Segmenting and targeting

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  Introduction to Marketing 1100 and
  Chapter 8: Segmenting and Targeting
  
  Week 4
  

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  Prepared by
  Charles Lamb, Joseph Hair, Carl McDaniel & Alison Barker
  Lecture Slides available on Moodle on the Friday BEFORE the lecture occurs
  
  
  
  Lecture Presentation Slides
  

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  Learning outcomes:
  Describe the characteristics of markets and market segments
  Explain the importance of market segmentation
  Discuss the criteria for successful market segmentation
  Describe the bases commonly used to segment consumer and business markets
  List the steps involved in segmenting markets
  Discuss alternative strategies for selecting target markets
  Explain how and why firms implement positioning strategies and how product differentiation plays a role.
  Understand how a perceptual map is created.
  
  Chapter 8: Segmenting and
  Targeting Markets
  

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  Characteristics of a Market
  people or organizations with
  
  needs or wants, and with
  
  the ability and
  
  the willingness to buy.
  
  
  A group of people that lacks any one of these characteristics is NOT a market.
  

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  Market Segmentation
  Market
  Market
  Segment
  Market
  Segmentation
  People or organizations with needs or wants and the ability and willingness to buy.
  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 meaningful, relatively similar, identifiable segments or groups.
  

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  Three Reasons for Segmentation
  Enables marketers to identify groups of customers with similar needs
  
  Provides marketers with information to help them design marketing mixes
  
  Consistent with the marketing concept of satisfying customer wants and needs while meeting organization’s objectives
  

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  Four Criteria for Segmentation
  Substantiality
  Is it large enough?
  Identifiability and measurability
  Can you measure or identify this market?
  Accessibility
  Can you get to this market?
  Responsiveness
  Will they respond to your product or marketing mix?
  

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  Bases for Segmentation
  Usage Rate
  Benefits Sought
  Psychographics
  Demographics
  Geography
  

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  Geographic Segmentation
  Region of the country or world
  
  Market size
  
  Market density
  
  Climate
  

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  Market segmentation/
  Region examples
  Examples of regional segmentation
  In Asia ‘Diet Coke’ is ‘Coke light’
  Pepsi max in Australia is Pepsi One in USA
  KFC customised for Japanese market- positioned as a trendy and high class store- not as a fast food outlet. Chips were substituted for mashed potato and a menu of fried fish and smoked chicken were added
  McDonalds don’t sell thick shakes in Singapore and Hong Kong; Singapore and HK have spicy McLamb burgers; burgers come with chilli sauce not tomato sauce.
  Krispy Kreme – Green Tea donut in Malaysia
  
  CRICOS Provider Code 00301J
  
  

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  Demographic Segmentation
  Age
  Gender
  Income
  Ethnic
  Family life cycle
  

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  CRICOS Provider Code 00301J
  
  General Segments
  Baby boomers
  Generation X
  Generation Y
  Generation W
  
  
  
  
  Tweens
  Yummy Mummies
  
  Market segmentation/
  Demographic
  

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  Demographic segmentation
  McDonalds targets children with McHappy meals, adults with McCafe and Salads Plus Menu
  McDonalds use different media vehicles to target senior citizens, kids, adults
  National Australia Bank is targeting women for credit cards by promoting in Cosmopolitan
  Toyota website in the USA has a section for women
  Health Clubs for WOMEN only e.g. Curves
  Ready to drink alcohol ‘Smirnoff Ice’ targeted at women, VB is targeted at men
  S’OK Potato Chips are targeting health conscious women
  Best for Less/Crazy Clarks- targeting low income consumers
  
  CRICOS Provider Code 00301J
  
  

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  Softdrink People
  CRICOS Provider Code 00301J
  
  

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  Age/Gender segmentation
  CRICOS Provider Code 00301J
  
  Kids
  Women
  Adults
  Men
  

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  Bases for Psychographic
  Segmentation
  Personality
  Motives
  Lifestyles
  Geodemographics
  

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  Benefit Segmentation
  The process of grouping customers into market segments according to the benefits they seek from the product.
  

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  Usage-Rate Segmentation
  Usage-Rate
  Segmentation
  Dividing a market by the amount of product bought or consumed.
  80/20
  Principle
  A principle holding that 20 percent of all customers generate 80 percent of the demand.
  

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  Note that steps 5 and 6 are actually marketing activities
  that follow market segmentation (steps 1 through 4).
  Steps in Segmenting Markets
  1
  Select a market for study
  2
  Choose bases for segmentation
  3
  Select descriptors
  4
  Profile and analyze segments
  5
  Select target markets
  6
  Design, implement, and maintain marketing mix
  

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  Strategies for Selecting
  Target Markets
  Concentrated
  Strategy
  Undifferentiated
  Strategy
  Multisegment
  Strategy
  

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  Undifferentiated Targeting
  Strategy
  Adopts a mass-market philosophy, viewing the market as
  One big market with no individual segments.
  The firm uses one marketing mix for the entire market.
  Assumes that individual customers have similar needs that can be met with a common marketing mix.
  Good for products with no competition
  23
  

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  Concentrated Targeting
  Selects a market niche
  Concentrating on a narrowly defined market
  May be too defined and will shrink or be too small when environment changes
  
  
  
  
  

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  Multisegment Targeting
  Chooses one or more well defined market segments to serve
  Greater sales volume, higher profits, larger market share and economies of scale in manufacturing and marketing
  Side effects: Cannibalization
  Prada and Miu Miu
  
  

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  Toyota
  CRICOS Provider Code 00301J
  
  

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  Positioning
  developing a specific marketing mix to influence potential customers’ overall perception or a brand, product line, or organization in general.
  

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  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.
  

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  Perceptual Map
  

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  Attribute
  Price and Quality
  Use or Application
  Product User
  Product Class
  Competitor
  Emotion
  Positioning Bases
  

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  Repositioning
  changing consumers’ perceptions of a brand in relation to competing brands.
  

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  Learning outcomes:
  What are the characteristics of markets and market segments?
  Why is market segmentation important?
  Discuss the criteria for successful market segmentation
  What are the bases commonly used to segment consumer and business markets?
  What are the steps involved in segmenting markets?
  What are the alternative strategies for selecting target markets
  Explain how and why firms implement positioning strategies and how product differentiation plays a role.
  Draw a perceptual map is created for Kellogg’s breakfast cereal.
  
  Chapter 8: Segmenting and
  Targeting Markets revision questions