UNDERSTANDING the MARKET ENVIRONMENT: SEGMENTING, TARGETING and POSITIONING
AM_6 Segmenting and Targeting Markets
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Transcript of AM_6 Segmenting and Targeting Markets
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Segmenting andTargeting Markets
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Market Segmentation
Market
MarketSegment
MarketSegmentation
People or organizations withneeds or wants and the ability and
willingness to buy
A subgroup of people ororganizations sharing one or morecharacteristics that cause them to
have similar product needs.
The process of dividing a marketinto meaningful, relatively similar,identifiable segments or groups.
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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 o f people that lacks any one of
these characterist ics isNOTa market.
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The Importance ofMarket Segmentation
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
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Criteria for Segmentation
Substantiality
IdentifiabilityMeasurability
Accessibility
Responsiveness
Segment must be largeenough to warrant a special
marketing mix.
Segments must be identifiableand their size measurable.
Members of targeted segmentsmust be reachable with
marketing mix.
Unless segment responds to amarketing mix differently, noseparate treatment is needed.
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Segmentation Bases
Characteristics of individuals,
groups,
or organizations used
to divide a total market
into segments.
(variables)
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Bases for Segmentation
Usage Rate
Benefits Sought
Psychographics
Demographics
Geography
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Geographic Segmentation
Segmenting markets by
region of the country/world
market size
market density
climate
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Benefits of RegionalSegmentation
New ways to generate sales in sluggishand competitive markets
Scanner/POS data allow assessment ofbest selling brands in region
Regional brands appeal to local
preferences React more quickly to competition
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Bases for Segmentation
Usage Rate
Benefits Sought
Psychographics
Demographics
Geography
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Demographic Segmentation
Segmenting markets
by age, gender, income,
ethnic background,
and family life cycle
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Bases forDemographic Segmentation
Age
Gender
Income
Ethnic background Family Life Cycle
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Family Life Cycle
Age
Marital
Status
Children
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Family Life Cycle
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Bases for Segmentation
Usage Rate
Benefits Sought
Psychographics
Demographics
Geography
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Psychographic Segmentation
Market segmentation on
the basis of personality,motives, lifestyles, and
geodemographics.
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Bases forPsychographic Segmentation
PsychographicSegmentation
Personality
Motives
Lifestyles
Geodemographics
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Lifestyle Segmentation
How time is spent
Importance of things
around them Beliefs
Socioeconomiccharacteristics
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Geodemographic Segmentation
Segmenting potential
customers into neighborhood
lifestyle categories.
Combines geographic,
demographic, and lifestyle
segmentation.
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Bases for Segmentation
Usage Rate
Benefits Sought
Psychographics
Demographics
Geography
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Benefit Segmentation
The process of grouping
customers into market
segments according to
the benefits they seek
from the product.
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Bases for Segmentation
Usage Rate
Benefits Sought
Psychographics
Demographics
Geography
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Usage-Rate Segmentation
Dividing a market by the
amount of product
bought or consumed.
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The 80/20 Principle
A principle holding that
20 percent of all customers
generate 80 percent
of the demand.
Target
customers
20%Share of
customers
Target
customers
80%
Share of
sales
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Business Marketing Segmentation
Four segments of business markets:
Producers / manufacturers Resellers
Governments
Institutions
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Steps in Segmenting a Market
Selecta
marketfor
study
Choosebasesfor
segmen-tation
Selectdescrip-tors
Profileand
analyzesegments
Selecttargetmarkets
Design,imple-ment,
maintainmktging
mix
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Target Market
A group of people or
organizations for which an
organization designs,
implements, and maintains a
marketing mix intended to
meet the needs of that group,
resulting in mutually
satisfying exchanges.
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UndifferentiatedTargeting Strategy
Marketing approach that
views the market as one big
market with no individual
segments and thus requires a
single marketing mix.
U diff ti t d
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UndifferentiatedTargeting Strategy
Advantages: Potential savings on
production and marketingcosts
Disadvantages: Unimaginative product
offerings
Company moresusceptible to competition
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Concentrated Targeting Strategy
A strategy used to select one
segment of a market (a
niche) for targeting marketing
efforts.
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Concentrated Targeting Strategy
Advantages: Concentration of resources Meets narrowly defined
segment
Small firms can compete Strong positioning
Disadvantages: Segments too small, or
changing Large competitors may
market to niche segment
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Cannibalization
Situation that occurs when
sales of a new productcut into sales of a
firms existing products.
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Position
The place a product, brand,
or group of products occupies
in consumers minds relative
to competing offerings.
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Positioning
Developing a specific
marketing mix to influence
potential customers overall
perception of a brand,
product line, or organization
in general.
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Product Differentiation
A positioning strategy that
some firms use to distinguish
their products from those of
competitors.
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Perceptual Mapping
A means of displaying or
graphing, in two or more
dimensions, the location of
products, brands, or groupsof products in customers
minds.
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Perceptual Map and PositioningStrategy for Levi Strauss Products
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Repositioning
Changing consumers
perceptions of a brandin relation to
competing brands.