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    Segmenting and Targeting Markets

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    Thao Nguyen Ngoc Nha
    Market segmentation involves dividing a total market into smaller, more homogeneous groups based on characteristics like geography, demographics, psychographics, benefits sought, or usage rate. Effective segmentation results in segments that are responsive to marketing mix changes, accessible, measurable, substantial, and homogeneous within but heterogeneous between segments. Segmentation allows companies to better understand customer needs, define objectives, and allocate resources accurately across segments.

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    Segmenting and Targeting Markets

    Uploaded by

    Thao Nguyen Ngoc Nha
    29 views39 pages
    Market segmentation involves dividing a total market into smaller, more homogeneous groups based on characteristics like geography, demographics, psychographics, benefits sought, or usage rate. Effective segmentation results in segments that are responsive to marketing mix changes, accessible, measurable, substantial, and homogeneous within but heterogeneous between segments. Segmentation allows companies to better understand customer needs, define objectives, and allocate resources accurately across segments.

    Original Description:

    PRINCIPLES OF MARKETING

    Original Title

    Chapter 07

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    Market segmentation involves dividing a total market into smaller, more homogeneous groups based on characteristics like geography, demographics, psychographics, benefits sought, or usage rate. Effective segmentation results in segments that are responsive to marketing mix changes, accessible, measurable, substantial, and homogeneous within but heterogeneous between segments. Segmentation allows companies to better understand customer needs, define objectives, and allocate resources accurately across segments.

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    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    29 views39 pages

    Segmenting and Targeting Markets

    Uploaded by

    Thao Nguyen Ngoc Nha
    Market segmentation involves dividing a total market into smaller, more homogeneous groups based on characteristics like geography, demographics, psychographics, benefits sought, or usage rate. Effective segmentation results in segments that are responsive to marketing mix changes, accessible, measurable, substantial, and homogeneous within but heterogeneous between segments. Segmentation allows companies to better understand customer needs, define objectives, and allocate resources accurately across segments.

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    You are on page 1of 39

    Chapter 7

    Segmenting and Targeting Markets


    What are Markets?

    • Market: people or institutions with


    sufficient purchasing power, authority,
    and willingness to buy
    • Types of Markets
    Requirements of a Markets

     Need

    +
     Ability
     Willingness
     Authority
    Role of Market Segmentation
    Market Segmentation: division of the
    total market into smaller, relatively
    homogeneous groups

    Why?

    Levels – Mass, Segment, and Niche


    Why segment?

    Most Most
    efficient effective
    Many Groups
    of One
    One Mass
    Market
    The Importance of Market
    Segmentation

     Markets have a variety of product


    needs and preferences.

     Marketers can better define


    customer needs.

     Decision makers can define objectives


    and allocate resources more
    accurately.
    No Market Segmentation
    Segmented by Gender
    Segmented by Age
    Segmentation Process
    • Marketers follow two methods to determine
    the bases on which to identify markets:
    – Segments are predefined by managers
    based on their observation of the
    behavioral and demographic
    characteristics of likely users
    – Segments are defined by asking
    customers which attributes are important
    and then clustering the responses
    Criteria for Effective
    Segmentation
    Responsiveness

    Accessibility

    Measurability /
    Identifiability

    Substantiality
    Most important point
    In relation to responsiveness to different
    marketing mixes, segments must be:
    Homogeneous within
    Heterogeneous between
    LO4 Bases for Segmenting Consumer
    Markets

    Characteristics of individuals,
    groups, or organizations used to
    divide a total market into segments.

    (variables)
    LO4
    Bases for Segmentation
    Geography
    Geography

    Demographics
    Demographics

    Psychographics
    Psychographics

    Benefits
    Benefits Sought
    Sought

    Usage
    Usage Rate
    Rate
    Segmenting Consumer
    Markets

    • Geographic Segmentation: Dividing


    an overall market into homogeneous
    groups on the basis of their locations

    Metropolitan
    MetropolitanStatistical
    Statistical
    Area
    Area(MSA)
    (MSA)
    Segmenting Consumer
    Markets

    • Demographic segmentation: dividing


    consumer groups according to
    characteristics such as gender, age,
    income, occupation, education, ethnicity,
    household size, and stage in the family
    life cycle.
    Family Life Cycle

    Age

    Marital
    Children
    Status
    Psychographic Segmentation

    • Psychographic Segmentation: dividing a


    population into groups that have similar
    psychological characteristics, and lifestyles.

