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Chapter ObjectivesMarketing Segmentation,Targeting,and PositioningCHAPTER 912478Identify the essential components of a market.Outline the role of market segmentation in developing a marketing strategy.Describe the criteria necessary for effective segmentation.Explain the geographic,domestic,and psychographic approaches to segmenting consumer markets.Describe product-related segmentation.Identify the steps in the market segmentation process.Discuss the four basic strategies for reaching target markets.Summarize the types of positioning strategies,and explain the reasons for positioning and repositioning products.536CHAPTER 9 Marketing Segmentation,Targeting,and PositioningMarket Groupofpeoplewithsufficientpurchasingpower,authority,andwillingnesstobuy.Anindividualslifestyle,income,geographiclocation,age,andotherfactorsallcontributetothelikelihoodthatpersonwillbuycertainproducts.Target market Groupofpeopletowhomafirmdecidestodirectitsmarketingeffortsandultimatelyitsgoodsandservices.Allowsfirmstodevelopmoreefficientandeffectivemarketingstrategies.Marketersmuststudyamarkettosegmentandcommunicatewithiteffectively.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningTYPES OF MARKETSConsumer products Productsboughtbyultimateconsumersforpersonaluse.Business products Goodsandservicespurchasedforuseeitherdirectlyorindirectlyintheproductionofothergoodsandservicesforresale.Aproductcanbeeither,dependingonitsuse.Example:Tires,whichcanbebepurchasedbyconsumersforthefamilycarorbyGeneralMotorsforitsproductionline.Example:Lineofprofessionalcookwareforrestaurantsmaybeadaptedforhomeuse.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningTHE ROLE OF MARKET SEGMENTATIONWith6.5billionpeopleintheworldand300millioninU.S.,toomanypotentialcustomerstoattractwithasinglemarketingmix.Market segmentation Divisionofthetotalmarketintosmaller,relativelyhomogenousgroups.CRITERIA FOR EFFECTIVE SEGMENTATIONFourbasiccriteriadeterminetheeffectivenessofmarketingsegmentation:First,segmentmusthavemeasurablesizeandpurchasingpower.Example:Femalecustomersaccountfor85percentofallconsumerpurchases.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningCHAPTER 9 Marketing Segmentation,Targeting,and PositioningSecond,marketersmustfindawaytopromoteeffectivelytoandservethemarketsegment.Examples:AdsfeaturingworkingmothersbyT-MobileandBlackberry.Third,segmentmustbesufficientlylargetooffergoodprofitpotential.Example:Womenspend$55billioninelectronicspurchaseseachyear.Fourth,firmmustaimforsegmentsthatmatchitsmarketingcapabilities.Smallerfirmsoftenstickwithatargetmarket.Example:Anelectronicscompanythatinstallsasupervisedplayareaforchildrenwhiletheirmothersshop.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningSEGMENTING CONSUMER MARKETSAttempttoisolatethetraitsthatdistinguishacertaingroupofconsumersfromtheoverallmarket.Groupcharacteristicssuchasage,gender,geographiclocation,income,andbuyingpatternsarekey.Fourcommonbasesforsegmentingconsumermarkets:Geographicsegmentation.Demographicsegmentation.Psychographicsegmentation.Product-relatedsegmentation.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningGEOGRAPHIC SEGMENTATIONGeographic segmentation Divisionofanoverallmarketintohomogenousgroupsbasedontheirlocations.Marketerslookatbothtotalpopulationtodeterminemarketsize.Alsopaycloseattentiontoareaswithquicklygrowingpopulationstoplanforthefuture.Worldwide,ChinaandIndiahavetheworldslargestpopulations,followedbytheU.S.Businessesmustalsoconsidereconomicvariablesandmaycombinetheirmarketingeffortsincountriesthatsharesimilarcharacteristics.Otherusefulgeographicindicatorsincludejobgrowthandmigrationpatterns.