Customers, Customers, Segmentation, Segmentation,

Target MarketingTarget MarketingWhat What

Individuals are Individuals are My Prospects?My Prospects?

Customer Buying ProcessCustomer Buying Process

Need RecognitionNeed Recognition Information SearchInformation Search Evaluation of AlternativesEvaluation of Alternatives Purchase DecisionPurchase Decision Post-purchase EvaluationPost-purchase Evaluation

Need RecognitionNeed Recognition Unmet needs identified – Current Unmet needs identified – Current

Satisfaction does not equal desired Satisfaction does not equal desired satisfactionsatisfaction Internal StimuliInternal Stimuli

Hunger, thirst, fatigueHunger, thirst, fatigue External StimuliExternal Stimuli

Advertising, window shopping, salespeople Advertising, window shopping, salespeople interactionsinteractions

Example: You brush your teeth this morning Example: You brush your teeth this morning and realize you are out of toothpasteand realize you are out of toothpaste

DemandDemand

Wants are not equal to demand in Wants are not equal to demand in the marketplacethe marketplace

Demand requires the customer’s Demand requires the customer’s ability and willingness to purchase ability and willingness to purchase backs up their want for the backs up their want for the product.product. You want a BMW … but you also You want a BMW … but you also

NEED to eat and pay rent!NEED to eat and pay rent!

Information SearchInformation Search

How much time, expense, and effort?How much time, expense, and effort?

RISK … financial, social, emotional, RISK … financial, social, emotional, personalpersonal Passive information searchPassive information search

Attentive and receptive to ads, information Attentive and receptive to ads, information encounteredencountered

Active SearchActive Search Seek out additional information by browsing Seek out additional information by browsing

the Internet, visiting the showroom, talking to a the Internet, visiting the showroom, talking to a salesman or associatessalesman or associates

Evaluation of Evaluation of AlternativesAlternatives

Evoked Set – various products or Evoked Set – various products or brands consideredbrands considered

Evaluation becomes a desire or Evaluation becomes a desire or want for a particular product or want for a particular product or service/brandservice/brand

If my product isn’t in the evoked If my product isn’t in the evoked set, not in the game!set, not in the game!

Purchase DecisionPurchase Decision

Assist the customer’s decision by Assist the customer’s decision by reducing riskreducing risk Warranties Warranties Service contractsService contracts Credit availability or lay awayCredit availability or lay away

Post Purchase Post Purchase EvaluationEvaluation

Delight – exceed expectationsDelight – exceed expectations Satisfaction – meet expectationsSatisfaction – meet expectations Dissatisfaction – do not meet Dissatisfaction – do not meet

expectationsexpectations Cognitive Dissonance – unsure of Cognitive Dissonance – unsure of

the product’s performance relative the product’s performance relative to expectations … nagging feeling to expectations … nagging feeling you made the wrong decisionyou made the wrong decision

Factors Affecting the Factors Affecting the Consumer Buying Consumer Buying

ProcessProcess Decision Making ComplexityDecision Making Complexity

Higher risk, more involved, need infoHigher risk, more involved, need info Social InfluencesSocial Influences

Culture, reference groups, family, Culture, reference groups, family, opinion leadersopinion leaders

Situational InfluencesSituational Influences Never go to the grocery store hungry!Never go to the grocery store hungry! Theme Park and Unexpected Rain!Theme Park and Unexpected Rain!

MarketMarket a set of a set of

individuals or individuals or organizations organizations that desire a that desire a product or product or service and service and are willing to are willing to buy itbuy it

Business MarketsBusiness Markets

Commercial Commercial MarketsMarkets Buy raw materialsBuy raw materials Facilitating goods Facilitating goods

and servicesand services Communications, Communications,

transportation, transportation, agricultureagriculture

Reseller MarketsReseller Markets Channel Channel

intermediariesintermediaries WholesalersWholesalers RetailersRetailers BrokersBrokers *resale for a profit*resale for a profit

Business MarketsBusiness Markets

Government Government MarketsMarkets Federal, state, Federal, state,

county, citycounty, city Purchases related Purchases related

to services to services provided provided

Fire trucks, Fire trucks, ambulances, ambulances, supplies and office supplies and office materialsmaterials

