Market people or organizations with needs or wants and with the ability and willingness Chapter 8 Segmenting and Targeting Markets 8 1 Market Segmentation to buy 8 2 Importance of Market Segmentation Segmentation started mainly in the 1960s 8 3 Criteria for Successful Segmentation Reasons to segment o Identify groups of customers with similar needs and to analyze characteristics of these groups o Help them design marketing mixes specifically matched with the characteristics o Consistent with the marketing concept of satisfying customer wants and needs while meeting the organizations objectives Segmentations must meet the basic criteria to be useful o Substantiality Large enough to warrant developing and maintain a special marketing mix o Identifiability and Measurability o Accessibility marketing mixes o Responsiveness Firm must be able to reach members of targeted segments with customized If all customers are equally price conscious about a product there is no need to offer high medium and low priced options 8 4 Bases for Segmenting Consumer Markets Segmentation bases variables are characteristics of individuals groups or organizations to divide a total market into segments A Geographic Segmentation a Refers to segmenting markets by region of a country or the world market size market density or climate i Which brands sell best in each region ii New way to generate sales iii New regional brands intended to appeal to local preferences iv Allows consumer goods companies to react more quickly to competition B Demographic Segmentation a Age gender income ethnic background and family life cycle i Age Segmentation generations ii Gender Segmentation women make 85 of consumer goods purchases iii C Psychographic Segmentation Income Higher income outstanding customer service a Segmentation Variables i Personality ii Motives 1 Traits attitudes and habits clothing 1 Emphasize durability reliability emotional motives iii Lifestyles iv Geodemographics 1 Way people spend their time and importance of things around them 1 Clusters potential customers into neighborhood lifestyle categories which is a combination of demo psych ethnic geo segments D Benefit Segmentation E Usage Rate Segmentation consumed a Benefit segmentation process of grouping customers into market segments according to the benefits they seek from the product a UR Segmentaion divides a market by the amount of product bought or b 80 20 Principle holds that 20 of all customers generate 80 of the demand 8 5 Bases for Segmenting Business Markets Business Market consists of four broad segments Producers Resellers Gov t Institution A Company Characteristics a Locations Type of company size and product use variables b Volume of purchase is commonly used basis for business segmentation B Buying process a Satisficers contact familiar suppliers and place the order with the first one to satisfy product and delivery requirements b Optimizers consider numerous suppliers solicit bids and study all proposals carefully before selecting one 8 6 Steps in Segmenting a Market Select a market or product category for study Choose a basis or bases for segmenting the market Select segmentation descriptors Profile and analyze segments Select target markets Design implement and maintain appropriate marketing mixes 8 7 Strategies for Selecting Target Markets Target Market is a group o f 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 A Undifferentiated Targeting a Undifferentiated targeting strategy adopts a mass market philosophy viewing the market as one big market with no individual segments one mix i First firm in an industry uses it B Concentrated targeting a Concentrated targeting firm selects a market niche one segment of a market for targeting its marketing efforts i Concentrates on understanding the needs motives and satisfactions C Multisegment Targeting chooses to serve two or more well defined market segments and develops a distinct marketing mix a Cannibalization occurs when sales of a new product cut into sales of a firm s existing products 8 8 CRM as a Targeting Tool Four trends that lead to the continuing growth of CRM o Personalization o Time Savings o Loyalty earn the customers loyalty o Technology mass media decline 8 9 Positioning Positioning a process that influences potential customers overall perception of a brand product line or organization in general Position place a product brand or group of products occupies in consumers minds a Means of displaying or graphing in two or more dimensions the location of products brands or groups of products in customers minds relative to competing offerings A Perceptual mapping B Positioning Bases a Attribute b Price and Quality c Use or Application d Product User e Product Class f Competitor g Emotion C Repositioning a Changing consumers perceptions of a brand in relation to competing brands Chapter 9 Marketing Research 9 1 Marketing Decision Support System Decision support system DSS interactive flexible computerized IS that enables managers to obtain and manipulate information as they are making decisions o Interactive controlled and immediate responses o Flexible Sort and manipulate data in various ways o Discover Oriented probe for trends and problems o Accessible Easy to learn Database marketing creation of a large computerized file of customers and potential customers profiles and purchase patterns 9 2 The Role of Marketing Research Marketing research process of planning collecting and analyzing data relevant to a marketing decision o Descriptive gathering and presenting factual statements o Diagnostic explaining data such as determining impact on sales o Predictive addresses what if questions 9 3 Steps in a Marketing Research Project Marketing Research Problem information oriented determining what information is needed and how that information can be obtained efficiently and effectively Marketing research objective the specific information needed to solve a marketing research problem the objective should be to provide insightful decision making information Management Decision Problem action oriented a broad based problem that uses marketing research in order for managers to take proper actions A Secondary data hand a Secondary data data preciously collected for any purpose other than the one at i Annual reports reports to stockholders product testing
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