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MKTG
Designed by
Amy McGuire, B-books, Ltd.
Prepared by
Dana Freeman, B-books, Ltd.
Lamb, Hair, McDaniel 2009-2010
8CHAPTER
Segmenting and Targeting Markets
Describe the
characteristics
of markets and
market segments
A marketing strategy which involves
dividing a broad target market into
subsets of consumers, or businesses,
that have, common needs, interests,
and priorities, and then designing and
implementing a marketing mix to target
them.
Male and female
Ages 13 – 25
Active
Lifestyle brand
Working middle class ($60,000 – $80,000)
Do some type of sport
Seeking quality clothing at competitive price
Urban youth: comfort, durability & style
Fashion Statement
Male and female
Ages 15 – 40
Athletes/Sportsmen
Middle/Upper class ($80 - $125,000)
Sports performance brand
Athletic teams, college’s athletic teams,
for product sponsorship and eventual
promotion to the members of these teams.
Elite athletes who demands quality,
innovation and performance apparel.
A younger demographic (20 – 35-year olds)
Customers have a flair for technology
Able to find their way around a tablet-like device
More likely to embrace changes and advances in technology
More educated people.
o College and Graduate
Working professionals
o Income $100,000+
Major metropolitan cities and suburbs
Enjoy reading
What do the images suggest?
Are the people old/young? White,
African American, Hispanic, Asian?
Where are they, e.g. at home, on
holiday?
What are they wearing? Nice
clothes, business, casual, grunge?
Does it look like they are in a city,
suburbs, small town,
international?
Are they at home, work, office,
remote location?
Are they using technology? iPads,
smart phones?
Until 1960’s marketers did not
practice segmentation
o Sloppy effort
o One size, fits all
o Either buy it, or go without
o Little competition
Today, marketers must segment the
market to survive
o Not everybody is your target market
• My 85 year old mother is not going to buy
your headphones
Substantial
Identifiableand Measurable
Accessible
Responsive
The market segment should be large enough, in terms of sales and profitability, to warrant
the firm’s possible attention
Segments must be identifiable and their size measurable.
Members of targeted segments must be reachable with marketing mix.
Each market segment should respond better to a distinct marketing mix, rather than a
generic offering
Old Navy
Useful
segment?
Substantial
Identifiable and measurable
Accessible
Responsive
Then, yes: Useful segmentation scheme
Successful Market Segmentation
Describe the bases
commonly used
to segment
consumer markets
Segmentation
VariablesMarketers use segmentation
bases (variables)
Characteristics of
individuals, groups, or
organizations used to divide
a total market into segments.
• There are a variety of ways of segmenting the
market for cars.
• Remember that market segmentation
should be focused on consumer groups
and their needs, not on the class of car.
• Classifying different types of cars (such as
sedans, people movers, convertibles, and so
on) is NOT an acceptable approach to market
segmentation.
• These types of cars are product solutions
designed to meet the needs of specific
consumer segments.
Demographic
o Industry: What industries should we serve?
o Company size: What size companies should we serve?
o Location: What geographical areas should we serve?
Operating Variables
o Technology: What customer technologies should we focus on?
o User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers?
o Customer capabilities: Should we serve customers needing many or few services
Situational Factors:
o Urgency: Should we target companies that need quick and sudden delivery or service
o Specific application: should we focus on a certain application or product
o Size and order: Should we focus on large or small orders
Personal Characteristics
o Buyer-Seller Similarity: Should we focus on business whose people and values are similar to ours
o Attitude toward risk: Should we serve risk taking or risk avoiding customers
o Loyalty: Should we serve businesses that show a high degree of loyalty to their suppliers
The business market consists of four segments: producers, resellers, government, and institutions
Usage Rate
Benefits Sought
Psychographics
Demographics
Geography
Targeting according to age, race, religion, gender,
family size, ethnicity, income, and education.
