MKT 340

1. Slide 8-1
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2. Slide 8-2
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LO 8-3
LO 8-2
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 8, YOU SHOULD BE ABLE TO:
LO 8-1
Explain what market segmentation is
and when to use it.
Identify the five steps involved in
segmenting and targeting markets.
Recognize the bases used to segment
consumer and organizational
(business) markets.

3. Slide 8-3
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
LO 8-5
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 8, YOU SHOULD BE ABLE TO:
LO 8-4
Develop a market-product grid to
identify a target market and
recommend resulting marketing
actions.
Explain how marketing managers
position products in the marketplace.

4. Slide 8-4
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ZAPPOS.COM’S STRATEGY:
SEGMENTS + SERVICE = “WOW”
 A Clear Market
Segmentation Strategy
 Delivering WOW
Customer Service

5. Slide 8-5
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 Product Differentiation
 Market Segmentation
 Market Segments
 Segmentation: Linking Needs to Actions
 The Zappos Segmentation Strategy
WHY SEGMENT MARKETS?
WHAT MARKET SEGMENTATION MEANS
LO 8-1
Zappos TV

6. Slide 8-6
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FIGURE 8-1 Market segmentation links market
needs to an organization’s marketing program
through marketing mix actions

7. Slide 8-7
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FIGURE 8-2 A market-product grid shows the
kind of sleeper that is targeted for each of the
bed pillows with a different firmness
 Using Market-Product
Grids

8. Slide 8-8
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WHY SEGMENT MARKETS?
WHEN AND HOW TO SEGMENT MARKETS
LO 8-1
 One-Size-Fits-All Mass Markets
No Longer Exist
 One Product and
Multiple Market Segments
 Multiple Products and
Multiple Market Segments

9. Slide 8-9
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WHY SEGMENT MARKETS?
WHEN AND HOW TO SEGMENT MARKETS
LO 8-1
 Segments of One
• Mass Customization
• Build-to-Order (BTO)

10. Slide 8-10
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WHY SEGMENT MARKETS?
WHEN AND HOW TO SEGMENT MARKETS
LO 8-1
 The Segmentation Tradeoff:
Synergies vs. Cannibalization
• “Tiffany/Walmart”
Strategies
• Organizational Synergy
• Cannibalization

11. Slide 8-11
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FIGURE 8-3 The five key steps in segmenting
and targeting markets that link market needs to
a firm’s marketing program

12. Slide 8-12
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
SEGMENTING AND TARGETING MARKETS
STEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTS
LO 8-2
 Criteria to Use in
Forming the Segments
• Similarity of Needs of
Potential Buyers within a Segment
• Potential for Increased Profit
• Similarity of Needs of
Potential Buyers within a Segment

13. Slide 8-13
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SEGMENTING AND TARGETING MARKETS
STEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTS
LO 8-2
 Criteria to Use in
Forming the Segments
• Potential of a Marketing Action
to Reach a Segment
• Difference of Needs of
Buyers Among Segments

14. Slide 8-14
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
SEGMENTING AND TARGETING MARKETS
STEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTS
LO 8-3
 Ways to Segment Consumer Markets
• Geographic Segmentation (88%)
• Demographic Segmentation (53%)

15. Slide 8-15
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
SEGMENTING AND TARGETING MARKETS
STEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTS
LO 8-3
 Ways to Segment Consumer Markets
• Psychographic Segmentation (43%)
• Behavioral Segmentation (65%)
 Product Features
 Usage Rate (or
Frequency Marketing)
 80/20 Rule

16. Slide 8-16
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FIGURE 8-A Segmentation bases, variables,
and breakdowns for U.S. consumer markets

17. Slide 8-17
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MARKETING MATTERS
To Which “Flock” Do You Belong?
LO 8-3
Nielsen Claritas
PRIZM
Example:
Nielsen Claritas PRIZM
“You are where you live.”

