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Outline Define MarketingSegmentation Levels of MarketingSegmentation Segmenting ConsumerMarkets
Mass Marketing vs. TargetMarketing Mass Marketing is whenalmost the same productis used for promotion anddistribution for allcustomers Target Marketing is apractice to identify andsegment the market anddevelop products andmarketing mixes for eachsegment or group ofcustomers
Marketing Segmentation MarketingSegmentation is:* A process of dividing themarket into distinctgroups of customersaccording to theirneeds, characteristics,or behaviors* A compromise betweenmass marketing andtarget marketing
Marketing SegmentationMarket Segmentation Market Targeting Market Positioning 1. Identify bases for 3. Develop Measures 5. Develop positioningsegmenting the market of segment or each target segmentattractiveness2. Develop profiles of 4. Select the target 6. Develop marketing mixresulting segments segment(s) for each target segment
Goals of SegmentationThe two main goals that any segmentation methodology should be able toaddress are: 1) At a strategic level, segmentation should be able to help anorganization rapidly evaluate new business opportunitiesGeographical expansion: Should the retail chain expand to north east?Product expansion: Should the electronic manufacturer launch asmartphone? 2) At an operational level segmentation should yield information to helpcraft successful marketing offers for specific prospects.Product: What product features are must haves vs. nice to haves?Price: What is the price point that customers are willing to pay?Communication: How to message to the target customers?Distribution: Where do the target customers live?
Mass Marketing Traditional marketingstrategy that uses nosegmentationstrategies, and uses thesame product,promotion, anddistribution to reach awide audience (wholemarket) Promotes the concept“One Size Fits All”
Problems with Mass Marketing Low production cost->lower prices -> highermargins Nevertheless, it is hardto appeal to all diversegroups, morecompetitors, andproliferation of massmedia has made it hardto further practice “onesize fits all” approach
Segmenting Markets Companies that are segmenting markets realize the diversityof the needs, perceptions, and buyer behavior between thecustomers So that they match the needs of the customer’s moreefficiently, improve and promote products for a distinctsegment of the market A good segmenting approach will eliminate the competitors
Niche Marketing Niche Marketers focuson the subgroups withinthe segments of themarket, seeking to findcustomers with adistinctive set of traitslooking for the samecombination of benefits
Geographic Segmentation Geographic segmentation divides the marketinto different geographical units: nations,states, regions, countries, cities, orneighborhoods
Demographic SegmentationDivides the market based on variables: Age Ethnicity Life-cycle Gender Income
Demographic Segmentation.Lifestyle groups Yuppie Associations Mobile High valued house/flat Good Salary Young branded car Third AgersAssociations 50s Retired early fromprofession. Time to spare Adventure Seekers
Geodemographics Geodemographics studies the relationshipbetween the geographical locations anddemographics
Psychographic Segmentation Divides the customers based on: Social Class Lifestyle PersonalitySAGA segmentation ofUK grandparents
Psychographic SegmentationCase Study. Adidas vs. Converse
Behavioral Segmentation Divides the market into segments based onbuyers’ knowledge, attitude, uses, responsesto the product Occasions Benefits Sought Usage rate Loyalty status Buyer Readiness Stage Attitude towards the product
Market SegmentationNIVEA Sun Case Study NIVEA sun products – sun care Segmentation Geographically: targeted at differentclimates and to users with different skin types Demographic Segmentation: men/women and adultswith children. There is a stark contrast betweenawareness and usage of sun care products betweenmen (who prefer convenience) and women (who enjoymore luxurious sun care products) Usage occasion (when) - e.g. holiday, outdoor sports,gardening, working etc. NIVEA provides a variety ofSPFs for differing needs and occasions Benefit sought - convenience is important to men (sothey choose spray applicators). Parents want toprovide maximum protection for children (high SPFsand coloured products are therefore important)
NIVEA sun segmentationAttitudinal 5 distinct groups for protection andafter sun:
Segmentation using e-mailmetrics Segmentation strategywith the usage of emailadvertising, orpromotion
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