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Markets
A Market is...
(1)
(2)
(3)
(4)
What is Market
Segmentation?
The breaking down or building up
of potential buyers into groups
called
Market Segments
4-3
Benefits of
Market Segmentation
1. Identifies opportunities for
new product development
2. Helps design marketing
programs most effective for
reaching homogenous groups
of buyers
3. Improves allocation of
marketing resources
4-4
Market Segmentation
Variables
Socioeconomic
Behavioral
Market
Segmentation
Variables
Psychographic
Benefits Sought
Fundamental-Buyer
Related Questions
Who are they?
What do they want to buy?
How do they want to buy?
When do they want to buy?
Where do they want to buy?
Why do they want to buy?
4-6
Market Segmentation
Market
Market
People
People or
or organizations
organizations with
with
needs
needs or
or wants
wants and
and the
the ability
ability and
and
willingness
willingness to
to buy
buy
Market
Market
Segment
Segment
A
A subgroup
subgroup of
of people
people or
or
organizations
organizations sharing
sharing one
one or
or more
more
characteristics
characteristics that
that cause
cause them
them to
to
have
have similar
similar product
product needs.
needs.
Market
Market
Segmentation
Segmentation
The
The process
process of
of dividing
dividing aa market
market
into
into meaningful,
meaningful, relatively
relatively similar,
similar,
identifiable
identifiable segments
segments or
or groups.
groups.
7
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
8
Identifiability
Identifiability
Criteria
Criteria
for
for
Market
Market
Segments
Segments
Accessibility
Accessibility
Responsiveness
Responsiveness
Segment
Segment must
must be
be large
large
enough
enough to
to warrant
warrant aa special
special
marketing
marketing mix.
mix.
Identifiability
Identifiability
Measurability
Measurability
Segments
Segments must
must be
be identifiable
identifiable
and
and their
their size
size measurable.
measurable.
Members
Members of
of targeted
targeted segments
segments
Accessibility
must
Accessibility
must be
be reachable
reachable with
with
marketing
marketing mix.
mix.
Unless
Unless segment
segment responds
responds to
to aa
Responsiveness
Responsiveness marketing
marketing mix
mix differently,
differently, no
no
separate
separate treatment
treatment is
is needed.
needed.
10
11
Segmentation Bases
Characteristics of
individuals, groups,
or organizations used
to divide a total market
into segments.
(variables)
12
Bases
Bases
Used
Used to
to
Segment
Segment
Consumer
Consumer
Markets
Markets
Demographics
Demographics
Psychographics
Psychographics
Benefits
Benefits Sought
Sought
Usage
Usage Rate
Rate
13
Geographic Segmentation
Region of the country or world
Market size
Market density
Climate
14
Bases
Bases
Used
Used to
to
Segment
Segment
Consumer
Consumer
Markets
Markets
Demographics
Demographics
Psychographics
Psychographics
Benefits
Benefits Sought
Sought
Usage
Usage Rate
Rate
15
Bases for
Demographic Segmentation
Age
Gender
Income
Ethnic background
Family Life Cycle
16
Bases
Bases
Used
Used to
to
Segment
Segment
Consumer
Consumer
Markets
Markets
Demographics
Demographics
Psychographics
Psychographics
Benefits
Benefits Sought
Sought
Usage
Usage Rate
Rate
17
Bases for
Psychographic Segmentation
Personality
Personality
Motives
Motives
Lifestyles
Lifestyles
Psychographic
Psychographic
Segmentation
Segmentation
Geodemographics
Geodemographics
18
Psychographic Segmentation
Divides Buyers Into Different Groups
Based on:
19
Behavioral Segmentation
Dividing the market into groups
based on variables such as:
Occasions
Benefits
User status
Usage rate
Loyalty status
Readiness stage
Attitude toward product
Marketing for Hospitality and Tourism, 3e
Philip Kotler, John Bowen, James Makens
20
Geodemographic
Segmentation
Segmenting potential
customers into
neighborhood lifestyle
categories.
Combines geographic,
demographic, and lifestyle
segmentation.
