Chapter 8 Segmenting and Targeting Markets Notes: Market segmentation was rare before the 1960’s. Consider Coca-Cola with its one product aimed at the entire soft drink market. Today over a dozen different products are marketed by the company to different market segments. Market segmentation plays a key role in the marketing strategy of organizations, leading to competitive advantage. The benefits are described on this slide. Discussion/Team Activity: Discuss how Coca-Cola’s product lines fit the needs of different market segments. Name different fashion retailers and identify their marketing segmentation strategies.
Note to Instructor This link goes to gurl.com, a Web site for female teenagers and young adults. It is interesting to browse with the students to note what kind of content is of interest to this group. A look at the advertisers with banner ads, sponsorships, or contests on the site shows the importance of targeted locations to these advertisers.
Note to Instructor There are a whole group of products which are targeted to the affluent including hotels like Four Seasons, which is mentioned in the book.Their products offerings are deluxe: Kids in the City package for $520 a night and, among other things, enjoy a visit in their room from the Ice Cream Man, who arrives with all the fixings to make any concoction they desire. The Benjamin Hotel in New York City provides dog beds in a variety of styles and doggie bathrobes, as well as canine room service and DVDs for dogs. At the Ritz-Carlton, Lake Las Vegas in Henderson, Nevada, the Love at Lake Las Vegas weekend package includes two nights in the 2,400 square foot presidential suite, helicopter and gondola rides, a champagne-tasting party on a yacht complete with rose petals strewn about and a string trio, use of a luxury car throughout the stay, in-room couples spa treatment, a $5,000 casino line of credit, a $50,000 shopping spree at Neiman Marcus, 14 dozen roses, and a butler-drawn Cristal champagne bath.
Chapter 8 Segmenting and Targeting Markets Notes: Exhibit 8.2 demonstrates both traditional and contemporary FLC patterns and shows how families’ needs, incomes, etc. differ at each stage. Married couples make up just 50.7% of the U.S. population. Unmarried Americans make up 42% of the workforce and 40% of home buyers. Discussion/Team Activity: Find examples of advertisements that target different stages of the family life cycle.
Note to Instructor Students often get confused with the difference between behavioral and psychographic segmentation. Behavior is more tied into how consumers use the product. A good illustration is greeting cards—ask students how their purchasing would be different when buying a birthday card for their mother versus one for a new boyfriend. In addition, ask them how people might look for different benefits when purchasing a car? Some might look for safety while others will look for the best gas mileage.
Chapter 8 Segmenting and Targeting Markets Notes: An undifferentiated targeting strategy is essentially a mass-market philosophy—viewing the market as one big market and using one marketing mix.
Chapter 8 Segmenting and Targeting Markets Notes: 1. With a concentrated targeting strategy, a firm selects a niche for targeting its efforts.
Chapter 8 Segmenting and Targeting Markets
Note to Instructor In slideshow view, click on movie icon to launch Meredith video snippet. See accompanying DVD for full video segment.
Note to Instructor Advances in communications technology have given rise to a new high-tech version of location-based marketing. By coupling mobile phone services with GPS devices, many marketers are now targeting customers wherever they are with what they want. This might include marketers reaching people near their stores, looking to make a decision. Discussion Question What are the drawbacks of local marketing? It can drive up manufacturing and marketing costs by reducing economies of scale. It can also create logistics problems as companies try to meet the varied requirements of different regional and local markets. Further, a brand’s overall image might be diluted if the product and message vary too much in different localities.
Note to Instructor Mass customization is the process through which firms interact one-to-one with masses of customers to design products and services tailor-made to meet individual needs. Has made relationships with customers important in the new economy. Provides a way to distinguish the company against competitors.
