Mktg10 ie ch08_ppt 10.3.16 (8)

MKTG CH 8 Powerpoint

1. © 2016 Cengage Learning. All Rights Reserved.
MKTG10
Lamb, Hair, and McDaniel
Chapter 8
Segmenting and
Targeting Markets

2. 8-1Describe the characteristics of markets and market
segments
8-2Explain the importance of market segmentation
8-3Discuss the criteria for successful market
segmentation
8-4Describe the bases commonly used to segment
consumer markets
8-5Describe the bases for segmenting business
markets
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LEARNINGOUTCOMES

3. 8-6List the steps involved in segmenting
markets
8-7Discuss alternative strategies for selecting
target markets
8-8Explain how CRM can be used as a
targeting tool
8-9Explain how and why firms implement
positioning strategies and how product
differentiation plays a role
© 2016 Cengage Learning. All Rights Reserved. 3
LEARNINGOUTCOMES

4. Describe the
characteristics
of markets and market
segments
Markets and
Market Segments
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8-1

5. © 2016 Cengage Learning. All Rights Reserved. 5
Characteristics of a Market
All markets share several
characteristics:
1.They are composed of people or organizations.
2.These people or organizations have wants and
needs that can be satisfied by particular product
categories.
3.They have the ability to buy the products they
seek.
4.They are willing to exchange their resources,
usually money or credit, for desired products.
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.

7. The Concept of Market Segmentation
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8. Explain the
importance
of market
segmentation
The Importance of
Market Segmentation
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8-2

9. © 2016 Cengage Learning. All Rights Reserved. 9
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.

10. Discuss criteria for
successful market
segmentation
Criteria for Successful
Segmentation
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8-3

11. © 2016 Cengage Learning. All Rights Reserved. 11
Criteria for Segmentation
Substantiality
Identifiability
and Measurability
Accessibility
Responsiveness
Segment must be large enough to
warrant a special marketing mix.
Segments must be identifiable and their
size measurable.
Members of targeted segments must be
reachable with marketing mix.
Unless segment responds to a marketing
mix differently, no separate treatment is
needed.

12. Describe the bases
commonly used
to segment
consumer markets
Bases for Segmenting
Consumer Markets
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8-4

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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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Benefits of
Regional Segmentation
New ways to generate sales in
sluggish and competitive markets
Scanner data allow assessment of
best selling brands in region
Regional brands appeal to local
preferences
Quicker reaction to competition

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Demographic Segmentation
Age
Gender
Income
Ethnic background
Family life cycle

17. Age Segmentation
•Tweens
•Teens
•Millennials
•Generation X
•Baby Boomers
•The War Generation
•The Great Depression Generation
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Marketers can segment markets by age
using cohorts:

18. Gender Segmentation
•Women make 85 percent of
consumers goods purchases
annually.
•Marketers of products such as
clothing and cosmetics still segment
markets by gender, and many of
these marketers are going after the
less-traditional male market.
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19. Income Segmentation
•Income level influences consumers’
wants and determines their buying
power.
•Retailers can appeal to:
–Low-income
–High-income
–Both
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20. © 2016 Cengage Learning. All Rights Reserved. 20
Ethnic Segmentation
The three largest ethnic groups in the
United Statesare:
Hispanic Americans
African Americans
Asian Americans
To meet the needs and wants of
expanding ethnic populations, some
companies make products geared
toward specific ethnic groups.

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Family Life Cycle
Age
Children
Marital
Status

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22
8.1
Family Life Cycle

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Psychographic
Segmentation
Market segmentation on the basis of
personality, motives, lifestyles, and
geodemographics.

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Bases for Psychographic
Segmentation
Personality
Motives
Lifestyles
Geodemographics

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Personality and Motive
Segmentation
Reflects a person’s traits, attitudes,
and habits.
Personality
Motives
Marketers might appeal to emotional,
rational, or status motives, among
others.

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Lifestyle Segmentation
How time is spent
Importance of things around
them
Beliefs
Socioeconomic characteristics

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GeodemographicSegmentation
Segmenting potential customers into
neighborhood lifestyle categories.
Combines geographic, demographic,
and lifestyle segmentation.

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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.

30. Describe the bases for
segmenting
business markets
Bases for Segmenting
Business Markets
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8-5

31. © 2016 Cengage Learning. All Rights Reserved. 31
Bases for Segmenting Business
Markets
Company
Characteristics
Buying
Processes
Producers
Resellers
Government
Institutions

32. © 2016 Cengage Learning. All Rights Reserved. 32
Company Characteristics
Important segmentation
variables:
Geographic location
Type of company
Company size
Product use

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Buying Processes
Satisficers
Business customers who place an
order with the first familiar supplier to
satisfy product and delivery
requirements.
Optimizers
Business customers who consider
numerous suppliers, both familiar
and unfamiliar, solicit bids, and study
all proposals carefully before
selecting one.

