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Segmentation target

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Segmentation target Segmentation target Presentation Transcript

  • Segmentation and Targeting
  • What Is Market Segmentation?
    • Market segmentation is the subdividing of a market into distinct subsets, where any subset may conceivably be selected as a marketing target to be reached with a distinct marketing mix
  • Segmentation Dilemma MASS MARKETING Economies of Scale CUSTOMIZATION Everyone Wants Something Different View slide
  • Segmentation Criteria
    • I. Customer Characteristics
    • II. Benefits Sought
    • III. Customer Behaviors
    View slide
  • Customer Characteristics DEMOGRAPHICS
    • Consumer Markets:
      • Gender
      • Age
      • Income
      • Dual income family
    • Industrial Markets:
      • SIC code
      • Size of company
  • Customer Characteristics PSYCHOGRAPHICS
    • Consumer Markets:
      • Environmentally-conscious
      • Value and lifestyles
        • VALS (1978); VALS 2 (1989)
        • Distinct patterns based on attitudes and values
    • Industrial Markets:
      • Corporate culture
      • Purchasing orientation
    • Struggler
    Customer Characteristics VALS CLASSIFICATION Principle Status Action Abundant Resources Minimal Resources Fulfilled Achiever Experiencer Believer Striver Maker Actualizer Fulfilled Achiever Experiencer Believer Striver Maker Struggler http://www.future.sri.com/vals/vals2desc.shtml
  • Customer Characteristics GEOGRAPHY
    • Regional Segmentation
    • Zip Clustering
      • Distinct marketing strategies created for similar types of neighborhoods stretched across the nation
      • Examples include PRIZM, Market Metrics
  • Benefit Segmentation WHAT BENEFIT DO YOU WANT?
    • Rationale - The benefits people are seeking in consuming a given product are the true reasons for the existence of segments
    • Example - Toothpaste
      • Cavity prevention (e.g., Crest)
      • Fresh breath (e.g., Aquafresh)
      • White teeth (e.g., Rembrandt)
  • Behavior Segmentation USAGE BEHAVIORS
    • Volume of usage
      • Heavy users, moderate users, light users and nonusers
      • 80/20 rule
    • Brand usage
      • Increase usage among users
      • Get users of competing brand to switch
      • Get nonusers to start
    • Usage occasion
  • What Is “Targeting” a Market Segment?
    • “ You can’t be all things to all people”
    • Therefore, companies typically focus on one or more segments and orient their marketing activities to those (potential) customers
  • Which Are the “Good” Segments to Target?
    • The most attractive market segments are:
    • Large
    • Growing
    • and have:
    • High purchase volume
    • High margins
    • High customer value
  • Which Are the “Good” Segments to Target?
    • However, the most attractive segments are frequently already well-served and so are highly competitive
    • … so you must also consider:
    • Number and strength of competitors
    • Ease of entry into the segment
    • Company’s current positioning
  • Targeting Dilemma - Segment Attractiveness SEGMENT VALUE More Opportunity COMPETITION More Companies Compete for Valuable Segments
  • Which Are the “Good” Segments to Target?
    • Additional considerations for targeting:
    • Customers are addressable - you can reach them
    • The company is capable of building a marketing program to target them
  • Targeting
    • Examples of successful targeting:
      • Wal-Mart - Value-conscious shoppers that do not want to worry about short-term sales
      • Lexus - People with high disposable income who value reliability and service, as well as prestige and luxury
      • Cray - Price insensitive computer users that require maximum computing power
      • Dupont - Less price-sensitive innovators in the use of plastics (skim pricing)
  • Porter’s Market Forces Model
  • Porter’s Market Forces Model
    • An important tool to help us understand the character of competition in a market is Michael Porter’s market forces model
    • It assists in evaluating the attractiveness of a market for potential entry
  • Porter’s Market Forces Model
    • The character of competition in markets varies widely:
    “ Cooperative” Competition Intense Rivalry Character of Competition in a Market
  • Porter’s Market Forces Model
    • What determines the attractiveness, or potential long-term profitability, of a market?
    Buyers (Buyer Power) Substitutes (Threat of Substitutes) Suppliers (Supplier Power) Potential Entrants (Threat of Mobility) Industry Competition (Segment Rivalry) Michael E. Porter
  • Porter’s Market Forces Model
    • How does the model predict the intensity of competitive rivalry?