The Market Segmentation Process

The Market Segmentation Process WTUC http://www.4cconsulting.com/uploadedImages/Management_consultancy/Intelligence_and_strategy/Segmentation.jpg

Importance of Market Segmentation in Advertising
To find profitable market segments
Scan marketplace and see what various consumer segments need and want and how they might be better satisfied
http://attractionmarketing.com/images/ad-Verizon.jpg

2-Step Strategy
Identifying groups of people (or organizations) with certain shared needs and characteristics within the broad markets for consumer of business products
Aggregating (combining) these groups into larger market segments according to their mutual interest ion the product’s utility.

Applying the Strategy Large market group
Pool them together into one aggregate target market
These people share the same interests in relation to your product’s utility

Target market- which lays the foundation for developing the proper mix of marketing activities-including advertising General Population of consumers http://www.intomartgfk.nl/images/bg_logo.gif

Markets consists of many segments
A company differentiate products and marketing strategy for every segment
Or simply concentrate on one segment

Types of Targets
Marketing activities are aimed at a particular segment of the population
Advertising is aimed at a particular group
Target market Target audience

Types of Markets
Companies use business advertising to reach people who buys good ad services for resale or for use in their own business or for manufacturing other products
Also known as BTB
Most advertising falls under consumer advertising
Ad directed at consumers or people who buy the product for their own or someone else’s personal use
Business Markets Consumer Markets

Over half of all marketing is BTB
Manufactured goods, raw materials, services for law firms, accountants, airlines, and advertising agencies
Need more specialized product knowledge
Advertising professionals must understand how people act and think, and why they buy what they buy
Business Markets Consumer Markets

http://futuresightconsulting.com/assets/images/FSC_Focus_MarketTargetingAndProfiling.jpg

Finding the Right Niche http://www.valicon.net/uploads/whowhatwhy_eng_popravki.gif

http://www.fivetwelvegroup.com/clientzone/uploads/images/FiveTwelve_Group_Segmentation_levels_v2.jpg

Behavioristic Segmentation
User status
Usage rate
Purchase occasion
Benefits sought

User-Status Variables
Sole users- most brand loyal, require least amount of advertising and promotion
Semisole users- typically use Brand A but have an alternate selection if it is not available or if alternate is promoted with a discount
Discount users- semisole users of competing Brand B. They don’t buy Brand A at full price
Aware Nontriers- use competitive products in the category but haven’t taken a liking to Brand A. These people rarely offer potential
Trial/Rejectors- bought Brand A’s advertising but didn’t like the product. Only reformulation of Brand A will bring them back
Reportoire users- perceive two or more brands to have superior attributes and will buy at full price. Primary brand switchers and respond to persuasive advertising based on the fluctuating wants and desires

Usage-Rate (Volume) Variables
Light users
Medium users
Heavy users

http://pewsocialtrends.org/assets/images/94.gif

http://z.hubpages.com/u/517176_f260.jpg

Purchase-Occasion Variable
Buyers are distinguished when they buy or use a product
Air travelers- may fly for business or vacation
Purchase- affected by frequency of need (regular/occasional), a fad (computer games), seasons (water skis, raincoats)
Marketers who discovers common purchase occasions for a group has a potential target segment and can better determine when to run specials and when to promote certain product categories

Benefit-Sought Variable
Benefits
High quality
Low price
Status
Sex appeal
Good taste
Health conscious
Symbolism- what the brand means to them or to their friends or some reference group
Switching occurs in response to different needs

http://ignitepartnership.com/blog/wp-content/uploads/personal%20brand%20pyramid.png

http://tomfishburne.typepad.com/tomfishburne/images/2008/02/10/080211attribute.jpg

What’s the User Benefit here?

High-Quality Benefit

Low Price benefit

Status Benefit

Sex Appeal Benefit

Good Taste Benefit

Health Conscious Benefit

Brand Symbol Benefit

Geographic Segmentation
Region
Country size
City size
Specific locations
Types of stores

http://www.census.gov/econ/census02/img/division.gif

Demographic Segmentation
Sex
Age
Ethnicity
Education
Occupation
Income
And other quantifiable factors

http://www.insidefacebook.com/wp-content/uploads/2009/02/20090201fbdemobar.png

Geodemographics Segmentation
Demographics combined with geographic segmentation
People’s lives are influenced by their environment and ethnicity

https://www.dataexpress.vedaadvantage.com/newdesign/i/homepages/main_banner-landscape.jpg

Psychographic Segmentation
Emotional appeal
Cultural values
Attitudes
Personality
Lifestyle
View people as individuals with feelings and inclinations

http://www.media-studies.ca/articles/images/VALS.jpg Basic principles or values Tangible markers of success or accomplish-ments Desire for experiences or risk

Example: Company that markets high-end motorcycles
A demographic profile might suggest that prospects are males between the ages of 30 and 50
A psychographic profile could extend the analysis by noting that the best prospects are experiences: Men motivated by self-expressive needs who also have sufficient resources to buy an expensive bike

http://www-edc.eng.cam.ac.uk/betterdesign/images/rsz_marketsegintrotop__130.gif

http://www.clickz.com/_imgs/graphics/032608media-attitude.gif

What’s the psychographic element here?

http://www.marketsegmentation.com/images/ServiceBenefits.gif

http://www.consumerpsychologist.com/images/intro/consumer_behavior.png

Group discussion
Hardee’s Thickburger
Big, premium burgers

Hardee’s Ad: Who’s the Target Market?

Hardee’s Thickburger Target Market
Young male demographic
‘ real’ men
Meets consumer taste expectations
Trade on the notion of ‘male identity’
Paris doesn’t have anything to do with the burger
Caused buzz among male demographic
Spicyparis.com’s traffic shot so high that it crashed the server

Another Hardee’s ad
‘ We could’ve shown you some cowboy, sitting around a campfire, eating a Western Bacon Thickburger…but who’d wanna see that?”

Hardee’s pays careful attention to the benefits sought by the target demographic and tailors its offering accordingly
Crafts advertising messages that will grab attention of the young male fast-food eaters

Assignment 1 due Week 5
Describe an ad that seems to be directed toward a specific target market segment. Define it using behavioristic, demographic, psychographic, and geographic variables.
See page 91 to read Hardee’s ad example
Print and submit on 3/16

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The Market Segmentation Process

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