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningCHAPTER 9 Marketing Segmentation,Targeting,and PositioningWithpost-WorldWarIIgrowthofsuburbs,traditionalcityboundarieshavelostmeaningformarketers.Governmentnowclassifiesurbandatainseveralcategories:Corebasedstatisticalarea(CBSA)metropolitanareas(thosewithatleast50,000)andmicropolitanareas(thosebetween10,000and50,000).Metropolitanstatisticalarea(MSA)areawithanurbancenterofatleast50,000andtotalmetropolitanareaofatleast100,000.Micropolitanstatisticalareaareawithbetween10,000and49,999residentswithproportionatelyfewcommutingoutsidethearea.Consolidatedmetropolitanstatisticalarea(CMSA)includestwoormoreprimarymetropolitanstatisticalareas.Primarymetropolitanstatisticalarea(PMSA)urbanizedareaswithpopulationsmorethan1million.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningCHAPTER 9 Marketing Segmentation,Targeting,and PositioningUSING GEOGRAPHIC SEGMENTATIONMarketersfocusoncoreregions,thosefromwhichtheydraw40to80percentofsales.Residencewithinregionurbancorevs.suburbisoftenanimportantvariable.Providesusefuldistinctionsforregionaldifferences.GEOGRAPHIC INFORMATION SYSTEMS(GISs)Computersystemsthatassemble,store,manipulate,anddisplaydatabylocation.Allowsfirmstooverlaydataaboutcustomersoveramapandmakedecisionaboutlocation,deliveryroutes,andotherissues.Example:GoogleEarth,whichallowsuserstoviewdifferentpartsofthecountrycloseup.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningDEMOGRAPHIC SEGMENTATIONDemographic segmentation Divisionofanoverallmarketintohomogenousgroupsbasedonvariablessuchasgender,age,income,occupation,education,sexualorientation,householdsize,andstageinthefamilylifecycle;alsocalledsocioeconomic segmentation.PrimarysourceofdataisU.S.CensusBureau.SEGMENTING BY GENDERLinesblurringinrecentyears.Example:Menbuyingskin-careproductsandwomenbuyingpowertoolsandtrucks.WorkingwomenwhoregularlyusetheInternetmakemostofthedecisionsaboutretailitems,healthcaregoodsandservices,andfitnessproducts.Understandingthiscanhelpmarketersdevelopmoreeffectivemessages.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningSEGMENTING BY AGEAswithgender,distinctionsamongagegroupsblurasconsumerschangeandasagedistributionshifts.Example:St.Josephsbabyaspirinnowmarketedtoadultstohelppreventheartdisease.The Cohort EffectTendencyofmembersofagenerationtobeinfluencedandboundtogetherbysignificanteventsintheirformativeyear,ages17to22.Example:OlderbabyboomerandtheVietnamWar.Formativeexperienceshelpformlong-termbeliefsandgoalsandinfluencebuyinghabits.School-Age ChildrenHavesignificantinfluenceoverfamilypurchases.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningTweens and TeensSpend$159billionannuallyoneverythingfromsnackstoclothingtoelectronics.Alsoinfluencebillionsofdollarsoffamilypurchases.Three-quartersofU.S.teens15to17yearsoldhavecellphones.Companiesthattargetthisgroupcanhavesignificantsuccess.Example:RetailerssuchasHotTopic,AmericanEagleOutfitters,andAeropostale.Generation XBornbetween1966and1981,numbers44million.Family-oriented,welleducated,andoptimistic.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningBaby BoomersBornbetween1946and1965,numbersapproximately77million.InfluencedbyVietnamWarandcareerismthatfollowed.Lucrativesegment.Example:Boomersover50willhave$1trillionindisposableincome.Diversesegmentthatgenerallytendstovaluehealthandqualityoflife.Seniors36millionAmericansaremorethan65yearsold.Headsofhouseholdsmorethan55yearsoldcontrolaboutthree-quartersofthecountrystotalassets.Accountfor40percentofnew-carsalesandmostofthetraveldollars.