Chapter 4(my) copy
Fundamental Of Marketing MKT243 Chapter 4 Market Segmentation and Targeting MarketDHD2011 MKT243 Fundamental Of Marketing 1
Segmenting and Targeting Market Topic Outline Definition of segmenting Reasons for segmenting Criteria for Successful segmentation Market Targeting Differentiation and PositioningDHD2011 MKT243 Fundamental Of Marketing 2
Market SegmentationMarket segmentation is the process that companies use to divide large heterogeneous markets into small markets that can be reached more efficiently and effectively with products and services that match their unique needs (Kotler and Gary)Market segmentation is the process of dividing a market into meaningful, relatively similar, and identifiable segments or groups (McDaniel, Lamb, Hair)DHD2011 MKT243 Fundamental Of Marketing 3
Market Segmentation People or organizations with People or organizations with Market Market needs or wants and the ability and needs or wants and the ability and willingness to buy willingness to buy A subgroup of people or organizations A subgroup of people or organizations Market Market sharing one or more characteristics that sharing one or more characteristics that Segment Segment cause them to have similar product cause them to have similar product needs. needs. The process of dividing a market into The process of dividing a market into Market Market meaningful, relatively similar, identifiable meaningful, relatively similar, identifiable Segmentation Segmentation segments or groups. segments or groups.DHD2011 MKT243 Fundamental Of Marketing 4
A Market Is... (1) people or organizations with (2) needs or wants, and with (3) the ability and (4) the willingness to buy. A group of people that lacks any one of these characteristics is not a market.DHD2011 MKT243 Fundamental Of Marketing 5
The Importance of MarketSegmentation Markets have a variety of product needs and preferences. Marketers can better define customer needs. Decision makers can define objectives and allocate resources more accurately.DHD2011 MKT243 Fundamental Of Marketing 6
Criteria for Successful Segmentation Substantiality Identifiablyand measurability Accessibility Responsiveness ActionableDHD2011 MKT243 Fundamental Of Marketing 7
Bases for segmenting Consumer MarketsDHD2011 MKT243 Fundamental Of Marketing 8
Market Segmentation Segmenting Consumer Markets Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or citiesDHD2011 MKT243 Fundamental Of Marketing 9
Market Segmentation Segmenting Consumer MarketsDemographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality DHD2011 MKT243 Fundamental Of Marketing 10
Market Segmentation (Demographic Segmentation)Age and life-cycle stage segmentation is the process of offering different products or using different marketing approaches for different age and life-cycle groupsGender segmentation divides the market based on sex (male or female) DHD2011 MKT243 Fundamental Of Marketing 11
Market Segmentation (Demographic Segmentation)Income segmentation divides the market into affluent or low-income consumersEthnic Segmentation divides the market into races or ethnicityFamily Life-Cycle Segmentation divides market based on stages determined by a combination of age, marital status, and the presence or absence of children. DHD2011 MKT243 Fundamental Of Marketing 12
Family Life CycleDHD2011 MKT243 Fundamental Of Marketing 13
Market SegmentationPsychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits The basis for Psychographic segmentation are as follow:1. Personality-Reflects a person’s traits, attitudes and habits. According to national survey by Roper, almost half of Americans believe their cars match their personality.DHD2011 MKT243 Fundamental Of Marketing 14
Cont…2. Motives-Marketers of baby products and life insurance appeal to consumers’ emotional motives-namely, to care for their loved ones3. Lifestyles-Divides people into groups according to the way they spend their time, the importance of the things around them, their beliefs, and socioeconomic characteristics such as income and education.4. Geodemographic-Segmenting potential customers into neighborhood lifestyles categories-It combines geographic and demographic and lifestyles segmentations.DHD2011 MKT243 Fundamental Of Marketing 15
Market Segmentation Segmenting Consumer MarketsBehavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product Occasions Benefits sought User status Usage rate Loyalty statusDHD2011 MKT243 Fundamental Of Marketing 16
