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Transcript of 3 - Sat May 23 F Advanced)
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Steps in Market Segmentation, Targeting,
and Positioning
1. Identifysegmentationvariables andsegment themarket
2. Developprofiles ofresulting
segments
MarketSegmentation
3. Evaluate
attractivenessof eachsegment
4. Select thetargetsegment(s)
MarketTargeting
5. Identify
possiblepositioningconcepts foreach targetsegment
6. Select,develop, andcommunicatethe chosenpositioning
concept
MarketPositioning
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Market Segmentation
The process of grouping customers into relatively
homogeneous sets such that customers within a
segment are similar to one another in the way they
respond to marketing effort directed at them.
A market segment is a specific group of customers
with similar needs, purchasing behaviors, andidentifying characteristics.
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Market Segmentation
Market segmentation offers potential for greater profitability through
increased efficiency and customer satisfaction.--Best (1982)
All markets are heterogeneous and thus, a nonsegmented strategy isinevitably suboptimal.
--Wind and Robertson (1983)
The most difficult aspect of any segmentation approach is the translation
of the results into a strategy.
--Wind (1978)
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Toyotas Adjacent Segmentation Strategy
PriceLev
el
Perceived Quality
Tercel
Paseo
Previa
Camry
Corrolla
AvalonSupra
Lexus
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Benefits of Market Segmentation
3. Identifies opportunities for new product development.
1. Helps in the design of marketing programs that are most effective
for reaching homogeneous groups of customers.
2. Improves the strategic allocation of marketing resources.
Methodologies:
Automatic Interaction Detector (AID) Chi-Squared Automatic Interaction Detector (CHAID)
Regression and Discriminant Analysis
Hierarchical clustering (group similar items)
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Bases for Segmenting Consumer Markets
Geographic Region, City or Metro Size, Density, Climate
Demographic
Age, Gender, Family Size and Life Cycle, Race, Occupation, Income
Psychographic Lifestyle or Personality
Behavioral Benefits, Usage Situations
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Geographic Segmentation
Variable Typical Breakdown
Region Pacific, Mountain, West North Central, West South Central,
East North Central, East South Central, South Atlantic,
Middle Atlantic, New England
City or Metro Under 5,000; 5,000-20,000; 20,001-50,000;
Size 50,001-100,000; 100,001-250,000; 250,001-500,000;
500,001-1,000,000;1,000,001-4,000,000
over 4,000,000
Density Urban, suburban, rural
Climate Northern, southern
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Demographic Segmentation
Variable Typical BreakdownAge Under 6, 6-11, 12-19, 20-34, 35-49, 50-64, 65+
Gender Male, female
Family size 1-2, 3-4, 5+
Family life Young, single; young, married, no children; young, married, youngest child under six;
cycle young, married, oldest child over six; older, married, with children;
older, married, no children under 18; older, single; other
Income Under $10,000; $10,001-$15,000; $15,001-$20,000; $20,001-$30,000;
$30,001-$50,000; $50,001-$100,000; over $100,000
Occupation Professional and technical; managers, officials, and proprietors; clerical, sales;
craftspeople; farmers; laborers; retired; students; housewives; unemployed
Education Grade school or less; some high school; high school; some college;
college graduate; graduate degree
Religion Catholic, Protestant, Jewish, Muslim, Hindu, other
Race White, black, Asian, Hispanic
Nationality American, British, French, German, Italian, Japanese
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Psychographic Segmentation
Variable Typical BreakdownLifestyle Activities, interests, opinions
Personality Compulsive, gregarious, authoritarian,ambitious
Values Sense of belonging, excitement,
warm relationships with others,
self-fulfillment, security,being well respected,
fun and enjoyment of life,
self-respect, sense of accomplishment
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Behavioral Segmentation
Variable Typical Breakdown
Usage situation Regular occasion, special occasion
Benefits Quality, service, economy, speed
User status Nonuser, ex-user, potential user,
first-time user, regular user
Usage rate Light user, medium user, heavy user
Loyalty status None, medium, strong, absolute
Readiness stage Unaware, aware, informed, interested,
desirous, intending to buy
Attitude toward Enthusiastic, positive, indifferent,
product negative, hostile
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Strategic Approach to Segmentation
and Targeting
The usage pattern should provide the
starting point for marketing segmentation.
