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chapter 7Market Segmentation and Target MarketsHarcourt, Inc.
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Dr. RosenbloomObjectivesUnderstand the concepts: market, segmentation, and target marketsLearn the advantages and disadvantages of target marketingExplain the steps in target market selection
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Dr. RosenbloomDiscuss segmentation criteria, strategies, bases, and information sourcesUnderstand market profiling and positioning strategiesDiscuss differences for business and international marketingObjectives
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Dr. RosenbloomWhat is a market?Individuals or organizations who:Are willing, able, and capable of purchasing a firms productSegmentation is critical because demand is often heterogeneous
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Dr. RosenbloomWhat is market segmentation?Market SegmentationProcess of dividing a large market into smaller target markets, or customer groups with similar needs and/or desires
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Dr. RosenbloomMarket SegmentationMass MarketNicheMicro-marketingThe IndividualPersonal-izationMicro-marketingNicheStandardized Marketing MixContinuum of Market Segmentation Size
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Dr. RosenbloomTarget MarketingAdvantagesEasier analysis of potential and actual consumersTailoring of products to marketAssessment of demand potentialIdentify competing productsIncreased sales effectiveness and cost efficienciesProduct positioning and easy identification of opportunities
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Dr. RosenbloomTarget MarketingDisadvantagesIncreased marketing costsPersonalization can become burdensome to manageFaux segmentation may be viewed cynicallyNarrow segmentation can impact brand loyaltyEthics and stereotyping issues
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Dr. RosenbloomTarget Market SelectionIdentify Total Market Determine Need for SegmentationDetermine Bases for SegmentationProfile Each Selected SegmentAssess Potential Profitability of Segment and Select Target SegmentSelect Positioning StrategyDevelop and Implement Appropriate Marketing MixMonitor, Evaluate and Control
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Dr. RosenbloomMarket CriteriaSegmentable markets are:HeterogeneousMeasurableSubstantialActionableCompanies must be able to respond to preferences with an appropriate marketing mixAccessibleMarket must be efficiently reachable
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Dr. RosenbloomExternal FactorsStage in product life cycleCompetitionProduct specific issuesMarket for the product
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Dr. RosenbloomSegmentation VariablesSituation SegmentationPsychographic SegmentationGeographic SegmentationBehavior/Usage SegmentationDemographic SegmentationBenefits-Sought Segmentation
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Dr. RosenbloomFamilyIncome LevelEthnicityEducationAgeDemographic Segmentation
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Dr. RosenbloomDemographic SegmentationAgeSome products are marketed to specific age groups
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Dr. RosenbloomDemographic SegmentationAgeSome products are marketed to specific age groups
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Dr. RosenbloomDemographic SegmentationIncome LevelSome products are marketed to consumers with different income levels
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Dr. RosenbloomDemographic SegmentationIncome LevelSome products are marketed to consumers with different income levels
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Dr. RosenbloomDemographic SegmentationHal Riney and PartnersBartles and James
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Dr. RosenbloomDemographic SegmentationFamilySome products are marketed to consumers with special family considerationFamily Life Cycle Bachelor, marriage, married with children, retired, etc.
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Dr. RosenbloomFunctions Of AdvertisingThe Martin AgencyKinderCare
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Dr. RosenbloomDemographic SegmentationFamilySome products are marketed to consumers with special family considerationFamily Life Cycle Bachelor, marriage, married with children, retired, etc.
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Dr. RosenbloomDemographic SegmentationEducationSome products are marketed to consumers with certain educational levels
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Dr. RosenbloomDemographic SegmentationEthnicitySome products are marketed to consumers from specific ethnic backgrounds
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Dr. RosenbloomDemographic SegmentationEthnicitySome products are marketed to consumers from specific ethnic backgrounds
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Dr. RosenbloomSegmentation VariablesSituation SegmentationPsychographic SegmentationGeographic SegmentationBehavior/Usage SegmentationDemographic SegmentationBenefits-Sought Segmentation
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Dr. RosenbloomGeographic SegmentationWhen an organization localizes its marketing efforts to accommodate the unique needs of specific geographic regions
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Dr. RosenbloomGeographic SegmentationWhen an organization localizes its marketing efforts to accommodate the unique needs of specific geographic regions
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Dr. RosenbloomGeographic SegmentationMetropolitan Statistical AreasAn urbanized area of 50,000 and a total metropolitan area population of at least 100,000Charlottesville, Virginia
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Dr. RosenbloomGeographic SegmentationPrimary Metropolitan Statistical AreasAn urbanized county or cluster of counties with a population of more than 1 millionGary/Hammond, Indiana
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Dr. RosenbloomGeographic SegmentationConsolidated Metropolitan Statistical AreaA metropolitan area that includes at least two PMSAsBaltimore, Maryland and Washington, D.C.
