Unit 7.Market SegmentationTargeting, and Positioning
Unit 7. Market Segmentation, Targeting, and Positioning
MarketSegmentationMarkets consist of buyers,and buyers differ inone or more ways.They may differ in their wantsresources,locations,buying attitudes,and buyingpractices.Through market segmentationcompanies dividelarge,heterogeneous marketsinto smallersegmentsthat can be reached moreefficientlyandeffectivelywithproductsandservices that match their unique needs. In thisunit,we discussthree important segmentationtopics:segmenting consumer markets,segmentingbusinessmarkets,and requirementsforeffectivesegmentation
Market Segmentation Markets consist of buyers, and buyers differ in one or more ways. They may differ in their wants, resources, locations, buying attitudes, and buying practices. Through market segmentation, companies divide large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs. In this unit, we discuss three important segmentation topics: segmenting consumer markets, segmenting business markets, and requirements for effective segmentation
Steps in Market SegmentationTargeting, and Positioning (See P118)MarketSegmentation1.Identify bases forsegmenting the market2.Developsegment profilesMarket Targeting3.Develop measure ofsegment attractiveness4.Select target segmentsMarketpositioning5.Develop positioning fortarget segments6.Develop a marketingmix for each segment
3 Steps in Market Segmentation, Targeting, and Positioning (See P118) Market Segmentation 1. Identify bases for segmenting the market 2. Develop segment profiles Market Targeting 3. Develop measure of segment attractiveness 4. Select target segments Market positioning 5. Develop positioning for target segments 6. Develop a marketing mix for each segment
SegmentingConsumerMarketsThere is no single way to segment a market.A marketer hastotry differentsegmentation variables,aloneandincombination,to find the best way to view the marketstructure.The major elements that might be used insegmentingconsumermarketsaregeographicdemographic,psychographic,andbehavioralvariablesGeographicsegmentationcalls for dividing the market intodifferentgeographical unitssuch asnations,regions,statescounties,cities,or neighborhoods.A company may decideto operate in one or a few geographicalareas,or to operatein all areasbutpay attention to geographical differencesinneedsandwants
Segmenting Consumer Markets There is no single way to segment a market. A marketer has to try different segmentation variables, alone and in combination, to find the best way to view the market structure. The major elements that might be used in segmenting consumer markets are geographic, demographic, psychographic, and behavioral variables. Geographic segmentation calls for dividing the market into different geographical units such as nations, regions, states, counties, cities, or neighborhoods. A company may decide to operate in one or a few geographical areas, or to operate in all areas but pay attention to geographical differences in needs and wants
Demographic segmentation divides the market into groupsbased on variables such as age,gender,family size,familylife cycle,income,occupation,education,religion,race,generation, and nationality.Demographicfactors are themostpopularbasesforsegmenting customergroups.Onereason is that consumer needs,wants,and usageratesoftenvaryclosely with demographicvariables.Another is that demographicvariables are easierto measurethanmost othertypes of variables.Even whenmarketsegmentsarefirst defined using other bases,suchasbenefitssought orbehavior,their demographiccharacteristicsmustbeknown in orderto assessthe sizeofthe target market and to reach it efficiently
Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality. Demographic factors are the most popular bases for segmenting customer groups. One reason is that consumer needs, wants, and usage rates often vary closely with demographic variables. Another is that demographic variables are easier to measure than most other types of variables. Even when market segments are first defined using other bases, such as benefits sought or behavior, their demographic characteristics must be known in order to assess the size of the target market and to reach it efficiently
MarketSegmentationDemographicSegmentation(SeeP118-119)Dividingthemarket intogroupsbased onvariablesmarklinsuch as:Technk erfahren.-99HSTARTUPAgeGenderSTARTPACUNGFamilysize orlifecycleUTHESDERSSESIncomeMAthOccupationEducationReligionRaceGeneration......Most PpulrBases&Easiest lasure
6 Market Segmentation Demographic Segmentation (See P118-119) ◼ Dividing the market into groups based on variables such as: • Age • Gender • Family size or life cycle • Income • Occupation • Education • Religion • Race • Generation •
Market SegmentationRequirementsforEffective Segmentation.Size,purchasing power,Measurableprofiles of segments can bemeasured.AccessibleSegments can be effectivelyreached and served.SubstantialSegments are large orprofitable enough to serve·Segments mustrespondDifferentialdifferently to differentmarketing mix elements &programs.·Effective programs can beActionabledesigned to attract and servethe segments
7 • Size, purchasing power, profiles of segments can be measured. • Segments can be effectively reached and served. • Segments are large or profitable enough to serve. Measurable Accessible Substantial Differential Actionable • Segments must respond differently to different marketing mix elements & programs. • Effective programs can be designed to attract and serve the segments. Market Segmentation Requirements for Effective Segmentation
RequirementsforEffectiveSegmentation(SeeP120)Tobeuseful,marketsegmentsmustbeMeasurable:Thesize,purchasingpower,andprofiles of the segments can be measured.Certain segmentation variables are difficult tomeasure.For example,there are 32.5 million lefthanded people intheUnitedStates-almostequaling the entire population of Canada.Yet fewproducts are targeted toward this left-handedsegment. The major problem may be that thesegment is hard to identify and measure.and is exposed to certain media,its members willbedifficult toreach
Requirements for Effective Segmentation (See P120) ◼ To be useful, market segments must be ◼ Measurable: The size, purchasing power, and profiles of the segments can be measured. Certain segmentation variables are difficult to measure. For example, there are 32.5 million lefthanded people in the United States—almost equaling the entire population of Canada. Yet few products are targeted toward this left-handed segment. The major problem may be that the segment is hard to identify and measure. ◼ and is exposed to certain media, its members will be difficult to reach
Accessible:Themarket segments canbeeffectivelyreached andservedSuppose a fragrance company finds that heavy users of itsbrand are single men and women who stay out late andsocialize a lot.Unless this group lives or shops at certainplaces.Substantial:Themarket segments are large or profitable enough toserve.A segment should be the largest possiblehomogenous group worth pursuing with a tailored marketingprogram. It would not pay,for example,for an automobilemanufacturerto develop cars especially for people whoseheightis lessthanfourfeet
Accessible: The market segments can be effectively reached and served. Suppose a fragrance company finds that heavy users of its brand are single men and women who stay out late and socialize a lot. Unless this group lives or shops at certain places. Substantial: The market segments are large or profitable enough to serve. A segment should be the largest possible homogenous group worth pursuing with a tailored marketing program. It would not pay, for example, for an automobile manufacturer to develop cars especially for people whose height is less than four feet
Differentiable:Thesegmentsareconceptuallydistinguishableand respond differently to different marketing mixelements and programs.If married and unmarriedwomen respondsimilarlyto a sale on perfume,they do not constitute separate segments.Actionable:Effective programs can bedesigned for attractingand servingthe segments.For example,althoughone small airline identified seven marketsegments,its staff was too small to developseparatemarketingprograms for each segment
Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs. If married and unmarried women respond similarly to a sale on perfume, they do not constitute separate segments. Actionable: Effective programs can be designed for attracting and serving the segments. For example, although one small airline identified seven market segments, its staff was too small to develop separate marketing programs for each segment