Market Segmentation 5.3.12

8/2/2019 Market Segmentation 5.3.12

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Market Segmentation


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THE MARKETING MIX

The FOUR FACTORS OF MARKETING are:

ProductPrice

Place

Promotion

CONTROLLABLE PARTS of the marketing process involve:Designing a want-satisfying PRODUCT

Setting a PRICE for the product

Placing the product in a PLACE where people will buy it

PROMOTING the product

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Elements in the Marketing Mix

ProductProduct

MarketingMarketingProgramProgram

PlacePlace

PromotionPromotion

Buy atBuy atComputersComputers

R UsR Us

PricePrice


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DESIGNING A PRODUCTTO MEETNEEDS

First, develop a product to fill the identified need.

A PRODUCTis any physical good, service, or idea that satisfies a want or need

plus anything that would enhance the product in the eye of

consumers, such as the brand.

The next step is CONCEPT TESTING

developing an accurate description of your product and asking

people whether or not the concept (the idea of the cereal)

appeals to them.

TEST MARKETING

is the process of testing products among potential users.Next, decide which brand names should be offered to attract

customers.

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A BRAND NAME

is a word, letter, or group of words or letters that differentiates one

sellers goods and services from th

ose of competitors.

These steps create

THE FIRST PPRODUCT.

SETTING AN APPROPRIATE PRICE (the second P)The price depends on a number of factors, such as the price of

competing restaurants.

You also have to consider the costs of pro-ducing, distributing, and

promoting the product.


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GETTING THE PRODUCT TO THE RIGHT PLACE

(the third P)

Once the product is manufactured, you have to decide how to get it

to the consumer.

You may want to sell your product through

INTERMEDIARIES, (MARKETING MIDDLEMEN,) organizations that

specialize in distributing goods from producer to customer.

DEVELOPING AN EFFECTIVE

PROMOTIONAL STRATEGY (the fourth P)


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PROMOTION

consists of all the techniques sellers use to

motivate people to buy products or services.

RELATIONSHIP BUILDING

WITH

CUST

OME

RSincludes responding to any suggestions they may

make to improve the product or the marketing of

the product.

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Marketing is an ONGOING PROCESS; companies must

continually adapt to changes in the market.

Listening to customers is the key to marketing.


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TWO DIFFERENT MARKETS: CONSUMER AND BUSINESS-TO-BUSINESS (B2B)

THERE ARETWO MAJOR MARKETS:

The CONSUMER MARKETconsists of all the individuals orhouseholds that want goods and services for personal

consumption or use.

The BUSINESS-TO-BUSINESS (B2B) MARKETconsists of all theindividuals and organizations that want goods and services touse in producing other goods and services or to sell, rent, or

supply goods to others (traditionally called INDUSTRIAL GOODS.)

The buyers REASON FOR BUYING and the END USE of theproduct determine whether it is considered a consumer product

or a B2B product.

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Business-to-Business (B2B)

1. Number

2. Size

3. GeographicConcentration

4. Rational

5. Direct Sales

6. Personal Selling


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THE CONSUMER MARKET

Consumer groups differ greatly in age, education level, income,

and taste.

Marketers must first decide which group to serve and then develop

products and services specially tailored to their needs (as

Campbell Soup Company does.)

MARKET SEGMENTATION

is the process of dividing the total market into groups whose

members have similar characteristics.

TARGET MARKETINGis marketing directly toward those groups (market segments) an

organization decides it can serve profitably.

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Market segmentation the process of dividing a total market into several

relatively homogeneous groups.


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SEGMENTINGTHE CONSUMER MARKET

Learning goal 4

Explain how marketers meet the needs of the consumer market

through market segmentation, relationship marketing, and the

study of consumer behavior.

GEOGRAPHIC SEGMENTATION

is dividing the market by geographic area.

DEMOGRAPHIC SEGMENTATION

is dividing the market by age, income, and education level.

PSYCHOGRAPHIC SEGMENTATION

is dividing the market using the groups values, attitudes, and

interests.BENEFIT SEGMENTATION

is dividing the market by determining which benefits of the

product to talk about.

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Market Segmentation

Target Marketing

Geographic

Demographic

Psychographic

Benefit

Volume


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Geographic Segmentation

Divides market into homogeneous groups on the basis of their

locations.

Demographic Segmentation

Divides market on the basis of various demographic or socioeconomic

characteristics: gender, income, age, occupation, household size, stage

in the family life cycle, education, and ethnic group.

Psychographic Segmentation

Divides consumer market into groups with similar psychological

characteristics, values, and lifestyles.

Product-Related Segmentation

Divides market based on buyers relationship to the good or service.


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Geographic segmentation targets geographically concentrated industries.

Demographic, or customer-based, segmentation a good or service intended

for a specific organizational market (i.e. healthcare).

End-use segmentation - focuses on the precise way a B2B purchaser will use a

product.


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Consumer behavior - actions of ultimate consumers directly involved in

obtaining, consuming, and disposing of products and the decision processes

that precede and follow these actions.

Personal factors: needs and motives, perceptions, attitudes, self-concept.

Interpersonal factors: cultural, social, and family influences.

Business buying behavior- often includes a variety of influences from

multiple decision makers.


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Relationship marketing - developing and

maintaining long-term, cost-effectiveexchange relationships with partners.

Consumers enter into relationships only if

there is some benefit to them.


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Lower costs and higher profits for the business.

Efficient targeting of best customers increases the lifetime value of a

customer.

Stronger relationships with business partners and opportunities to combine

capabilities and resources to better accomplish goals.