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningSEGMENTING BY ETHNIC GROUPThreefastest-growingethnicgroupsinU.S.areHispanics,AfricanAmericansandAsianAmericans.Hispanics and African AmericansArethelargestethnic/minoritygroupsintheUnitedStates.HispanicpopulationgrowingmorequicklythanAfricanAmerican.Hispanicsdisposableincomeisrapidlyincreasing.AfricanAmericansmakemorethan$1trillioninpurchaseseachyear.HispanicsandAfricanAmericansarenothomogenousgroups,andmarketersmustreachdifferentsegments.Example:TVOneserves30millionAfricanAmericanhouseholds.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningAsian AmericansSecond-fastestgrowingsegmentoftheU.S.population.Expectedtogrowto23millionby2020.Concentratedinfewergeographicareasthanotherethnicgroups.Verydiversegroupthatrepresentsmorethan15cultures.Native AmericansCurrentlynumbersroughly2.8million,andanadditional11millionAmericansclaimsomeheritageorancestry.Populationgrowingatdoubletherateofthenationalpopulation.NativeAmericanbusinesseshaverevenueof$34billionannually.Rez Bizencouragesentrepreneurshipandeconomicdevelopment.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningPEOPLE OF MIXED RACETheabilitytoselectmorethanoneracialcategoryoncensusformshasbeenrecentlyintroduced.Makesstatisticsmoreaccuratebutcomparingthenewstatisticswithpastdatacanbedifficult.SEGMENTING BY FAMILY LIFE CYCLE STAGESFamilylifecycletheprocessoffamilyformationanddissolution.Lifestage,notage,isprimaryconcernofmarketer.Example:Youngchildlesscouplesmayspendmoreonentertainment,whilecoupleswithyoungayoungchildmaybuycribs,childrensclothing,andotherchildrensitems.Emptynestersmayhavehigherdisposableincomesthanpreviouslyandspendmoreonluxuryitems.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningSEGMENTING BY HOUSEHOLD TYPEAveragehouseholdsizeinU.S.hasdecreasedfrom5.8in1790tolessthanthreetoday.Householdsvarybylifestageandthepresenceorabsenceofchildren.Growingnumberofsame-sexcoupleswhosharehouseholds.22percentofgaycouplesand34percentoflesbiancouplesareraisingchildren.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningSEGMENTING BY INCOME AND EXPENDITURE PATTERNSEngels LawsAshouseholdincomeincreases:Asmallerpercentageofexpendituresgoesforfood.Thepercentagespentonhousing,householdoperations,andclothingremainsconstant.Thepercentagespentonotheritems(suchasrecreationandeducation)increases.Helpsmarketerstargetconsumersatallincomelevels.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningDEMOGRAPHIC SEGMENTATION ABROADDemographicdatacanbemoredifficulttogetthanintheU.S.GovernmentcensusdatamayincludedifferentinformationthanU.S.census.Canadaincludesreligiousaffiliation,whichU.S.censusdoesnot.GreatBritain,Japan,andothercountriesdonotcollectincomedata.InternationalProgramsCenterprovidessomeinternationaldemographicdata,asdoestheUnitedNations.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningPSYCHOGRAPHIC SEGMENTATIONWHAT IS PSYCHOGRAPHIC SEGMENTATION?Psychographic segmentation Divisionofapopulationintogroupsthathavesimilarpsychologicalcharacteristics,values,andlifestyles.Commonresearchmethodisalarge-scalesurveyaskingforagreementordisagreementwithstatementsaboutactivities,interests,andopinions.VALSTMApsychographicsegmentationsystemdeveloped25yearsagoandtodayownedandmanagedbySRIConsultingBusinessIntelligence.Basedonconceptsofresourcesandmotivation.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningCHAPTER 9 Marketing Segmentation,Targeting,and PositioningPSYCHOGRAPHIC SEGMENTATION OF GLOBAL MARKETSRoperASWidentifiedsixpsychographicconsumersegmentsthatexistin35countriesstudied.Striversvalueprofessionalandmaterialgoalsmorethantheothergroups.Devoutsvaluedutyandtradition.Altruistsemphasizesocialissuesandsocietalwell-being.Intimatesvaluefamilyandpersonalrelationships.Funseekersfocusonpersonalenjoymentandpleasurableexperiences.Creativesseekeducation,technology,andknowledge.