18. Slide 8-18
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Source: Experian Marketing Services Simmons Winter 2013 Full Year Adult Survey 12-Month OneViewSM
Crosstabulation Report: Based on Visits within the Past 30 Days
FIGURE 8-4 Comparison of various kinds of
users and nonusers for Wendy’s, Burger King,
and McDonald’s fast-food restaurants

19. Slide 8-19
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
SEGMENTING AND TARGETING MARKETS
STEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTS
LO 8-3
 Variables to Use in Forming Segments
• Students
• Non-students
 Dorms, Sororities,
& Fraternities
 Faculty & Staff
 Apartments
 Day Commuters
 Night Commuters
 Residents in Area
 Workers in Area

20. Slide 8-20
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SEGMENTING AND TARGETING MARKETS
STEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTS
LO 8-3
 Ways to Segment
Organizational Markets
• Geographic Segmentation
• Demographic Segmentation
• Behavioral Segmentation

21. Slide 8-21
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
FIGURE 8-C Segmentation bases, variables,
and breakdowns for U.S. organizational
markets

22. Slide 8-22
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
SEGMENTING AND TARGETING MARKETS
STEP 2: GROUP PRODUCTS INTO CATEGORIES
LO 8-3
 Individual Wendy’s Products
• Breakfast
 Groupings of Wendy’s Products: Meals
• Lunch
• Between
Meal Snack
• Dinner
• After
Dinner
Snack
Wendy’s Ad

23. Slide 8-23
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
FIGURE 8-5 Wendy’s new products and
innovations target specific market segments
based on a customer’s gender, needs, or
university affiliation

24. Slide 8-24
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SEGMENTING AND TARGETING MARKETS
STEP 3: DEVELOP A MARKET-PRODUCT GRID AND
ESTIMATE THE SIZE OF MARKETS
LO 8-4
 Forming a Market-Product Grid
 Estimating Market Sizes: FIGURE 8-A

25. Slide 8-25
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FIGURE 8-6 Selecting a target market for your
Wendy’s fast-food restaurant next to an urban
university (target market is shaded)

26. Slide 8-26
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SEGMENTING AND TARGETING MARKETS
STEP 4: SELECT TARGET MARKETS
LO 8-4
 Criteria to Use in Selecting
Target Markets
 Those That Divide a Market into Segments
• Two Types of Criteria
 Those That Actually Pick the Target Segments

27. Slide 8-27
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
SEGMENTING AND TARGETING MARKETS
STEP 4: SELECT TARGET MARKETS
LO 8-4
 Criteria to Use in Selecting
Target Markets
• Market Size
• Expected Growth
• Competitive Position
• Cost of Reaching the Segment
• Organizational Compatibility

28. Slide 8-28
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
SEGMENTING AND TARGETING MARKETS
STEP 4: SELECT TARGET MARKETS
LO 8-4
 Choose the Products & Segments
• No Breakfast
• Four Student Segments Only
(not the three nonstudent segments)

29. Slide 8-29
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
SEGMENTING AND TARGETING MARKETS
STEP 5: TAKE MARKETING ACTIONS
LO 8-4
 Wendy’s Segmentation Strategy Now
• Day Commuters
• Between-Meal Snacks
• Dinners to Night Commuters
 Future Strategies for Wendy’s
 Keeping an Eye on Competition

30. Slide 8-30
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
FIGURE 8-7 Advertising actions to market
various meals to a range of possible market
segments of students

31. Slide 8-31
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
SEGMENTING AND TARGETING MARKETS
STEP 5: TAKE MARKETING ACTIONS
LO 8-4
 Apple’s Ever-Changing Segmentation Strategy
• Marketing Synergies
 Market-Product Synergies: A Balancing Act
• Product Synergies
Apple’s 1984
Super Bowl Ad

32. Slide 8-32
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MARKETING MATTERS
Apple’s Segmentation Strategy
LO 8-4
Apple’s
Web site

33. Slide 8-33
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
POSITIONING THE PRODUCTLO 8-5
 Product Positioning
• Head-to-Head Positioning
 Product Repositioning
 Two Approaches to Product Positioning
• Differentiation Positioning
 Writing a Positioning Statement

34. Slide 8-34
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
POSITIONING THE PRODUCTLO 8-5
• Identify Important Attributes for a
Product or Brand Class
 Product Positioning w/ Perceptual Maps
• Customers’ Ratings of Competing
Products or Brands on These Attributes
• Customer’s Ratings of the Company’s
Products or Brands on These Attributes
• Reposition the Company’s Products or
Brands in the Minds of Consumers

35. Slide 8-35
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
POSITIONING THE PRODUCTLO 8-5
 Perceptual Map
 A Perceptual Map to Reposition
Chocolate Milk for Adults
• Identify Important Attributes for Adult Drinks
• Discover How Customers See Chocolate Milk
• Reposition Chocolate Milk to Make It More
Appealing to Adults
• Discover How Adults See Competing Drinks

