Gilbert A. Churchill, Jr. J. Paul PeterGilbert A. Churchill, Jr. J. Paul Peter

Chapter 8

Market Segmentation

Marketing

Basic DefinitionsBasic DefinitionsSlide8-1

ApproachApproach

Market

MarketSegmentation

DefinitionDefinition

TargetMarket

Individuals or organizations with the desire and ability to buy goods and services

The particular market segment that the organization selects to serve.

The process of dividing a market into groups of potential buyers who have similar needs and wants, value perceptions, or purchasing behavior

Approaches to Serving MarketsApproaches to Serving MarketsTable8.1

Slide8-2

ApproachApproach

Mass Marketing A single marketing mix for the entire market

SegmentMarketing

DescriptionDescription ExamplesExamples

IndividualMarketing

Phone service, WEB pages

Niche Marketing

A single marketing mix for one segment of the market

Women's Workout World (exercise facilities for women); American Association for Retired Persons (lobbying and membership services for people over 50)

McDonald’s (Happy Meals for young children, Big Macs for Teens, Arch Deluxe for adults); Toshiba copiers (several sizes and features to meet different levels of business needs)

Personalized amenities for repeat guests at Ritz-Carlton hotels; management consulting services tailored to an organization’s needs

A marketing mix customized for an individual or organization

Differentiated Marketing

Separate marketing mixes for two or more segments of the market

Market SegmentationMarket Segmentation used to develop a competitive advantageused to develop a competitive advantage

Market Potential - the total purchases that buyers in a segment will likely make during a specified period of time, given a specified level of marketing activity

Market Potential - the total purchases that buyers in a segment will likely make during a specified period of time, given a specified level of marketing activity

Measurability - be able to measure its size and

characteristics

Measurability - be able to measure its size and

characteristics

Responsiveness - respond differently to

some aspect of the 4P than other segments

Responsiveness - respond differently to

some aspect of the 4P than other segments

Accessibility - be able to reach members of target segment with customized

marketing mixes

Accessibility - be able to reach members of target segment with customized

marketing mixes

Criteria for Successful

MarketSegmentation

Criteria for Successful

MarketSegmentation

Slide8-3

P & G Segmentation - Detergent MarketP & G Segmentation - Detergent Market53% market share of the $3.2 billion market53% market share of the $3.2 billion market

TIDE - “Tide’s in, dirt out”

CHEER - “all temperature -

Cheer”

BOLD - “cleans, soften,and

controls static”

GAIN - “freshens like

sunshine”

ERA - “built-in stain

remover”

DASH - “attack

tough dirt”

OXYDOL - “makes clothes

bright”

SOLO - “liquid detergent with fabric softener

DREFT - “a clean you can

trust”

IVORY SNOW - “mild, gentle soap for baby clothes

ARIEL - “tough cleaner”

Slide8-4

Mass/Undifferentiated MarketingMass/Undifferentiated MarketingSlide8-5

Price

PromotionPlacement

Product

The Market

Everyone

Niche MarketingNiche MarketingSlide8-6

Price

PromotionPlacement

Product

The Market

MarketSegment

Differentiated MarketingDifferentiated MarketingSlide8-7

Price

PromotionPlacement

Product

The Market

MarketSegment

MarketSegment

Price

PromotionPlacement

Product

Individual MarketingIndividual MarketingSlide8-8

Price

PromotionPlacement

ProductThe Market

CustomerPrice

PromotionPlacement

Product

Price

PromotionPlacement

Product

Price

PromotionPlacement

Product

Customer

Customer

Customer

Some Bases for Segmenting Some Bases for Segmenting Consumer MarketsConsumer Markets

Slide8-9

DemographicDemographic

SegmentationSegmentation

GeographicGeographic

PsychologicalPsychologicalBenefitBenefit

BehaviorBehavior SouthwestSouthwestAirlinesAirlines

Frito-LayFrito-LaySnacksSnacks

ColgateColgateToothpasteToothpaste

CampbellCampbellSoupSoup

LevisLevisDockersDockers

Table8.2

VALS2 Lifestyle Categories - VALS2 Lifestyle Categories - Consumer MarketsConsumer Markets

Slide8-10

Figure8.2

Resources

Abundant

Self-OrientationPrincipalOriented

StatusOriented

ActionOriented

Minimal

Fulfilleds Achievers Experiencers

Believers Strivers Makers

Strugglers

Actualizers

Some Bases for Segmenting Some Bases for Segmenting Organizational MarketsOrganizational Markets

Slide8-11

SegmentationSegmentation

Geographic

CustomerType

OrganizationalBuyer

BehaviorFlowers IndustriesBaked Goods

IntelComputer Chips

Apple ComputerNewton PocketComputer

Table8.3

The Process of Market SegmentationThe Process of Market SegmentationSlide8-12

Figure8.5

Analyze CustomerProduct Relationship

Investigate Segmentation Bases

Develop ProductPositioning

Select Segmentation Strategy

Product Product PositionPosition

Positioning Bases

AttributeBMW - performance

Price and QualityDillards VS KMart

Use or ApplicationGatorate

Product UserJ&J Baby Shampoo

Product ClassParkay, Caress

CompetitorVISA VS AMEX

The perception of the product relative to competing products in the minds of potential buyers.

Slide8-13

Sample Positioning Map: AutomobilesSample Positioning Map: AutomobilesSlide8-14

Figure8.6

Traditional Sporty

Functional

Luxurious•Lexus

•BMW

•Pontiac

•Mercedes

Cadillac•

Lincoln•

•Chrysler•BuickOldsmobile•

•Porsche

•Chevrolet

•Nissan

•Toyota•Saturn

•VW

Ford•

Dodge•

Plymouth•

Mercury•