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Buyer Characteristics
Demographic characteristics
Decision style
Tolerance for risk
Confidence level
Job responsibilities

35. List the steps involved in
segmenting markets
Steps in
Segmenting a Market
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8-6

36. Markets are dynamic, so it is important that companies
proactively monitor their segmentation strategies over time.
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Steps in Segmenting Markets
1Select a
market for
study
2
Choose bases
for
segmentation
3Select
descriptors
4Profile and
analyze
segments
5Select
markets
6Design,
implement,
and maintain
marketing
mix

37. Discuss alternative
strategies for selecting
target markets
Strategies for Selecting
Target Markets
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8-7

38. © 2016 Cengage Learning. All Rights Reserved. 38
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.

39. © 2016 Cengage Learning. All Rights Reserved. 39
Strategies for Selecting Target Markets
Concentrated
Strategy
Undifferentiated
Strategy
Multisegment
Strategy

40. A marketing approach that
views the market as one big
market with no individual
segments and thus
uses a single
marketing mix.
Undifferentiated Targeting
Strategy
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41. Advantage:
Potential savings on
production and marketing
costs
Disadvantages:
Unimaginative product
offerings
Company more
susceptible to competition
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Undifferentiated
Strategy
Undifferentiated Targeting
Strategy

42. Concentrated
Targeting Strategy
A strategy used to select
one segment of a market for
targeting marketing efforts.
Niche
One segment of
a market.
Concentrated Targeting
Strategy
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43. Advantage:
Concentration of resources
Meets narrowly defined
segment
Small firms can compete
Strong positioning
Disadvantages:
Segments too small, or
changing
Large competitors may
market to niche segment
Concentrated Targeting
Strategy
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Concentrated
Strategy

44. MultisegmentTargeting
Strategy
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A strategy that chooses two or
more well-defined market segments
and develops a distinct marketing
mix for each.

45. Advantage:
Greater financial success
Economies of scale
Disadvantages:
Higher costs
Cannibalization
MultisegmentTargeting
Strategy
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Multisegment
Strategy

46. Product design costs
Production costs
Promotion costs
Inventory costs
Marketing research costs
Management costs
Cannibalization
Costs of Multisegment
Targeting Strategy
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47. Explain how CRM can
be used as a targeting
tool
CRM as a Targeting Tool
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8-8

48. © 2016 Cengage Learning. All Rights Reserved. 48
CRM
•Recall from Chapter 1 that CRM entails
tracking interactions with customers to
optimize customer satisfaction and
long-term company profits.
•Companies that successfully implement
CRM tend to customize the goods and
services offered to their customers
based on data generated through
interactions between carefully defined
groups of customers and the company.

49. © 2016 Cengage Learning. All Rights Reserved. 49
CRM Trends
•One-size-fits all marketing no longer relevant
•Direct and personal marketing efforts will grow
to meet needs of busy consumers.
•Consumers will be loyal to companies that have
earned—and reinforced—their loyalty.
•Mass-media approaches will decline as
technology allows better customer tracking.

50. Explain how and why firms
implement positioning
strategies and how product
differentiation
plays a role
Positioning
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8-9

51. What is Positioning…
•“The art and science of fitting the
product or service to one or more
segments of the broad market in such a
way as to set it meaningful apart from
the competition.” –(Kotler, 2010)
•The process of creating a desired image
among its competitors in the publics
mind.

52. © 2016 Cengage Learning. All Rights Reserved. 52
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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Brand Positioning
Tide Tough, powerful cleaning
Cheer Tough cleaning, color protection
Bold Detergent plus fabric softener
Gain Sunshine scent and odor-removing formula
Era Stan treatment and stain removal
Dash Value brand
Solo Detergent and fabric softener in liquid form
Dreft Outstanding cleaning for baby clothes, safe
Ivory Fabric and skin safety on baby clothes
Ariel Tough cleaner, aimed at Hispanic market
Positioning of Procter & Gamble Detergents

54. © 2016 Cengage Learning. All Rights Reserved. 54
Effective Positioning
1.Assess the positions occupied by competing
products
2.Determine the dimensions underlying these
positions
3.Choose a market position where marketing
efforts will have the greatest impact

55. 3.55
Brand Positioning
Internal Reality
What should
we say?
What would
we like to
say?
What can
we say?
Brand
Positioning
External Inputs
Leadership Direction
Consumer Insights
& Research
Strategy
Time, Resources
& Reality of Brand
Functions

56. Why is positioning important?
•Limited budgets and resources
•50% of business go under in the first two years
•Defining & positioning your message improves
the odds of success
•Most business are very knowledgeable about
what they produce
–“Found a need and filled it”
•Now what?