36. Slide 8-36
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FIGURE 8-B A perceptual map of the location
of beverages in the minds of American adults

37. Slide 8-37
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FIGURE 8-8 The strategy American dairies are
using to reposition chocolate milk to reach
adults

38. Slide 8-38
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PRINCE SPORTS, INC.:
TENNIS RACQUETS FOR EVERY SEGMENT
VIDEO CASE 8
Prince
Video Case

39. Slide 8-39
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FIGURE 1 Prince targets racquets at specific
market segments

40. Slide 8-40
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VIDEO CASE 8
Prince Sports
1. In the 21st century, what trends
in the environmental forces (social,
economic, technological,
competitive, and regulatory)
(a) work for and (b) work against
success for Prince Sports in the
tennis industry?

41. Slide 8-41
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VIDEO CASE 8
Prince Sports
2. Because sales of Prince Sports in
tennis-related products depends
heavily on growth of the tennis
industry, what marketing activities
might it use in the United States to
promote tennis playing?

42. Slide 8-42
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
VIDEO CASE 8
Prince Sports
3. What promotional activities might
Prince use to reach (a) recreational
players and (b) junior players?

43. Slide 8-43
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
VIDEO CASE 8
Prince Sports
4. What might Prince do to gain
distribution and sales in (a) mass
merchandisers like Target and
Walmart and (b) specialty tennis
shops?

44. Slide 8-44
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
VIDEO CASE 8
Prince Sports
5. In reaching global markets outside the
U.S., (a) what are some criteria that
Prince should use to select countries in
which to market aggressively, (b) what
three or four countries meet these
criteria best, and (c) what are some
marketing actions Prince might use to
reach these markets?

45. Slide 8-45
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HONEY NUT CHEERIOS®
MILK ‘N CEREAL BAR:
IDENTIFYING PRODUCT
GROUPS
IN-CLASS ACTIVITY 8-1

46. Slide 8-46
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ICA 8-1
Honey Nut Cheerios® Milk ‘N Cereal Bar
Example:
Identify Product Groups for
Honey Nut Cheerios®
Milk ‘N Cereal Bar

47. Slide 8-47
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3M POST-IT® FLAG +
HIGHLIGHTER: PRODUCT
POSITIONING FOR
CONSUMERS AND RETAILERS
IN-CLASS ACTIVITY 8-2

48. Slide 8-48
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
ICA 8-2
3M Post-it® Flag Highlighter Invention
3M Highlighters
=
3M product that
will combine
Post-it® Notes or
Post-it® Flags and
Highlighters
3M Post-it® Notes
or
Post-it® Flags
Felt-tip
Markers+

49. Slide 8-49
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ICA 8-2
3M Post-it® Flag + Highlighter (2nd Generation)
Highlighter
Video

50. Slide 8-50
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

51. Slide 8-51
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

52. Slide 8-52
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Market Segmentation
Market segmentation involves
aggregating prospective buyers
into groups, or segments, that
(1) have common needs and
(2) will respond similarly to a
marketing action.

53. Slide 8-53
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Product Differentiation
Product differentiation is a
marketing strategy that involves
a firm using different marketing
mix actions to help consumers
perceive the product as being
different and better than
competing products.

54. Slide 8-54
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Market-Product Grid
A market-product grid is a
framework to relate the market
segments of potential buyers
to products offered or potential
marketing actions.

55. Slide 8-55
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Usage Rate
Usage rate is the quantity
consumed or patronage (store
visits) during a specific period.
Also called frequency marketing.

56. Slide 8-56
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80/20 Rule
The 80/20 rule is a concept
that suggests 80 percent of a
firm’s sales are obtained from
20 percent of its customers.

57. Slide 8-57
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Product Positioning
Product positioning is the
place a product occupies in
consumers’ minds based on
important attributes relative to
competitive products.

58. Slide 8-58
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Product Repositioning
Product repositioning involves
changing the place a product
occupies in a consumer’s mind
relative to competitive products.

59. Slide 8-59
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Perceptual Map
A perceptual map is a means of
displaying in two dimensions the
location of products or brands in the
minds of consumers to enable a
manager to see how they perceive
competing products or brands, as well
as the firm’s own product or brand.