? West and Southwest – Who? Mid-income, 35-54 q High Users: Protect with reinforcement
– How? “frequent flier” programs – Where? Northeast – Who? Large income, small families Market Targeting
Total market approach
Single Marketing Mix Target Market -- Concentration approach
Segment I Single Marketing Mix Segment II
(Target market) Segment III Multisegment approach
Marketing Mix I Marketing Mix II Marketing Mix III Target Market I Target Market II Target Market III Five Patterns of Target Market Selection
Single-segment concentration M1 M2 M3 P1 P2 P3 Market specialization M1 M2 M3 P1 P2 P3 P1 P2 P3 Selective specialization M1 M2 M3 P1 P2 P3 Full market coverage M1 M2 M3 P = Product Product M = Market P1 P2 P3 Product specialization M1 M2 M3 Effective Segmentation Criteria Criteria
q q q q q Differential Response (must be meaningful, respond differently to marketing mix) Accessible (must have unique access) Substantial (must be large enough to warrant the trouble) Actionable (company must have resources to create a marketing mix for each segment) Measurable (must be able to determine the needs of the segment and satisfaction levels). Market Positioning
Differentiation is the act of designing a set of meaningful differences to distinguish the company's offer from the competitors' offers. Positioning is the act of designing the company's offer so that it occupies a distinct and valued place in the target customers' minds. Perceptions are more important to positioning than attributes.
"Positioning Age, 1972 is not what you do to a product. Positioning is what you do to the mind of the prospect." Al Ries and Jack Trout, Advertising "A company should develop a unique selling proposition (USP) for each brand and stick to it."Rosser Reeves, Reality in Advertising Steps in the Positioning Process Steps 1. Identify relevant set of competitive products. 2. Identify the set of determinant attributes that define 2. the “product space” in which positions of current offerings are located and collect information. offerings 3. Determine product’s current location in the product 3. space (product positioning). space 4. Determine customers’ most preferred combination 4. of determinant attributes. of 5. Examine the fit between preferences of marketing 5. segment and current position of product segment 6. Select positioning or repositioning strategy Perceptual Map
High Quality G
Low C Price A E F
Low Quality D B
High Price Product and Brand Positioning
Product-positioning map (breakfast market)
Bacon and eggs Cold cereal Slow
Pancakes Hot cereal Instant breakfast Quick Inexpensive Perceptual Map
Live shows Easy to reach Good food Fantasy Exercise Fun rides Disneyland Knott’s Berry Farm
1.0 1.0 0.8 0.6 Little waiting Educational, animals Marineland 0.4 of the Japanese Pacific 0.2 Deer Park
0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 -1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 -1.6 -0.2 Magic Mountain -0.4 -0.6 -0.8 Busch Gardens Economical Lion Country Safari Price/Quality Tradeoff Map
Relative Satisfaction with Price
al ue Fa ir V 90 90 95 100 105 110 115 120 Q Li ne In du st ry = Our Company Q = Our Competitor 90 90 95 100 105 110 115 120 100 = Industry Average Relative Satisfaction with Quality ...
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This note was uploaded on 10/13/2010 for the course MKT B280 taught by Professor Lawrence during the Fall '08 term at Loyola New Orleans.
- Fall '08