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80/20principle: Frequent customers have a higher lifetime value, so

businesses allocate resources accordingly.

Frequency marketing: reward purchasers with cash, rebates, and other

premiums.

Affinity programs: solicit involvement based on common interest. Comarketing: businesses jointly market each others products.

Cobranding: firms link their names in a single product.


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VOLUME, OR USAGE, SEGMENTATION is

dividing the market by usage (volume of use.)

The best segmentation strategy is to USE ALL THE VARIABLES tocome up with a consumer profile thats sizable, reachable, and

profitable.

REACHING SMALLER MARKET SEGMENTS

NICHE MARKETINGis the process of finding small but profitable market segments

and designing custom-made products for them.

ONE-TO-ONE MARKETING

means developing a unique mix of goods and services for each

individual customer.

This is easier to do one-to-one marketing in B2B markets, but is

becoming possible in consumer markets as well.

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Different Markets

Consumer

Niche

One-to-One

Business-to-Business

(B2B)


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MOVINGTOWARD RELATIONSHIP MARKETING

MASS MARKETING means developing products and promotions to

please large groups of people.The mass marketer tries to sell products to as many people as

possible.

That means using mass media, such as TV, radio, and newspapers.

RELATIONSHIP MARKETING is a marketing strategy with the goal ofkeeping individual customers over time by offering them

products that exactly meet their requirements.

RELATIONSHIP MARKETING moves away from mass production

toward CUSTOM-MADEGOODS.

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Customizing products and

marketing and rapidly delivering

goods.

Customer relationship

managementsoftwareh

elpscompanies gather, sort, and

interpret data about specific

customers.


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Influences on

ConsumerBehavior

CultureCulture

SubcultureSubculture

ReferenceReference

GroupGroup

CognitiveCognitive

DissonanceDissonance

CustomerCustomer

LearningLearning


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SOCIOCULTURAL INFLUENCES

such as reference groups and culture

Consumer behavior is also influenced by other factors:LEARNING

involves changes in an individuals behavior resulting from previous

experiences and information.

A REFERENCE GROUPis the group that an individual uses as a reference point in

formation ofhis or her beliefs, attitudes, values, or behavior.

CULTURE

is the set of values, attitudes, and ways of doing things that are

transmitted from one generation to another in a given society..


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SUBCULTURE

is the set of values, attitudes, and ways of doing things that results

from belonging to a certain group with which one closely identifies.COGNITIVE DISSONANCE

is the type of psychological conflict that can occur after a

purchasesuch as doubts about whether they got the best product

at th

e best price.


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The latest in TECHNOLOGY enables sellers to work with buyers to

determine their individual wants and needs and to develop

goods and services specifically designed for those individuals.

One-way messages in mass media are replaced by a personal

dialogue among participants.

The text uses two examples: service firms such as airlines, rental car

companies, and hotels; and the Hard Rock Caf.

THE CONSUMER DECISION-MAKING PROCESS

Studying consumer behavior centers on studying the CONSUMER

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PURCHASE DECISION PROCESS:

Problem recognitionInformation search

Evaluate alternatives

Make purchase decision

Postpurchase evaluation

Consumer behavior researchers also study the various

INFLUENCES THATIMPACT CONSUMER BEHAVIOR.

MARKETING MIX VARIABLES (the four Ps)PSYCHOLOGICAL INFLUENCES such as perception and attitudes

SITUATIONAL INFLUENCES such as the type of purchase and

physical surroundings

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Several factors make

BUSINESS-TO-BUSINESS MARKETING

DIFFERENT NUMBER:

There are relatively FEW CUSTOMERS compared to the

consumer market.

SIZE

Though few in number, industrial customers are relatively

VERY LARGE.


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GEOGRAPHICALLY CONCENTRATED:

B2B markets tend to be CONCENTRATED in certain areas of the

country.

RATIONAL

Business buyers are generally MORE RATIONAL in their purchase

decisions.

DIRECT

B2B sales tend to be DIRECT.

PERSONAL SELLING

There is much more emphasis in personal selling than in theconsumer market.

YOUR PROSPECTS IN MARKETING

There is a wider variety of careers in marketing than in most business

areas.


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Place Decisions

Direct Sales

Reseller Sales

Market Coverage Intensive

Selective

Exclusive

Inventory Size

Logistics

Source: Perdue University, May 2005


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Why Should You

Market To Women?

Women control 80% of all household spending.

Women purchase 81% of all products andservices manufactured.

80% of all checks written are signed by women.

85% of all automobile purchases are influencedby women.

In 2005, 4.7 Million women were self-employed.

Source: St. Louis Small Business Monthly, May 2004


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Consumer Decision Making

Marketing mix

Product

Price

Place

Promotion

Marketing mix

Product

Price

Place

Promotion

Psychological

Perception

Attitudes

Learning

Motivation

Psychological

Perception

Attitudes

Learning

Motivation

Situational

Type of Purchase

Social surroundings

Physical surroundings

Previous experience

Situational

Type of Purchase

Social surroundings

Physical surroundings

Previous experience

Sociocultural

Reference groups

Family

Social class

Culture

Subculture

Sociocultural

Reference groups

Family

Social class

Culture

Subculture

DecisionDecision--Making ProcessMaking Process

Problem RecognitionProblem Recognition

Information SearchInformation Search

Alternative evaluationAlternative evaluation

Purchase decisionPurchase decision

Postpurchase evaluationPostpurchase evaluation

(cognitive dissonance)(cognitive dissonance)

Market Segmentation 5.3.12

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