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Dr. RosenbloomSegmenting Consumer MarketsSituation SegmentationPsychographic SegmentationGeographic SegmentationBehavior/Usage SegmentationDemographic SegmentationBenefits-Sought Segmentation
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Dr. RosenbloomPsychographic SegmentationGrouping customers together based on social class, lifestyles and psychological characteristics (attitudes, interests and opinions)PRIZM analysis from Claritas
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Dr. RosenbloomSegmenting Consumer MarketsSituation SegmentationPsychographic SegmentationGeographic SegmentationBehavior/Usage SegmentationDemographic SegmentationBenefits-Sought Segmentation
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Dr. RosenbloomBenefits-Sought SegmentationMarkets can be segmented based on the benefits that consumers desire from using a specific product
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Dr. RosenbloomBenefits-Sought SegmentationBozell, IncorporatedAmerican Pork Council
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Dr. RosenbloomSegmenting Consumer MarketsSituation SegmentationPsychographic SegmentationGeographic SegmentationBehavior/Usage SegmentationDemographic SegmentationBenefits-Sought Segmentation
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Dr. RosenbloomSituation SegmentationPurchase situation or occasionPhysical surroundingsSocial surroundingsTemporal perspectiveHow much time to make a purchase?Task definitionPre-purchase attitude
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Dr. RosenbloomSegmenting Consumer MarketsSituation SegmentationPsychographic SegmentationGeographic SegmentationBehavior/Usage SegmentationDemographic SegmentationBenefits-Sought Segmentation
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Dr. RosenbloomLight Users80%Heavy Users20%Behavior/Usage SegmentationMarkets can be segmented by how often or how heavily consumers use a specific product80/20 Principle - 80% of revenue generated by 20% of customers
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Dr. RosenbloomSegmentation DataInternal sourcesIn-house customer and marketing databasesData mine to explore patterns and relationships in collected dataExternal sourcesLists of catalog/magazine subscribersU.S. Census informationMediamark, CACI Marketing Systems, etc.
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Dr. RosenbloomPositioning StrategyDifferentiation through:Price/quality - emphasize value in terms of quality, price, or both
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Dr. RosenbloomPositioning StrategyDifferentiation through:Product attributes - characteristics as a positioning baseProduct usage - positioning based on a products typical useDifferentiation through:Symbol - use of a symbol or icon to position a product in the consumer consciousness
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Dr. RosenbloomPositioning StrategyDifferentiation through:Product user - the typical user of a product
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Dr. RosenbloomPositioning StrategyDifferentiation through:Product class - positioning against another type of product or product class
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Dr. RosenbloomPositioning StrategyDifferentiation through:Competition - comparisons to a products competition (directly or indirectly)
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Dr. RosenbloomSegmenting Business MarketsDemographicsIndustry size, growth potential, etc.Operating CharacteristicsTechnology, brand-user status, etc.Purchasing ApproachesPurchasing policies, size of orders, etc.
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Dr. RosenbloomSegmenting Business MarketsProduct Use or Usage SituationThe way the product will be used and customer service levels requiredSituational FactorsUrgency, special product usesBuyers Personal Characteristics
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Dr. RosenbloomSegmenting Global MarketsEconomicStage of development in a host countryPolitical/LegalRegulations and lawsCulturalLanguage barriers, differences in consumer customs
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Dr. RosenbloomSegmenting Global MarketsSome segments transcend national bordersRich around the worldOlder and comfortableIndulged kidsEmerging middle classWomen employed outside the house
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Dr. RosenbloomMarket SegmentationDifferentiatedConcentratedUndifferentiated
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Dr. RosenbloomDifferentiated MarketingDifferentiated MarketingAn organization targets multiple market segments and develops segment specific mixes
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Dr. RosenbloomConcentrated MarketingConcentrated MarketingWhen an organization concentrates its marketing efforts on a smaller segment of a larger market
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Dr. RosenbloomUndifferentiated MarketingUndifferentiated MarketingAn organization develops one strategy appropriate for all members of the total market
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