Segmenting and Targeting Markets

A group of people that lacks any one of these characteristics is NOT a market. 2 Market Segmentation Market People or organizations with needs or wants and the ability and willingness to buy. Segment The Concept of Market Segmentation A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs.

The process of dividing a market into Segmenting and Targeting Markets By annoyance 23 meaningful, relatively similar, identifiable Segmentation segments or groups. 3 4 The Importance of Criteria for Segmentation Substantially Segments must be identifiable and their size measurable. Accessibility Members of targeted segments must be reachable with marketing mix. Responsiveness and preferences Segment must be large enough to warrant a special marketing mix. Identifiably and Insurability 0 Markets have a variety of product needs

Unless segment responds to a marketing mix differently, no separate treatment is needed. 0 Marketers can better define customer 0 Decision makers can define objectives and allocate resources more accurately 5 6 Geographic Segmentation Bases for Segmentation Geography 0 Region of the country or world Demographics 0 Market size Chirography’s 0 Market density Benefits Sought 0 Climate Usage Rate 7 8 Benefits of Regional Segmentation Demographic Segmentation Age New ways to generate sales in sluggish and competitive markets Scanner data allow assessment of best selling brands in region

Regional brands appeal to local preferences Quicker reaction to competition Gender Income Ethnic Family life cycle 9 Cryptographic Segmentation 10 Benefit Segmentation The process of grouping customers into market segments according to the benefits they seek from the product. Personality Motives Lifestyles Stereographic 11 12 Bases for Segmenting Business Usage-Rate Segmentation Usage-Rate 80/20 Principle Dividing a market by the amount of product bought or consumed.

Producers Company Characteristics Resellers A principle holding that 20 percent of all customers enervate 80 percent of the demand. Government Buying Processes Institutions 13 14 Buyer Characteristics Company Characteristics Important segmentation variables: Satisfiers Business customers who place an order with the first familiar supplier to satisfy product and delivery Optimizers Business customers who consider numerous suppliers, both familiar and unfamiliar, solicit bids, and study all proposals carefully before selecting one. Geographic location 0 Type of company 0 Company size 0 Product use 15 16 Steps in Segmenting Markets Demographic characteristics Decision style 1 Select a market for study Choose bases segmentation 3 Select descriptors analyze segments 5 Select target markets Tolerance for risk 6 Design, implement, and maintain marketing mix Confidence level Note that steps 5 and 6 are actually marketing activities that follow market segmentation (steps 1 through 4).

Job responsibilities 18 17 Target Market Strategies for Selecting Target Markets A group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually attesting exchanges. Undifferentiated Strategy 19 Concentrated Enlistment Undifferentiated Targeting Advantage: A marketing approach that views the market as one big market with no individual segments and thus uses a single marketing mix. Potential savings on production and marketing costs Disadvantages: 0 Unimaginative product offerings 0 Company more susceptible to competition 0 2013 by Coinage Learning Inc. All Rights Reserved. 21 Concentrated Targeting A strategy used to select one segment of a market for Targeting Strategy 0 Concentration of resources Meets narrowly defined segment 0 Small firms can compete 0 Strong positioning targeting marketing efforts.