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningUSING PSYCHOGRAPHIC SEGMENTATIONCanhelpmarketersmoreeffectivelycreategoodsandservicesforatargetmarket.Identifyingwhichpsychographicsegmentsaremostprevalentincertainmarketshelpsmarketersplanandpromotemoreeffectively.Generallyactsasagoodsupplementtogeographicanddemographicsegmenting.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningPRODUCT-RELATED SEGMENTATIONProduct-related segmentation Divisionofapopulationintohomogeneousgroupsbasedontheirrelationshipstotheproduct.SEGMENTING BY BENEFITS SOUGHTFocusesonthebenefitspeopleexpectfromusingtheproduct.Example:Starbuckscustomerswasmorethancoffee;theywantapleasantexperiencethatmakesthemfeelappreciated.SEGMENTING BY USAGE RATES80/20principlelargepercentageofrevenuecomesfromasmall,loyalpercentageofcustomers.Marketersmaytargetheavy,moderate,lightusersornonusers.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningSEGMENTING BY BRAND LOYALTYGroupingcustomersaccordingtothestrengthoftheirproductloyalty.Example:Frequentpurchaserprograms.Customersdeveloployaltyforavarietyofreasons.USING MULTIPLE SEGMENTATION BASESFlexibilityhelpsmarketersincreasetheiraccuracyinreachingtherightmarkets.Goalisgettingtoknowpotentialcustomersbetterandsatisfyingtheirneedswithappropriategoodsandservices.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningTHE MARKET SEGMENTATION PROCESSDEVELOP A RELEVANT PROFILE FOR EACH SEGMENTIn-depthanalysisthathelpsmanagersaccuratelymatchbuyersneedswiththefirmsofferings.FORECAST MARKET POTENTIALSetsupperlimitonpotentialdemandandmaximumsalespotential.FORECAST PROBABLE MARKET SHAREComesfromanalysisofcompetitorsmarketpositionanddevelopmentofmarketingstrategy.SELECT SPECIFIC MARKET SEGMENTSUsedemandforecastsandcostprojectionstodeterminereturnoninvestmentfromeachsegment.Assessesnonfinancialfactorssuchasfirmsabilitytolaunchproduct.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningSTRATEGIES FOR REACHING TARGET MARKETSUNDIFFERENTIATED MARKETINGUndifferentiated marketing Strategythatfocusesonproducingasingleproductandmarketingittoallcustomers;alsocalledmass marketing.Morecommoninthepastthantoday.DIFFERENTIATED MARKETINGDifferentiated marketing Strategythatfocusesonproducingseveralproductsandpricing,promoting,anddistributingthemwithdifferentmarketingmixesdesignedtosatisfysmallersegments.Generallyraisesproductionandpromotioncostsbutalsocanincreasesatisfactionamongindividualsegments,leadingtohigheroverallsales.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningCONCENTRATED MARKETINGConcentrated marketing Focusingmarketingeffortsonsatisfyingasinglemarketsegment;alsocalledniche marketing.Approachcanappealtosmallfirmsortofirmsthatofferhighlyspecializedgoodsandservices.Example:PeanutButter&Co.,whichappealstopeanutbutterlovers.Canbackfireifcompetitorstargetthesamenicheorifmarketdecreases.MICROMARKETINGMicromarketing Targetingpotentialcustomersatverynarrow,basiclevels,suchasbyZIPcode,specificoccupation,orlifestylepossiblyevenindividualsthemselves.Internetmakesmicromarketingmoreeffective.Firmscansufferifmarketistoosmalltobeprofitable.CHAPTER 9 Marketing Segmentation,Targeting,and PositioningSELECTING AND EXECUTING A STRATEGYBasicdeterminantsofmarketingstrategy:Companyresources.Producthomogeneity.Stageintheproductlifestyle.Competitorsstrategies.Positioning Placingaproductatacertainpointorlocationwithinamarketinthemindsofprospectivebuyers.Distinguishesfirmsofferingsfromitscompetitors.Maydevelopapositioningmapandrepositionproductasnecessary.CHAPTER 9 Marketing Segmentation,Targeting,and Positioning
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