FIGURE 9-1FIGURE 9-1 Market segmentation—linking market needs to an organization’s marketing program

WHY SEGMENT MARKETS?

• What Market Segmentation Means

How Reebok’s Segmentation Strategy Developed

Using Market-Product Grids

FIGURE 9-2FIGURE 9-2 Market-product grid showing how different Reebok shoes reach segments of customers with different needs

FIGURE 9-3FIGURE 9-3 The five key steps in segmenting and targeting markets link market needs of customers to the organization’s marketing program

STEPS IN SEGMENTING AND TARGETING MARKETS

• Step 1: Group Potential Buyers into Segments

• Potential for Increased Profit

Criteria to Use in Forming the Segments

• Similarity of Needs of Buyers within a Segment

• Simplicity and Cost of Assigning Buyers to Segments

• Difference of Needs of Buyers Among Segments

• Potential of a Marketing Action to Reach a Segment

STEPS IN SEGMENTING AND TARGETING MARKETS

• Step 1: Group Potential Buyers into Segments

Ways to Segment Consumer Markets

• Customer Characteristics

Geographic: Region

Demographic: Household

Psychographic: Lifestyle

STEPS IN SEGMENTING AND TARGETING MARKETS

• Step 1: Group Potential Buyers into Segments

Ways to Segment Consumer Markets

• Buying Situations

• Frequency Marketing

• 80/20 Rule

Benefits Sought: Product Features

Usage/Patronage: Usage Rate

FIGURE 9-B FIGURE 9-B Segmentation variables and breakdowns for U.S. consumer markets

FIGURE 9-C FIGURE 9-C Patronage of fast-food restaurants by adults 18 years and older: Simmons Market Research Bureau NCS/NHCS Spring 2004 Adult Full-Year Choices System Crosstabulation Report

STEPS IN SEGMENTING AND TARGETING MARKETS

• Step 1: Group Potential Buyers into Segments

Variables to use in Forming Segments

• Students in Dorms

• Students in Apartments

• Day Commuters

• Night Commuters

• Faculty/Staff

• People Living in Area

• People Working in Area

STEPS IN SEGMENTING AND TARGETING MARKETS

• Step 2: Group Products to be Soldinto Categories

• Step 3: Develop a Market-Product Grid and Estimate Size of Markets

FIGURE 9-5FIGURE 9-5 Selecting a target market for your Wendy’s fast-food restaurant next to an urban university (target market is shaded)

STEPS IN SEGMENTING AND TARGETING MARKETS

• Step 4: Select Target Markets

Criteria to Use in Picking the Target Segments

• Market Size

• Expected Growth

• Cost of Reaching Segment

• Compatibility with theOrganization’s Objectivesand Resources• Competitive Position

Choose the Segments

STEPS IN SEGMENTING AND TARGETING MARKETS

Your Wendy’s Segmentation Strategy

• Day Commuters

• Between-Meal Snacks

• Dinner to Night Students

• Step 5: Take Marketing Actions to Reach Target Markets

Wendy’s How can Wendy’s target different market

segments with different advertising programs?

FIGURE 9-6 FIGURE 9-6 Advertising actions to reach specific student segments