Segmenting and Targeting Markets

Made by : Jatin Katna CM9211

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Market Segmentation
Market
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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Market Segment Market Segmentation

A Market is...
(1) (2) people or organizations with needs or wants, and with

(3)
(4)

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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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
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Criteria for Segmentation

Substantiality Identifiability Measurability
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 Accessibility marketing mix. Unless segment responds to a Responsiveness marketing mix differently, no separate treatment is needed.
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Segmentation Bases
Characteristics of individuals, groups,
or organizations used to divide a total market into segments.

(variables)

Bases for Segmentation

Geography
Demographics Psychographics Benefits Sought Usage Rate
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Geographic Segmentation
Segmenting markets by

region of the country/world

market size
market density climate

Benefits of Regional Segmentation

New ways to generate sales in sluggish and competitive markets Scanner/POS data allow assessment of best selling brands in region Regional brands appeal to local preferences

React more quickly to competition

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Bases for Segmentation

Geography

Demographics
Psychographics Benefits Sought Usage Rate
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Demographic Segmentation

Segmenting markets by age, gender, income, ethnic background, and family life cycle

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Bases for Demographic Segmentation

Age
Gender

Income
Ethnic background

Family Life Cycle

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Family Life Cycle

Age

Marital Status

Children

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Family Life Cycle

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Bases for Segmentation

Geography Demographics

Psychographics
Benefits Sought Usage Rate
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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
Psychographic Segmentation Geodemographics
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Lifestyle Segmentation

How time is spent

Importance of things around them Beliefs

Socioeconomic characteristics

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

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Bases for Segmentation

Geography Demographics Psychographics

Benefits Sought
Usage Rate
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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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Bases for Segmentation

Geography Demographics Psychographics Benefits Sought

Usage Rate
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Usage-Rate Segmentation

Dividing a market by the amount of product bought or consumed.

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The 80/20 Principle

A principle holding that 20 percent of all customers generate 80 percent of the demand.
Share of customers
Target customers 20%

Share of sales

Target customers 80%

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Business Marketing Segmentation

Four segments of business markets: Producers / manufacturers Resellers Governments Institutions

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Steps in Segmenting a Market

Select a market for study

Choose bases for segmentation

Select descrip -tors

Profile and analyze segments

Select target markets

Design, implement, maintain mktging mix

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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.
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Undifferentiated Targeting Strategy

Marketing approach that views the market as one big market with no individual segments and thus requires a single marketing mix.

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Undifferentiated Targeting Strategy

Advantages:
Potential savings on production and marketing costs
Unimaginative product offerings Company more susceptible to competition

Disadvantages:

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Concentrated Targeting Strategy

A strategy used to select one segment of a market (a niche) for targeting marketing efforts.

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Concentrated Targeting Strategy

Advantages:
Concentration of resources Meets narrowly defined segment Small firms can compete Strong positioning Segments too small, or changing Large competitors may market to niche segment
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Disadvantages:

Cannibalization
Situation that occurs when sales of a new product cut into sales of a firms existing products.

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Position
The place a product, brand, or group of products occupies in consumers minds relative to competing offerings.

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

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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.

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Perceptual Map and Positioning Strategy for Levi Strauss Products

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

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