Chapter 8 Segmenting and Targeting Markets A Market Is 1 People or organization with 2 Needs or wants and with 3 The ability and 4 The willingness to buy 5 A group of people that lacks any one of these characteristics is NOT a market Market Segmentations market people or organizations with needs or wants and the ability or willingness to buy Market segment subgroup of people or organization sharing one or more characteristics that cause them to have similar product needs Market segmentation process of dividing a market into meaningful relatively similar identifiable segments or groups Criteria for Segmentation sustainability segment must be large enough to warrant a special marketing mix Identifiability and Measurability segments must be identifiable and their size must be measurable Accessibility members of targeted markets must be reachable with marketing mix Responsiveness unless segment responds to a marketing mix differently no separate treatment is needed Bases for Segmentation geography region of country or world market size market density climate demographics psychographics age gender income ethnic background family life cycle segmentation on the basis of personality motives lifestyles and geodemographics lifestyle how time is spent importance of things around them beliefs socioeconomic characteristics geodemographics segmenting potential customers into neighborhood lifestyle categories process of grouping customers into marketing segments according to the benefits they seek from products Benefits Sought Usage Rate usage rate segmentation dividing a market by the amt of product bought fr consumers 80 20 Principle principle holding that 20 of all customers generate 80 of the demand former potential 1st time light or irregular medium heavy Bases for Segmenting Business Markets producers resellers governemt institutions company characteristics buying processes company characteristics geographic locations type of company company size volume of purchase product use Buyer characteristics demographic decision style tolerance for risk confidence level job responsibilities Steps in Segmenting Markets 1 Select market for a study 2 3 4 5 6 Choose basis for segmentation Select descriptors Profile and analyze segments Select target markets Design implement maintain marketing mix Strategies for Selecting Target Markets undifferentiated strategy marketing approach that views the market as one big market with no individual segments and thus requires a single marketing mix advantage potential savings on production and marketing costs disadvantage unimaginative product offerings company more susceptible to competition concentrated strategy strategy used to select one segment of a market for targeting marketing efforts advantages concentration of resources meets narrowly defined segments small firms can compete strong positioning disadvantages segments too small or changing large competitors may market to niche segment multi segment strategy chooses two of more well defines market segments and develops a distinct marketing mix for each advantage great financial success economics of sale disadvantages high cost cannibalization costs product design costs production promotion inventory marketing research management cannibalization Positioning developing a specific marketing mix to influence potential customers overall perception of a brand product line or organization in general effective positioning 1 Assess the positions occupied by competing products 2 Determine the dimensions underlying these positions 3 Choose a market positions where marketing efforts will have the greatest impact bases attribute price and quality user or application product user product class competitor emotion repositioning changes consumer s perceptions of a brand in relation to competing brands perceptual mapping means of displaying or graphing in 2 or more dimensions the location of products brands or groups of products in customer s minds Product differentiation positioning strategy that firms use to distinguish their product from competitors