Steps in Segmenting a Market 1 2 3 4 5 6 Select a Choose a Design, Market basis or implement Select Profile Selector product bases for and maintain segmentation and analyze targetCategory segmenting appropriate description segments marketFor study the market marketing mixes DHD2011 MKT243 Fundamental Of Marketing 17
Market Targeting Selecting Target Market Segments Target market consists of a set of buyers who share common needs or characteristics that the company decides to serveDHD2011 MKT243 Fundamental Of Marketing 18
Strategies for Selecting Target Markets Undifferentiated Concentrated Multisegment Strategy Strategy StrategyDHD2011 MKT243 Fundamental Of Marketing 19
Undifferentiated TargetingStrategy Undifferentiated A marketing approach that Undifferentiated Targeting Targeting views the market as one big Strategy Strategy market with no individual segments and thus requires a single marketing mix.DHD2011 MKT243 Fundamental Of Marketing 20
Concentrated Targeting Strategy Concentrated A strategy used to select one Concentrated Targeting Strategy segment of a market for Targeting Strategy targeting marketing efforts. Niche One segment of a market.DHD2011 MKT243 Fundamental Of Marketing 21
Multisegment Targeting Strategy Multisegment A strategy that chooses two or Multisegment Targeting Targeting more well-defined market Strategy Strategy segments and develops a distinct marketing mix for each.DHD2011 MKT243 Fundamental Of Marketing 22
Advantages and Disadvantages ofTarget Marketing Strategies Targeting Strategy Advantages Disadvantages Undifferentiated Potential savings on Unimaginative product production/ marketing offerings costs Company more susceptible to competition Concentrated Concentration of Segments too small, or resources changing Can better meet the Large competitors may needs of a narrowly more effectively market defined segment to niche segment Allows some small firms to better compete with large firms Strong positioningDHD2011 MKT243 Fundamental Of Marketing 23
Cont… Targeting Strategy Advantages Disadvantages Multisegment Greater financial Highcosts success Cannibalization Economies of scale in producing/ marketingDHD2011 MKT243 Fundamental Of Marketing 24
Marketing Targeting Target Market Strategies Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations Local marketing Individual marketingDHD2011 MKT243 Fundamental Of Marketing 25
Market Targeting Target Market Strategies Local marketing involves tailoring brands and promotion to the needs and wants of local customer groups Cities Neighborhoods StoresDHD2011 MKT243 Fundamental Of Marketing 26
Market Targeting Target Market StrategiesIndividual marketing involves tailoring products and marketing programs to the needs and preferences of individual customers Also known as: One-to-one marketing Mass customization Markets-of-one marketing DHD2011 MKT243 Fundamental Of Marketing 27
Forces Influencing One-to-One MarketingMore diverse societyMore diverse societyMore demanding, More demanding,time-poor consumers time-poor consumersDeclining brand loyaltyDeclining brand loyaltyEmergence of newEmergence of newmedia alternativesmedia alternativesDemand forDemand formarketing accountabilitymarketing accountabilityDHD2011 MKT243 Fundamental Of Marketing 28
Positioning Def: Developing specific marketing mix to influence potential customer’s over all perception of a brand, product line, or organization in general Product position The way the product is defined by consumers on important attributes-the place the product occupies in consumers’ minds relative to competing products Product differentiation A positioning strategy that some firms use to distinguish their products from those of competitors.DHD2011 MKT243 Fundamental Of Marketing 29
Effective Positioning 1. Assess the positions occupied by competing products 2. Determine the dimensions of these positions 3. Choose an effective market positionDHD2011 MKT243 Fundamental Of Marketing 30
Perceptual Mapping A means of displaying or graphing in two or more dimensions the location of products, brands or groups of products in customers’ mindsDHD2011 MKT243 Fundamental Of Marketing 31
Perceptual MappingDHD2011 MKT243 Fundamental Of Marketing 32
Perceptual MappingDHD2011 MKT243 Fundamental Of Marketing 33
Positioning Bases Product Attributes/benefit Price and quality Use or application Product user Product class Competitor EmotionDHD2011 MKT243 Fundamental Of Marketing 34