21
VALS 2 Dimensions
Abundant Resources
Principleoriented
Statusoriented
Actionoriented
Actualizers
Minimal Resources
Fulfillers
Achievers
Experiencers
Believers
Strivers
Makers
Strugglers
22
Bases
Bases
Used
Used to
to
Segment
Segment
Consumer
Consumer
Markets
Markets
Demographics
Demographics
Psychographics
Psychographics
Benefits
Benefits Sought
Sought
Usage
Usage Rate
Rate
23
Benefit Segmentation
The process of grouping
customers into market
segments according to
the benefits they seek
from the product .
24
Men
Heavy users
Babool,
ColgateTooth-powder
Medicinal
(Decay
Prevention)
Large families
Heavy users
Promise,
Colgate Total/ Flouriguard
Taste
Children
Spearmint lovers
Colgate Regular,
Promise - Just for kids
Cosmetic
(Bright teeth)
Teens,
Young adults
Smokers
Close up,
Colgate-Gel
25
Bases
Bases
Used
Used to
to
Segment
Segment
Consumer
Consumer
Markets
Markets
Demographics
Demographics
Psychographics
Psychographics
Benefits
Benefits Sought
Sought
Usage
Usage Rate
Rate
26
Usage-Rate Segmentation
27
Segmentation
Rest of
India
Age
Occasi
onal
Sex
Regula
r
West
>3
South
5
2535
Consum
ption
15-25
Geograp
hical
Female
Ma
le
Segmentation by price
Under Rs. 3 Lakhs
Ambassador
Fiat Palio
Hyundai Santro, Getz
Chevrolet Opel Corsa
Maruti Zen, Wagon R, Versa, Esteem, Gypsy
Ford Icon & Fiesta
Tata Indica, Indigo
Mahindra Bolero
30
Segmentation by price
Chapter 7 Version 6e
31
Chapter 7 Version 6e
32
Chapter 7 Version 6e
33
38
Business Marketing
Segmentation
Geographic
MacroMacrosegmentation
segmentation
Customer Type
Customer Size
Product Use
Business
Business
Markets
Markets
Purchasing Criteria
MicroMicrosegmentation
segmentation
Purchasing Strategy
Importance
Personal
Characteristics
39
Steps in Segmenting a
Market
Select
a
market
for
study
Choose
bases
for
segmentation
Select
descriptors
Profile
and
analyze
segments
Select
target
markets
Design,
implement,
maintain
mkting
mix
40
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.
41
Undifferentiated Concentrated
Strategy
Strategy
Multisegment
Strategy
42
Undifferentiated
Targeting Strategy
Advantages:
Potential savings on
production and marketing
costs
Disadvantages:
Disadvantages
Unimaginative product
offerings
Company more
susceptible to competition
43
Concentrated
Targeting Strategy
Advantages:
Advantages
Concentration of resources
Meets narrowly defined
segment
Small firms can compete
Strong positioning
Disadvantages:
Disadvantages
Multisegment
Targeting Strategy
Advantages:
Advantages
Disadvantages:
Disadvantages
High costs
Cannibalization
45
Costs of Multisegment
Targeting
$
$
$
$
$
$
$
Cannibalization
Situation that occurs when
sales of a new product
cut into sales of a
firms existing products.
47
Positioning
Developing a specific
marketing mix to influence
potential customers overall
perception of a brand,
product line, or
organization in general.
48
Position
The place a product, brand,
or group of products
occupies in consumers
minds relative to competing
offerings.
49
Effective Positioning
Assess the positions of
competing products
Determine the dimensions of
these positions
Choose an effective market
position
50
Product Differentiation
A positioning strategy that
some firms use to
distinguish their products
from those of competitors.
51
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.
52
Perceptual Mapping--Levis
High Price
Vintage
Red Line
Slates
Classic
Red Tab
Dry Goods
501
Dockers
Classics
Red Tab
Basics
L2
Designer
Dockers
Premium
Red Tab
Elesco
Silver Tab
Old product
Low Price
New product
53
Positioning Bases
Attribute
Attribute
Price
Price and
and Quality
Quality
Use
Use or
or Application
Application
Product
Product User
User
Positioning
Positioning
Bases
Bases
Product
Product Class
Class
Competitor
Competitor
54
Repositioning
Changing consumers
perceptions of a brand
in relation to
competing brands.
55