57. Customer Choice…
•Positioning your product involves crafting a
message that is consistent with your image.
•Customers make choices based on Image,
personality, convenience, service,
uniqueness, price, benefits, features, value
and beliefs.
•What was a recent purchase you made?
•Which aspects listed above went into you
decision making process?

58. Bases & strategies for positioning
•Benefits
•Comparison with competitors
•Market
•Price and Quality

59. Approaches to positioning
•Positioning strategies generally focus
on either the CONSUMER or the
COMPETITION.
•Both types of positioning use benefits –
one ties the benefit to the
consumer…the other shows the benefit
vs. the competition.

60. Consumer Benefits

61. Benefit Positioning
•Benefit positioning is generally a
stronger basis for positioning, because it
answers the consumer question: What
will this do for me?
•Miller Lite offers software that can be
used as a social organizer.
•On the Valvoline motor oil site, visitors
can send greeting cards, download
racing screen savers and sign up for
newsletters.

62. Competitor

63. Competitor
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64. Negative Advertising
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65. Market positioning…
•The most important factor in establishing a
brand in the market place…
•All other marketing activities are based on the
position of a product.
•A good brand strategy CANNOT exist without
proper positioning.
•The position of the brand is a key factor in
communicating benefits and differentiating it
from the competition.
•What strategies do marketer’s use to position
products?

66. Price & Quality
•Is another popular positioning strategy.
•Ads reflect the image of a high quality brand
where cost is considered secondary to the
quality and benefits of using the product &
brand.
•Premium positioned brands use this type of
strategy.
•Focus on quality (or value) at a competitive
price.

67. Positioning of companies….
•What comes to mind when you think of Cabela’s?
•What comes to mind when you think of Gary’s
Gun Shop?
•What comes to mind when you think of Wal-
Mart?
•What comes to mind when you think of Macy’s?
•What comes to mind when you think of Red Sox?
•What comes to mind when you think of Canaries?
•Now think about how these companies
communicate their position
•Are their approaches different or similar?

68. © 2016 Cengage Learning. All Rights Reserved. 68
Product Differentiation
A positioning strategy that some firms
use to distinguish their products from
those of competitors.

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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.

70. 3.70
Brand Positioning Example
Price
Quality

71. Competitor positioning
•Many firms position by benefits that
provide advantages over their
competitors.
•Companies may position themselves
against
–An entire industry
–A particular firm
–Relative industry position
•“I Can’t Believe It’s Not Butter”
margarine positions itself against other
margarines.

72. •The process involved in creating a unique
name and image for a product in the
consumers’ mind, mainly through
advertising campaigns with a consistent
theme.
•Branding aims to establish a significant
and differentiated presence in the
market that attracts and retains loyal
customers
Business Branding: What

73. •The objectives that a good brand will
achieve include:
–Delivers the message clearly
–Confirms your credibility
–Connects your target prospects emotionally
–Motivates the buyer
–Concretes User Loyalty
Business Branding: Why

74. •Increase the public's awareness of your
business name and logo
•Build a strong company "essence" that
inspires loyalty and trust in your current
customers and provides a level of
familiarity and comfort to draw in
potential customers
Business Branding

75. •What is your company’s mission?
•What are the benefits and features of your
products or services?
•What do your customers and prospects already
think of your company?
•What qualities do you want them to associate
with your company?
Business Branding:

76. •Name
•Positioning
•Symbol/Icon/Logo
•Slogan/Tag Line
•Personality
Business Branding: How

77. © 2013 by Cengage Learning Inc. All Rights Reserved. 77
Effective Positioning
1.Assess the positions occupied by competing
products
2.Determine the dimensions underlying these
positions
3.Choose a market position where marketing
efforts will have the greatest impact
9

78. © 2013 by Cengage Learning Inc. All Rights Reserved. 78
Product Differentiation
a positioning strategy that some firms
use to distinguish their products from
those of competitors.
9

79. Attribute
Price and Quality
Use or Application
Product User
Product Class
Competitor
Emotion
© 2016 Cengage Learning. All Rights Reserved. 79
Positioning Bases

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

81. Chapter 8 Video
NumiOrganic Tea
NumiOrganic Tea describes how its sampling
program helps position the brand with its target
markets. Its premium position ties naturally into the
customer outlined in the film, but Numiis also
interested in expanding outside of the major tea
drinker into more casual tea drinkers.
CLICK TO PLAY
© 2016 Cengage Learning. All Rights Reserved.81