CH 6 segmenting consumers and positioning products Generation Y 1980 1996 marketing mix includes product pricing promotion and distribution place Market a group of people who as individuals or as organizations have needs for products in a product class and have the ability willingness and authority to purchase such products Ex Students are in the market for textbooks and maybe computers for class Ex Liquor companies do not include teenagers in their market because one must be 21 years or above to purchase the product 2 types of markets Consumer market purchasers and household members who intend to consume or benefit from the purchased products and do not buy products to make profits Also called business to consumer markets B2C Business market individuals or groups that purchase a specific kind of product for resale direct use in producing other products or use in daily operations Also called business to business markets B2B or industrial or organizational markets Ex If a lamp producer buys electrical wire in order to produce their own lamps then the lamp producer is in the business market for electrical wire If the lamp producer purchases mops to cleans it floors then it is in the business market for mops since the mops are used in it s daily operations The 5 five steps of the target market selection process target market group of people or organizations for which a business creates and maintains a marketing mix specifically designed to satisfy the needs of group members Identify the appropriate targeting strategy 1 Undifferentiated targeting strategy a strategy in which an organization designs a single marketing mix and directs it at an entire market for a particular product a This mix consists of one type of product with little or no variation one price one promotional program aimed at everybody and one distribution system b Often include commodities and some food items such as sugar and salt c Must have homogenous market Homogenous market a market in which a large proportion of customers have similar needs for a product Heterogeneous market a market made up of individuals or organizations with diverse needs for products in a specific product class a Ex auto industry some people want economical cars some want sports cars Market segmentation the process of dividing a total market into groups with relatively similar product needs to design a marketing mix that matches those needs Market segment consist of individuals groups or organizations that share one or more similar characteristics that cause them to have relatively similar product needs a Ex the prius designed for segment of people who are environmental conscious and relatively lower income not a luxury car Market segmentation can only succeed given these conditions a Customers need for the product must be heterogeneous b Segments must be identifiable and divisible c The total market should be divided so segments so segments can be compared with respect to sales potential costs profits etc d At least one segment must have enough profit potential to justify developing and maintain a special marketing mix for that segment e The company must be able to reach the chosen segment with a particular marketing mix Concentrated targeting strategy a market segmentation strategy in which an organization targets a single market segment using one marketing mix a Ex porche focuses on the luxury sports car segment and only targets high income individuals b Can be like putting all your eggs in one basket Differentiated targeting strategy a strategy in which an organization targets 2 or more segments by developing a marketing mix for each segment a Some companies do so well in one segment that they expand into other segments products b Causes production costs to go up because they are making more c Ex Victoria secret was primarily in the adult lingerie segment but has now expanded into the teenage sleepwear segment which they call Pink 2 Segmentation variables for CONSUMER markets segmentation variables characteristics of individuals groups or organizations used to divide a market into segments Ex location age gender ethnicity Ex Nutrisystem silver only for men above 60 yrs of age Segmentation markets can be divided into 4 categories a demographic variables income most used age gender ethnicity social class occupation etc b geographic variables region city size market density climate terrain etc c psychographic variables most risky personality attributes lifestyle motives d behavioristic variables volume usage benefit expectations brand loyalty etc e family life cycle the idea that marital status and the age and presence of children influence household income and product needs market density the number of potential customers within a unit of land area geodemographic segmentation segmentation method that clusters people in zip code areas and smaller neighborhood units based on lifestyle and demographic information micromarketing an approach to market segmentation where organizations focus precise marketing efforts on very small geographic markets benefit segmentation the division of a market according to benefits that consumers want from the product the benefits consumers seek ARE their product needs ex Tylenol cold and flu provides the benefit of ridding cold and flu to consumers segment is for consumers who have a cold or flu segmentation variables for BUSINESS markets geographic location type of organization customer size and product use 3 Develop Market segment profiles Describes the similarities among potential customers within a segment and explains the differences among people in different segments 4 Evaluate relevant market segments Evaluating which segments are profitable and which are not worth it Market potential total amount of a product that customers will purchase within a specified period at a specific level of industrywide marketing activity a Expressed in dollars or units Company sales potential the maximum percentage of market potential that an individual firm within an industry can expect to obtain for a specific product Breakdown approach measuring company sales potential based on general economic forecast for a specific period and the market potential derived from it Buildup approach measuring company sales potential by estimating how much of a product a potential buyer in a geographic area will purchase in a given period multiplying the estimate by the number of potential buyers and adding the totals of all the
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