Institutional Institutional MarketsMarkets Non-commercial Non-commercial

organizationsorganizations Churches, Churches,

charities, schools, charities, schools, hospitalshospitals

Buy finished goods Buy finished goods that facilitate their that facilitate their missionmission

Business Market Business Market CharacteristicsCharacteristics

The Buying CenterThe Buying Center Group decisionGroup decision

Hard and Soft CostsHard and Soft Costs Monetary, shipping, installation (hard)Monetary, shipping, installation (hard) Opportunity cost, downtime, human Opportunity cost, downtime, human

resource concerns (training)resource concerns (training) Example: New software for billingExample: New software for billing

Business Market Business Market CharacteristicsCharacteristics

ReciprocityReciprocity One business sells copiers and services One business sells copiers and services

and it is understood they will use your and it is understood they will use your advertising servicesadvertising services

Mutual DependenceMutual Dependence Nissan is disrupted if Calsonic goes Nissan is disrupted if Calsonic goes

downdown Walmart loses business, Proctor and Walmart loses business, Proctor and

Gamble revenues declineGamble revenues decline

Business Buying Business Buying ProcessProcess

Problem RecognitionProblem Recognition Develop Product SpecificationsDevelop Product Specifications Vendor ID and QualificationVendor ID and Qualification Solicit Proposals and BidsSolicit Proposals and Bids Vendor SelectionVendor Selection Order Processing Order Processing Vendor Performance ReviewVendor Performance Review

Market Matching Market Matching StrategiesStrategies

Mass-Market StrategyMass-Market Strategy Segmentation StrategiesSegmentation Strategies

Multisegment StrategiesMultisegment Strategies Focused (Concentrated) Focused (Concentrated) StrategiesStrategies

Segmentation Segmentation StrategiesStrategies

Concentrated Concentrated StrategyStrategy one one

marketing marketing mixmix

one segment one segment of the larger of the larger marketmarket

Ex: PorsheEx: Porshe

Multisegment Multisegment StrategyStrategy two or more two or more

marketing marketing mixesmixes

two or more two or more segmentssegments

EX: GMEX: GM

Individualized Individualized Segmentation StrategiesSegmentation Strategies

One to One MarketingOne to One Marketing Unique product for each customer in Unique product for each customer in

the target segment (B2B), Burger the target segment (B2B), Burger King, HealthcareKing, Healthcare

Mass CustomizationMass Customization Build a BearBuild a Bear

Permission MarketingPermission Marketing Opt in for email communicationsOpt in for email communications

No Segmentation No Segmentation StrategiesStrategies

Mass-Market Strategy Mass-Market Strategy (Undifferentiated (Undifferentiated Approach)Approach) one marketing mixone marketing mix target entire market for target entire market for

entire product categoryentire product category EX: Ford Model A/TEX: Ford Model A/T

Marketing Marketing SegmentationSegmentation

Identifying groups of people Identifying groups of people with shared characteristics with shared characteristics within the broad markets for within the broad markets for consumer or business productsconsumer or business products

aggregating these groups into aggregating these groups into larger segments according to larger segments according to their mutual interest in the their mutual interest in the product’s utilityproduct’s utility

Steps to Steps to SegmentSegment Identify the needs structure of the Identify the needs structure of the

consumer populationconsumer population Group the customers into Group the customers into

homogeneous segmentshomogeneous segments Id factors that are correlated with Id factors that are correlated with

the segments (segmentation the segments (segmentation variables)variables)

Select your target marketSelect your target market Develop your positioning strategyDevelop your positioning strategy

Segmentation Segmentation VariablesVariables DemographicsDemographics

age, income, sex, age, income, sex, family life cyclefamily life cycle

GeographicsGeographics regions, climate, regions, climate,

densitydensity Behavioral Behavioral

benefits sought, benefits sought, usage rates (80/20 usage rates (80/20 principle), principle), purchase occasionpurchase occasion

Psychographic Psychographic SegmentationSegmentation

MotivesMotives Personality – Personality –

fashionistas, fashionistas, techiestechies

Lifestyles –healthy, Lifestyles –healthy, antiestablishment antiestablishment - independent- independent

GeodemographicGeodemographic College studentsCollege students

Target MarketsTarget Markets

these are the aggregate these are the aggregate segments that you will segments that you will direct your marketing direct your marketing efforts towardsefforts towards

You’re prospects!You’re prospects!