    • Lifestyle: people’s decisions about how to live


    their daily lives, including family, job, social, and
    consumer activities
    LO4
    Geodemographic
    Segmentation

    Segmenting potential customers into


    neighborhood lifestyle categories.
    Combines geographic, demographic,
    and psychographic segmentation.
    LO4
    Benefit Segmentation

    The process of grouping customers


    into market segments according to
    the benefits they seek from the
    product.
    Usage Rate Segmentation

    Dividing
    Dividing aa market
    market by
    by the
    the
    amount
    amount ofof product
    product bought
    bought
    or
    or consumed.
    consumed.
    Bases for Segmenting Business
    Markets
    Producers
    Producers

    Resellers
    Resellers

    Government
    Government

    Institutions
    Institutions

    Company
    Company Buying
    Buying
    Characteristics
    Characteristics Processes
    Processes
    LO6
    Steps in Segmenting Markets

    1 2 3 4 5 6
    Select Choose Select Profile Select Design,
    a market bases descriptors and target implement,
    for for analyze markets maintain
    study segmen- segments marketing
    tation mix

    Note that steps 5 and 6 are actually marketing activities that follow market segmentation (steps 1 through
    4).
    Targeting

    Choosing one or more segments for which


    to design your marketing operations
    Identify the Appropriate Targeting Strategy

    Undifferentiated Strategy

    Differentiated

    Concentrated
    Undifferentiated Strategy

    Single
    Marketing
    Mix

    Organization
    Target Market
    Differentiated Strategy

    Marketing Mix 1

    Marketing Mix 2
    Organization

    Target Market
    Concentrated Strategy

    Single
    Marketing
    Mix

    Organization
    Target Market
    Cannibalization

    Cannibalization
    Cannibalization

    Situation that occurs when


    sales of a new product cut into
    sales of a firm’s existing
    products.
    STRATEGIES FOR REACHING
    TARGET MARKETS
    • No single, best choice strategy suits all
    firms
    • Determinants of a market-specific
    strategy:
    – Company resources
    – Product homogeneity
    – Competitors’ strategy
    One-to-One Marketing

    An individualized marketing method


    that utilizes customer information to
    build long-term, personalized, and
    profitable relationships with each
    customer.
    - ‘share of customer’
    Product Positioning

    Positioning starts with a product. A Piece of


    merchandise, a service, a company, an
    institution, or even a person... But positioning
    is not what you do to a product. Positioning is
    what you do to the mind of the prospect.
    That is, you position the product in the mind
    of the prospect.
    Al Ries and Jack Trout (1981)
    Positioning of
    Procter & Gamble
    Detergents
    Market
    Brand Positioning
    Share
    Tide Tough, powerful cleaning 31.1%
    Cheer Tough cleaning, color protection 8.2%
    Bold Detergent plus fabric softener 2.9%
    Gain Sunshine scent and odor-removing formula 2.6%
    Era Stain treatment and stain removal 2.2%
    Dash Value brand 1.8%
    Oxydol Bleach-boosted formula, whitening 1.4%
    Solo Detergent and fabric softener in liquid form 1.2%
    Dreft Outstanding cleaning for baby clothes, safe 1.0%

    LO 9
    Ivory Snow Fabric & skin safety on baby clothes 0.7%
    Ariel Tough cleaner, aimed at Hispanic market 0.1%
    Product Positioning
    Dimensions
    Product Attributes / Differences / Benefits

    Product User / Usage

    By Association

    Problem Solution

    Against a Competitor / Away from Competitors


    Perceptual Mapping

    A means of displaying or graphing, in two


    or more dimensions, the location of
    products, brands, or groups of products in
    customers’ minds.
    Perceptual Maps
    Corolla
    Corolla Celica
    Celica Avalon
    Avalon Camry
    Camry
    Expensive

    Sporty Conservative

    Inexpensive
    Product Positioning using
    perceptual maps
    High moisturizing
    Zest
    Tone 7
    4
    Lever 2000
    Dove
    5 2

    Safeguard
    Coast
    Lux 8
    Nondeodorant 3 Deodorant

    1
    Dial
    Lifebuoy
    Lava
    6

    Low moisturizing
    Repositioning

    Changing consumers’
    perceptions of a brand in relation
    to competing brands.
    Positioning and Product Differentiation

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