Market Segmentation Determinants of Advertising Strategy

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The Market Segmentation Process It is actually a 2 Step Strategy: Identifying groups of people (or organizations) with shared needs and characteristics within the broad markets for consumer or business products; and Aggregating (combining) these groups into larger market segments according to their mutual interest in the product’s utility. This process gives a company a selection of market segments large enough to target and lays the foundation for developing the proper mix of marketing activities-including Advertising

It is actually a 2 Step Strategy:

Identifying groups of people (or organizations) with shared needs and characteristics within the broad markets for consumer or business products; and

Aggregating (combining) these groups into larger market segments according to their mutual interest in the product’s utility.

This process gives a company a selection of market segments large enough to target and lays the foundation for developing the proper mix of marketing activities-including Advertising

Segmenting the Consumer Market Finding the Right Niche : Consumers leave “footprints in the sand”: Where they live and work What they buy How they spend their leisure time By following these footprints, marketers can locate and define groups of consumers with similar needs and wants, create messages for them, and know how and where to send their messages. The goal is to find that particular niche , or space in the market, where the Advertiser’s product or service will fit.

Finding the Right Niche :

Consumers leave “footprints in the sand”:

Where they live and work

What they buy

How they spend their leisure time

By following these footprints, marketers can locate and define groups of consumers with similar needs and wants, create messages for them, and know how and where to send their messages.

The goal is to find that particular niche , or space in the market, where the Advertiser’s product or service will fit.

Segmenting the Consumer Market Marketers group these characteristics into Categories: Behavioristic Segmentation Geographic Segmentation Demographic Segmentation Psychographic Segmentation

Marketers group these characteristics into Categories:

Behavioristic Segmentation

Geographic Segmentation

Demographic Segmentation

Psychographic Segmentation

Segmenting the Consumer Market: Behavioristic Segmentation Group consumers by Purchase Behavior: User-Status Variable Usage Rate Purchase Occasion Benefit Sought

Group consumers by Purchase Behavior:

User-Status Variable

Usage Rate

Purchase Occasion

Benefit Sought

Product Life Cycles Marketers theorize just as humans pass through stages in life from infancy to death, products (and especially product categories) also pass through a product life cycle There are 4 stages in the product life cycle: Introduction – significant Advertising Growth – Advertising should increase as competitors jump into the market Maturity – Advertising selectively to revitalize brand Decline – Minimal Advertising

Marketers theorize just as humans pass through stages in life from infancy to death, products (and especially product categories) also pass through a product life cycle

There are 4 stages in the product life cycle:

Introduction – significant Advertising

Growth – Advertising should increase as competitors jump into the market

Maturity – Advertising selectively to revitalize brand

Decline – Minimal Advertising

Product Classifications Ways to classify tangible goods: By market By rate of consumption and tangibility By purchasing habits By physical description

Ways to classify tangible goods:

By market

By rate of consumption and tangibility

By purchasing habits

By physical description

Product Positioning Once an Advertising person understands the product’s stage in the life cycle and how it is classified, the first strategic decision can be made: how to position the product. The basic goal of positioning strategy is to own a Word in the prospect’s mind

Once an Advertising person understands the product’s stage in the life cycle and how it is classified, the first strategic decision can be made: how to position the product.

The basic goal of positioning strategy is to own a Word in the prospect’s mind

Product Differentiation Product differentiation creates a product difference that appeals to the preferences of a distinct market segment. In advertising, nothing is more important than being able to tell prospects truthfully that your product is new and different .

Product differentiation creates a product difference that appeals to the preferences of a distinct market segment.

In advertising, nothing is more important than being able to tell prospects truthfully that your product is new and different .

Product Branding The fundamental differentiating device for all products is the brand-that combination of name, words, symbols, or design that identifies the product and its source and distinguishes it from competing products. A manufacturer may establish: Individual brand Family brand National brand Private Label Licensed brand

The fundamental differentiating device for all products is the brand-that combination of name, words, symbols, or design that identifies the product and its source and distinguishes it from competing products.

A manufacturer may establish:

Individual brand

Family brand

National brand

Private Label

Licensed brand

Product Packaging It is an exhibitive medium that can determine the outcome of retail shelf competition. The 4 considerations in package design: Identification Containment Protection Convenience Consumer Appeals Economy

It is an exhibitive medium that can determine the outcome of retail shelf competition.

The 4 considerations in package design:

Identification

Containment

Protection

Convenience

Consumer Appeals

Economy

Advertising and the Price Element The price element of the marketing mix influences consumer perceptions of the brand dramatically. Companies typically set their price based on: Market demand for the product Costs of production Competition Corporate objectives.

The price element of the marketing mix influences consumer perceptions of the brand dramatically.

Companies typically set their price based on:

Market demand for the product

Costs of production

Competition

Corporate objectives.

Advertising and the Distribution Element It is important for the marketers to understand that the method of distribution, like the price, must be consistent with the brand image. Direct Distribution-sell direct to consumer Indirect Distribution-sell through a distribution channel

It is important for the marketers to understand that the method of distribution, like the price, must be consistent with the brand image.

Direct Distribution-sell direct to consumer

Indirect Distribution-sell through a distribution channel

Direct Marketing, Public Relations, Collateral Materials and Sales Promotion Direct Marketing-taking the store to the consumer Public Relations-publicity and special events Collateral Materials-accessory items companies produce to integrate and supplement their advertising or PR strategies Sales Promotion-a category of demand influencing instruments and activities that supplement the basic instruments of the marketing mix for short period of time by stimulating channel members or prospective customers to some immediate, overt behavior

Direct Marketing-taking the store to the consumer

Public Relations-publicity and special events

Collateral Materials-accessory items companies produce to integrate and supplement their advertising or PR strategies

Sales Promotion-a category of demand influencing instruments and activities that supplement the basic instruments of the marketing mix for short period of time by stimulating channel members or prospective customers to some immediate, overt behavior

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