Post on 14-May-2015
DHD2011 MKT243 Fundamental Of Marketing 1
Fundamental Of Marketing
MKT243
Chapter 4
Market Segmentation and Targeting Market
DHD2011 MKT243 Fundamental Of Marketing 2
Segmenting and Targeting Market
Definition of segmenting Reasons for segmenting Criteria for Successful segmentation Market Targeting Differentiation and Positioning
Topic Outline
DHD2011 MKT243 Fundamental Of Marketing 3
Market 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)
Market Segmentation
DHD2011 MKT243 Fundamental Of Marketing 4
Market Segmentation
MarketMarket
MarketSegmentMarket
Segment
MarketSegmentation
MarketSegmentation
People or organizations with needs or wants and the ability and
willingness to buy
People or organizations with needs or wants and the ability and
willingness to buy
A subgroup of people or organizations sharing one or more characteristics that
cause them to have similar product needs.
A subgroup of people or organizations sharing one or more characteristics that
cause them to have similar product needs.
The process of dividing a market into meaningful, relatively similar, identifiable
segments or groups.
The process of dividing a market into meaningful, relatively similar, identifiable
segments or groups.
DHD2011 MKT243 Fundamental Of Marketing 5
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.
The Importance of Market Segmentation
6
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
DHD2011 MKT243 Fundamental Of Marketing 7
Criteria for Successful Segmentation
Substantiality Identifiably and measurability Accessibility Responsiveness Actionable
DHD2011 MKT243 Fundamental Of Marketing 8
Bases for segmenting Consumer Markets
DHD2011 MKT243 Fundamental Of Marketing 9
Market Segmentation
Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities
Segmenting Consumer Markets
DHD2011 MKT243 Fundamental Of Marketing 10
Market Segmentation
Demographic 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
Segmenting Consumer Markets
DHD2011 MKT243 Fundamental Of Marketing 11
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 groups
Gender segmentation divides the market based on sex (male or female)
DHD2011 MKT243 Fundamental Of Marketing 12
Market Segmentation
Income segmentation divides the market into affluent or low-income consumers
Ethnic Segmentation divides the market into races or ethnicity
Family Life-Cycle Segmentation divides market based on stages determined by a combination of age, marital status, and the presence or absence of children.
(Demographic Segmentation)
Family Life Cycle
13DHD2011 MKT243 Fundamental Of Marketing
DHD2011 MKT243 Fundamental Of Marketing 14
Market Segmentation
Psychographic 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 15
Cont…2. Motives
-Marketers of baby products and life insurance appeal to consumers’ emotional motives-namely, to care for their loved ones
3. 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 16
Market Segmentation
Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product
Occasions Benefits sought User status Usage rate Loyalty status
Segmenting Consumer Markets
DHD2011 MKT243 Fundamental Of Marketing 17
Steps in Segmenting a Market
1 2 3 4 5 6
Select a Market
or productCategoryFor study
Choose abasis or bases for
segmentingthe market
Select segmentation
description
Profile and analyze
segments
Select target market
Design, implement
and maintain appropriate marketing
mixes
DHD2011 MKT243 Fundamental Of Marketing 18
Market Targeting
Target market consists of a set of buyers who share common needs or characteristics that the company decides to serve
Selecting Target Market Segments
DHD2011 MKT243 Fundamental Of Marketing 19
Strategies for Selecting Target Markets
ConcentratedStrategy
UndifferentiatedStrategy
MultisegmentStrategy
Undifferentiated Targeting Strategy
20
UndifferentiatedTargetingStrategy
UndifferentiatedTargetingStrategy
A marketing approach that
views the market as one big
market with no individual
segments and thus
requires a single
marketing mix.
DHD2011 MKT243 Fundamental Of Marketing
Concentrated Targeting Strategy
21
ConcentratedTargeting Strategy
ConcentratedTargeting Strategy
A strategy used to select one
segment of a market for
targeting marketing efforts.
Niche
One segment of a
market.
DHD2011 MKT243 Fundamental Of Marketing
Multisegment Targeting Strategy
22
MultisegmentTargetingStrategy
MultisegmentTargetingStrategy
A strategy that chooses two or
more well-defined market
segments and develops a
distinct marketing
mix for each.
DHD2011 MKT243 Fundamental Of Marketing
DHD2011 MKT243 Fundamental Of Marketing 23
Advantages and Disadvantages of Target Marketing Strategies
Targeting Strategy Advantages Disadvantages
Undifferentiated Potential savings on production/ marketing costsCompany more susceptible to competition
Unimaginative product offerings
Concentrated Concentration of resourcesCan better meet the needs of a narrowly defined segmentAllows some small firms to better compete with large firmsStrong positioning
Segments too small, or changingLarge competitors may more effectively market to niche segment
DHD2011 MKT243 Fundamental Of Marketing 24
Cont…Targeting Strategy Advantages Disadvantages
Multisegment Greater financial successEconomies of scale in producing/ marketing
High costsCannibalization
DHD2011 MKT243 Fundamental Of Marketing 25
Marketing Targeting
Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations
Local marketing Individual marketing
Target Market Strategies
DHD2011 MKT243 Fundamental Of Marketing 26
Market Targeting
Local marketing involves tailoring brands and promotion to the needs and wants of local customer groups
Cities Neighborhoods Stores
Target Market Strategies
DHD2011 MKT243 Fundamental Of Marketing 27
Market Targeting
Individual 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
Target Market Strategies
DHD2011 MKT243 Fundamental Of Marketing 28
Forces Influencing One-to-One Marketing
Demand for marketing accountabilityDemand for marketing accountability
Emergence of new media alternativesEmergence of new media alternatives
Declining brand loyaltyDeclining brand loyalty
More demanding, time-poor consumersMore demanding, time-poor consumers
More diverse societyMore diverse society
DHD2011 MKT243 Fundamental Of Marketing 29
Positioning Def: Developing specific marketing mix to influence
potential customer’s over all perception of a brand, product line, or organization in general
Product positionThe way the product is defined by consumers on important attributes-the place the product occupies in consumers’ minds relative to competing products
Product differentiationA positioning strategy that some firms use to distinguish their products from those of competitors.
DHD2011 MKT243 Fundamental Of Marketing 30
Effective Positioning
1. Assess the positions occupied by competing products
2. Determine the dimensions of these positions
3. Choose an effective market position
DHD2011 MKT243 Fundamental Of Marketing 31
Perceptual Mapping A means of displaying or graphing in two or
more dimensions the location of products, brands or groups of products in customers’ minds
DHD2011 MKT243 Fundamental Of Marketing 32
Perceptual Mapping
DHD2011 MKT243 Fundamental Of Marketing 33
Perceptual Mapping
DHD2011 MKT243 Fundamental Of Marketing 34
Positioning Bases
Product Attributes/benefit Price and quality Use or application Product user Product class Competitor Emotion