Other factors (demographics, benefits,lifestyles etc.) may be used to make the
usage-based approach actionable and to
enrich the positioning.
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Convey the Benefits to The Swing Group
Those who are
Indifferent
Those Who
Love US
Swing
GroupFuture
BarriersUnderstand
Benefits
Those Who
Hate US
The Usage-based Approach
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Brand and Category Development
MaintainPoint of Entry
Category Build
MarketPenetration
?
CDI
BDI
Low
LowHigh
High
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Major Segmentation Variables for Business Markets
Demographic
Industry
Company size Location
Operating Variables
Technology
User/nonuser status
Customer capabilities
Purchasing Approaches
Purchasing-function organization
Power structure
Nature of existing relationship
General purchasing policies
Purchasing criteria
Situational Factors
Urgency
Specific application
Size of order
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Market Targeting
The process of evaluating the various segments and deciding how many
and which segments to serve.
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Segment Attractiveness
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Segment Profitability
Segment Segment
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Person/Situation Segmentation
Step 1: Use observational studies, focus group interviews, and secondary data to discover whether
different usage situations exist and whether they are determinant, in the sense that they appear toaffect the importance of various product characteristics.
Step 2: Identify needs, benefits and perceptions by usage situation as well as by individual difference
characteristics.
Step 3: Construct a person/situation segmentation matrix. The rows are the major usage situations and
the columns are the groups of users identified by a singlecharacteristic or combination of characteristics.
Step 5: Rank the cells in the matrix in terms of potential sales volume.
Step 4: Profile each nonempty cell. State the major benefits sought, important product attributes, and unique market
behavior for each nonempty cell of the matrix. (Some types of people will never consume the product in certain situations.)
Step 6: Position your competitors offerings within the matrix. The person/situation segments they
currently serve can be determined by the product feature they promote and other marketing strategies.
Step 7: Position your offering within the matrix on the same criteria.
Step 8: Assess how well your current offering and marketing strategy meet the needs of the segment
compared to the competitions offering.
Step 9: Identify market opportunities based on segment size, needs, and competitive advantage.
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Usage
Situation
Person
Benefits sought
1. Profile segments
Person by Situation Segmentation
3
Competitor B
2
Competitor C
1
Company
2. Rank segments
Competitor A
3. Identify competitors
Company
4. Identify companysposition Salient attributesBehaviors
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S
ituation
Person
Person by Situation Segmentation:Family Dining Segments
Special trip,Eat at restaurant
Female
$25,000 or less
Cabin FeverReduce loneliness
Less bored blue
Get out of the house
Female, 22-44
Married with kids
Married with kids,
$35,000
Family Meal Reward everyone
Easy to get
Food kids like
Married with kids,
$25,000+
Kids TreatMake kids happy
Kids wont
embarrass me
Good Price-Value Save money
Stay home, dont cook
Discount prices
Eat at restaurant,
3+ people,
Under $4/person
Family dinner,Eat at home,
Under $5/person
Family dinner,
Eat at home,
$3/person
Source: Pizza Hut
Moms Night OffReward, rejuvenate
An extravagance
On the Way HomeQuick and easy
Convenient
Kids feel special
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S
ituation
Person
Person by Situation Segmentation:Family Dining Segments
Special trip,Eat at restaurant
Female
$25,000 or less
Cabin FeverReduce loneliness
Less bored blue
Get out of the house
Female, 22-44
Married with kids
Married with kids,
$35,000
Family Meal Reward everyone
Easy to get
Food kids like
Married with kids,
$25,000+
Kids TreatMake kids happy
Kids wont
embarrass me
Good Price-Value Save money
Stay home, dont cook
Discount prices
Eat at restaurant,
3+ people,
Under $4/person
Family dinner,Eat at home,
Under $5/person
Family dinner,
Eat at home,
$3/person
S Pi H