Segmenting and Target Market Market Segmentation Market people or organizations with needs or wants and the ability and willingness to buy Market segment a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs Market segmentation the process of dividing a market into meaningful relatively similar identifiable segments or groups Importance of Market Segmentation Markets have variety of needs and preferences Can better define customer needs Decision makers can define objectives and allocate resources more accurately Criteria for Segmentation Substantiality segment must be large enough to warrant a special marketing mix Identifiability measurability segments must be identifiable and their size measurable Accessibility members or targeted segments 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 market size density climate o Regional segmentation benefits new ways to generate sales in sluggish and competitive markets o Quicker reaction to competition Demographics o Age o Gender o Income o Ethnic ex hispanics buy most baby clothes and cell phones Africans basketball shorts shoes Asians techy o Family life cycle age marital status children Psychographics market segment on the basis of personality motives lifestyles and geodemographics Benefits sought process of grouping customers into market segments according to the benefits they seek from the product Usage rate Steps in segmenting markets Select market for study Choose basis for segmentation Select descriptors Profile and analyze segments Select target markets Design implement and maintain marketing mix Strategies for selecting target markets Undifferentiated strategy a market approach that views the market as one big market with no individual segments and thus uses a single marketing mix o Advantages potential savings on production and marketing cost o Disadvantages unimaginative product offerings Company more susceptible to competition Concentrated strategy strategy used to select one segment of a market for targeting marketing efforts o Niche one segment of a market Multisegment strategy a strategy that chooses two or more well defined market segments and develops a distinct marketing mix for each o Advantages greater financial success economies of scale o Disadvantages higher costs cannibalization One to one marketing is individualized information intensive long term and personalized Has a goal of cost reduction customer retention increased revenue and customer loyalty Positioning developing a specific marketing mix to influence potential customers overall perception or a brand product line or organization in general Effective positioning o 1 assess the positions occupied by competing products o 2 determine dimensions underlying positions o 3 choose market position where marketing efforts will have the greatest impact perceptual mapping displaying or graphing 2 or more locations of products brands or groups in customers minds repositioning changing consumers perceptions of a brand in relation to competing brands
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