Advantages of demographic segmentation is that
the information you need is readily available for
you.
Most popular because customer wants are closely
linked to variables such as income and age.
o Also, for practical reasons, there is often much more data
available to help with the demographic segmentation
process.
There are about 20 million tweens (ages 9-12) in the U.S. This group spends
over $20 billion per year. Retailers such as Limited Too and Lululemon Ivivva
brand serve this market.
Segmenting your market based
on consumer age
Tweens (8 – 12)
o Big influence over family
purchases
o Retailers serve clothing imitates
teenagers and young adults
o Adult technology for kids
Teens
o Technology savvy
o Grown-up tastes and preferences
o Learn quickly from social media
Born between 1980 and 2003
o Grew-up on personal computers, cell
phones, and video game systems
o Know how to use a tablets,
smartphones, and apps.
o Entrepreneurial
o Engage in peer to peer marketing on
youtube.
Born 1966 – 1976
Tend to be disloyal to brands
Skeptical of big business
Many are parents, make purchasing decisions with input from family
Desire an experience, NOT a product
Boon between 1946 – 1964
Represent ½ of all the spending in the US
Make up 49% of affluent households
Spend lots of money on travel, electronics, and cars
Women make 70 percent of
consumers goods purchases
annually
Many marketers of male-dominated
arenas are targeting women
Increasing numbers of marketers in
female dominated categories are
targeting men.
o Russell Simmons Yoga Line
o Jenny Craig & Weight Watchers
Segmenting the market based on a
consumer's income and
expenditure patternso Upper High Class
o High Class
o Upper Middle Class
o Middle Class
o Lower Middle Class
o Lower Class
Low-income (Walmart)
High-income (Saks Fifth Avenue)
Both (Costco, Target)
Recognizing the special
strengths or needs of
an ethnic community in offering
it appropriate products and
services using an appropriate
marketing approach.
Three largest ethnic segments
o Hispanics
o African Americans
o Asians
Kmart teaming up with Hispanic
celebrities to produce line of
clothing targeting this segment
A method for separating the aspects of the family market at different stages of life.
The marketing technique takes the size of a person's family into consideration, along with a potential customer's age and professional status.
Single young adults• Clothing.
• Beauty.
• Accessories.
• Personal vehicles.
• Entertainment.
• Travel.
• Basic furniture.
• Basic appliances
• Pet expenses.
• Studies.
Social media has enabled custom audiences and precise
targeting.
Marketers to start using signals to target and schedule
media, not predictions based on surveys and panels
Real signals activated by customers to identify where they
are on their individual journey to purchase
o Logging onto the brand website
o Searching for a brand name
o Talking about brand on social media
o Installed the brands app on their cell phone
o Starting a Pinterest board
Age, income, where they went to school, or ethnicity don’t
matter
Location data merged with credit card data provides great signals.
Data from Pinterest, downloaded apps, twitter, amazon searches, Instagram
following, etc. can tell us
o We need to reach customers as they are demonstrating intent
Are they talking about you on twitter? Are they watching a product demonstration
on Youtube, Are they sharing an Instagram post for your product?
Psychographic segmentation referred to as behavioral segmentation.
Dividing your market into segments based upon different personality traits, values, attitudes, interests, and lifestyles of consumers.
This segmentation is advantageous because it allows you to engage in product design and marketing in a focused manner.
If these are known, products and marketing campaigns can be customized so that they appeal more specifically to customer motivations.
• Hard working• Dog lover• TV binge watcher• Scary film lover• Baseball fan• Environmentally aware• Thrill seeker• Loves Italian food• Morning person• Plays computer games• Tech savvy• Fashionista• Republican/Democrat• Gardening• LGBTQ activist• Starbucks every morning• Spender/Saver/in-debt
PersonalityTraits, attitudes, and habits, opinions, interests and hobbies
MotivesLove, compassion, acceptance, security
Lifestylesvalues, beliefs, opinions, and interests
GeodemographicsCombining demographics, psychographics and geography
http://www.wordst
ream.com/blog/w
s/2016/06/27/fa
cebook-ad-
targeting-options-
infographic
Segmenting potential
customers into
neighborhood lifestyle
categories.
