Chapter 8-Segmenting and Targeting MarketsA Market Is…1. People or organization with 2. Needs or wants and with3. The ability and4. The willingness to buy5. A group of people that lacks any one of these characteristics is NOT a marketMarket 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 groupsCriteria 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 neededBases for Segmentation-geography-region of country or world , market size, market density, climate-demographics-age, gender, income, ethnic background, family life cycle-psychographics-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-Benefits Sought-process of grouping customers into marketing segments according to the benefits they seek from products-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, heavyBases 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 useBuyer characteristics-demographic-decision style-tolerance for risk-confidence level-job responsibilitiesSteps in Segmenting Markets1. Select market for a study2. Choose basis for segmentation3. Select descriptors4. Profile and analyze segments5. Select target markets6. Design, implement, maintain marketing mixStrategies 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, cannibalizationPositioning-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 products2. Determine the dimensions underlying these positions3. 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