Slide 1Chapter 10 Target Markets: Segmentation, Evaluation, and PositioningObjectivesWhat are MarketsMarket RequirementsTarget Market Selection ProcessStep 1: Targeting StrategyUndifferentiated Targeting StrategyHomogeneous MarketConcentrated Targeting Strategy Through Market SegmentationHeterogeneous MarketMarket SegmentationMarket SegmentConditions For Successful Market SegmentationConcentrated Target StrategyDifferentiated Targeting Strategy Through Market SegmentationDifferentiated Targeting StrategyStep 2: Determine Which Segmentation Variables to UseVariables for Segmenting Consumer MarketsDemographic VariablesAge Group Spending LevelsLife Cycle StagesFamily Life Cycle StagesGeographic VariablesMarket DensityGeodemographic SegmentationMicromarketingPsychographic VariablesVALS TypesBehavioristic VariablesBenefit SegmentationSegmenting Business MarketsStep 3: Develop Market Segment ProfilesStep 4: Evaluate Relevant Market SegmentsStep 5: Select Specific Target MarketsProduct Positioning and RepositioningToothpaste Product PositionsPerceptual Map For Pain RelieversDeveloping Sales ForecastExecutive JudgmentSurveysTime Series AnalysisTime Series Analysis (cont’d)Regression AnalysisMarket TestUsing Multiple Forecasting MethodsChapter 10Target Markets: Segmentation, Evaluation, and Positioning10 | 3Copyright © Houghton Mifflin Company. All rights reserved.Objectives•Learn what a market is•Understand differences among targeting strategies•Become familiar with segmentation variables•Know what segment profiles are and how theyare used•Evaluate market segments•Identify factors that influence selection of specific market segments•Understand positioning•Become familiar with sales forecasting methods10 | 4Copyright © Houghton Mifflin Company. All rights reserved.What are Markets•Group of people seeking products in a specific product category (see Ch. 2 definition)•Can be…–specific location (flea market)–large geographic area –relationship between supply and demand (market for given product)–action word, as in market a product10 | 5Copyright © Houghton Mifflin Company. All rights reserved.Market RequirementsNeed/desire for a particular productHave ability to purchase productWilling to use buying powerHave authority to buy specific products10 | 6Copyright © Houghton Mifflin Company. All rights reserved.Target Market Selection Process10 | 7Copyright © Houghton Mifflin Company. All rights reserved.Step 1: Targeting Strategy10 | 8Copyright © Houghton Mifflin Company. All rights reserved.UndifferentiatedTargeting Strategy•A strategy in which an organization defines an entire market for a particular product as its target market, designs a single market mix, and directs it at that market.10 | 9Copyright © Houghton Mifflin Company. All rights reserved.Homogeneous MarketA market in which a large portion of customers have similar needs for a product.10 | 10Copyright © Houghton Mifflin Company. All rights reserved.Concentrated Targeting Strategy Through Market Segmentation10 | 11Copyright © Houghton Mifflin Company. All rights reserved.Heterogeneous MarketA market made up of individuals or organizations with diverse needs for products in a specific product class.10 | 12Copyright © Houghton Mifflin Company. All rights reserved.Market SegmentationThe process of dividing a total market into groups with relatively similar product needs to design a marketing mix that matches those needs.10 | 13Copyright © Houghton Mifflin Company. All rights reserved.Market SegmentIndividuals, groups, or organizations sharing one or more similar characteristics that cause them to have similar product needs.10 | 14Copyright © Houghton Mifflin Company. All rights reserved.Conditions For Successful Market Segmentation1. Customer product needs are heterogeneous2. Segments identifiable and divisible3. Market divided so segments can be compared on sales potential, costs, and profits4. At least one segment has potential to justify marketing expense5. Segment can be reached with a particular marketing mix10 | 15Copyright © Houghton Mifflin Company. All rights reserved.Concentrated Target StrategyMarket segmentation strategy in which an organization targets a single market segment using one marketing mix10 | 16Copyright © Houghton Mifflin Company. All rights reserved.Differentiated Targeting Strategy Through Market Segmentation10 | 17Copyright © Houghton Mifflin Company. All rights reserved.Differentiated Targeting StrategyA strategy in which an organization targets two or more segments by developing a marketing mix for each segment.10 | 18Copyright © Houghton Mifflin Company. All rights reserved.Step 2: Determine Which Segmentation Variables to Use•Segmentation Variable–characteristics of individuals, groups, or organizations used to divide a market into segments10 | 19Copyright © Houghton Mifflin Company. All rights reserved.Variables for Segmenting Consumer Markets10 | 20Copyright © Houghton Mifflin Company. All rights reserved.Demographic Variables•Age•Gender•Race•Ethnicity•Income•Education•Occupation•Family size•Family life cycle•Religion•Social class10 | 21Copyright © Houghton Mifflin Company. All rights reserved.Age Group Spending Levels10 | 22Copyright © Houghton Mifflin Company. All rights reserved.Life Cycle Stages10 | 23Copyright © Houghton Mifflin Company. All rights reserved.Family Life Cycle StagesSource: Jason Fields, “America’s Families and Living Arrangements: 2003,” Current Population Reports, U.S. Census Bureau, 2003.10 | 24Copyright © Houghton Mifflin Company. All rights reserved.Geographic Variables•Climate•Terrain•City size•Population density•Urban/rural areas10 | 25Copyright © Houghton Mifflin Company. All rights reserved.Market DensityThe number of potential customers within a unit of land area.10 | 26Copyright © Houghton Mifflin Company. All rights reserved.Geodemographic SegmentationA method of market segmentation that clusters people in zip code areas and smaller neighborhood units based on lifestyle and demographic information.10 | 27Copyright © Houghton Mifflin Company. All rights reserved.MicromarketingAn approach to market segmentation in which organizations focus precise marketing efforts on very small geographic markets.10 | 28Copyright © Houghton Mifflin Company. All rights reserved.Psychographic Variables•Personality