Combines geographic,
demographic, and lifestyle
segmentation.
Geodemographic
Segmentation
The process of grouping
customers into market segments
according to the benefits they
seek from the product.
Benefit
Segmentation
Consumers are divided into groups of non-users and light, medium, and heavy product
users, and companies often seek to target one heavy user rather than several light users.
List the steps
involved in
segmenting
markets
Target
Market
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
satisfying exchanges.
ConcentratedStrategy
UndifferentiatedStrategy
MultisegmentStrategy
Undifferentiated
Targeting
Strategy
A marketing approach that
views the market as one big
market with no individual
segments and thus
requires a single
marketing mix.
Undifferentiated Targeting Strategy
All consumers have similar needs for
a specific kind of product.
Single marketing mix
o Pricing strategy
o Promotional program aimed at
everybody
o Type of product with little/no
variation
o Distribution system aimed at entire
market
The elements of the marketing mix
do not change for different
consumers, all elements are
developed for all consumers.
Concentrated
Targeting Strategy
A strategy used to select one
segment of a market for
targeting marketing efforts.
NicheOne segment of
a market.
• A single market segment with one
marketing mix (niche)
• It allows a firm to specialize
• Can focus all energies on satisfying
one group's needs
• A firm with limited resources can
compete with larger organizations.
Only one marketing mix is developed.
Manufacturer of Rolex watches has
chosen to concentrate on the luxury
segment of the watch market.
Multisegment
Targeting
Strategy
A strategy that chooses
two or more well-defined
market segments and
develops a distinct
marketing
mix for each.
Multi-segment Targeting Strategy
Situation that occurs when
sales of a new product cut into
sales of a firm’s existing
products.
Cannibalization
Cannibalization
Explain how and why
firms implement
positioning strategies
and how product
differentiation
plays a role
Arranging for a product or brand to occupy
a clear, desirable and distinctive place
relative to the competition in the minds of
the target customers.
A process which influences customers
overall perception of the brand.
Attribute
Price and Quality
Use or Application
Product User
Product Class
Competitor
Emotion
Association of a product with a product
feature, an attribute, or customer benefit.
Rice Krispies
o Snap, crackle, pop - Simply highlighting the attribute
of noise that this cereal makes, which adds a fun
benefit to the product
KFC
o Finger Linkin’ good - Focuses on the enjoyable taste
of the product
M&M’s
o Melts in your mouth – Connects product feature
directly to the benefits
High price as a symbol of quality, or low price as an indicator of value may be used to position a product.
Association of a product with price,
value, quality
American Express
o Don’t leave home without it – states that
the product is vital when traveling
Arm & Hammer
o Fruit and vegetable wash – for clean and
healthy vegetables
Vicks VapoRub
o For use on chest and back to suppress
cough and cold
Association of a product with some type of use or application
Positioning base focuses on a personality or type of user.
Subway
o Eat Fresh – positioned against other
food products
Federal Express
o When it absolutely , positively has to be
there overnight – states there is no
competitive alternative when you want
promptness
Activia Yogurt
o Breakfast blend – states can eat on the
go as breakfast meal
Product is positioned as associated with a particular
category of products.
Burger King
o Have it you way – Highlights the flexibility of their menu choices, implied against McDonald’s
offerings
Avis Rent-a-Car
o We try harder - Targets the market leader (Hertz), by implying that they are lazy and
complacent, particularly in the area of customer service
Apple Computer
o I’m a Mac, I’m a PC – Highlights the young progressive user against the competition
Positioning against competitors
Positioning using emotion focuses on how the product makes customers feel.
Changing consumers’
perceptions of a brand in
relation to competing brands.
