Description
Successful marketing strategies depend on meeting consumer needs and wants, A firm with a good deal of venture capital may seek to discover broad variety of unmet needs, Operate within your firm's need satisfaction activities
Market Segmentation and Targeting
Target Marketing
Market Segmentation
Meeting the Consumer Needs
• Successful marketing strategies depend on meeting consumer needs and wants
• A firm with a good deal of venture capital may seek to discover broad variety of unmet
needs
• Operate within your firm’s need satisfaction activities
• At a strategic level, need and wants usually are translated into more operational
concepts
Market Division
• Three important questions to be considered
– Should the segmentation be a priori or a post hoc?
– How does one determine the relevant dimensions or bases to use for segmentation?
– What are some bases for segmenting consumer and organizational buyer markets?
Consumer Market Segmentation
• Customers can be divided or segmented by using
Segmentation
is about identifying
Targeting
is about selecting
Positioning
is about differentiating
and communicating
Modern Marketing =STP Marketing
DETERMINE CONSUMER NEEDS AND WANTS
DIVIDE MARKETS ON RELEVANT DIMENSIONS
DEVELOP PRODUCE POSITIONING
DECIDE SEGMENTATION STRATEGY
DESIGN MARKETING MIX STRATEGY
Professor Freddy Lee
– Geography
– Demography
– Sociography
– Behavior
Market Segments for High-Tech Products
The pessimists
Business Family Entertainment
Less Affluent
Sidelined citizens
Organizational Buyer Markets
• Company size
• Purchase quantity
• Product application
• Organization type
• Location
• Purchase status
• Attribute importance
More Affluent
Not interested in technology
Media-junkies
Old consumers Willing to use Seek entertainment
typically managers technology but and can’t find much
who don’t touch slow to upgrade. of it online. Prefer
their computers TV and other media
at work
The optimists
Less Affluent Entertainment Family
Techno-strivers
Use technology from Families with limited Favor online
cell phones to pagers budget but still entertainment but have
to online service Interested in new less cash to spend
primarily to gain technology. on it
career edge
More Affluent
These customers are Also big spenders but They like the on-line
thebiggest spenders focused on technology world for
and they’re early for home uses such entertainment and
adopters of new are willing to spend as family PC
technology for for the latest
personal use technotainment
Professor Freddy Lee
Psychographic Segmentation
• VALS 2 (“values and lifestyles”)
• Life styles are measured by asking consumers about their
– Activities
– Interests
– Opinions
• Segmentation research based on VALS™ is a product of SRI Consulting Business
Intelligence
VALS Profiles
Geodemographic Segmentation
• PRIZM: Potential Ranking Index by Zip Markets
– PRIZM assumes that similar customers live within the same or proximate
neighborhood (s)
– PRIZM classifies every U.S. neighborhood into one of 62 distinct types or clusters of
consumers
– PRIZM helps marketers understand customers in selected markets
Market Segmentation Strategies
• The firm may decide not to enter the market
• The firm may not decide to segment but to be a mass marketer if
– The market is so small it’s not profitable to market to one portion of it
– Heavy users comprise so much of sales they are the only relevant target
– Dominant brand does not need segmentation
Differentiation
• Differentiation is to design a set of meaningful differences to distinguish the
company’s offering from competitors’ offering.
Survivors
Achievement
Achievers
Strivers
Innovators
Abundant Resources
Ideals Self Expression
Thinkers
Believers
Experiencers
Makers
Minimal Resources
Professor Freddy Lee
• Differentiation can happen in
– Physical product
– Services
– Personnel
– Distribution channel
– Image
Major Product Differentiators
• Horizontal Differentiation
– Features
The characteristics that supplement the product’s basic function
– Style and design
• Vertical Differentiation
– Performance quality
– Conformance quality
The degree to which all the produced units are identical and meet the
promised target specification
– Durability
– Reliability
– Reparability
Product Positioning
• Positioning can be achieved according to selected attributes or functions
– Superiority to competitive products
– Positioned by use or application
– Positioned in terms of particular types of users
– Positioned relative to a product class
• Position mapping is a visual depiction of customers perception of competitive products
Visualizing A Positioning Strategy
Perceptual map
– Dimensions of attributes (i.e., product space)
– Customers’ perceptions
Perceptual Map: The Bar Soaps
Professor Freddy Lee
High Moisturizing
Repositioning: Case of GM
Market Evaluation Measures
• 3Ms of market evaluation
– Measurable – large enough to measure size and characteristics
– Meaningful – large enough to deliver sufficient sales and growth potential
– Marketable – can be reached and served in an efficient manner
Market Evaluation Questions
• Measurability questions
– What are the appropriate bases for segmenting this market and can they be
measured?
– Is secondary data available so this can be done inexpensively?
– If primary data are needed, will there be a return on investment?
– Are specific names/addresses needed?
– Can purchases by this segment be measured and tracked?
Market Evaluation Questions
• Meaningfulness Questions
Nondeodorant Deodorant
7 Tone Zest
4
Lever 2000
Dove
2
Safeguard
5
Coast
Lux
8
3
1
Dial
Lifebuoy
Lava
Low Moisturizing
6
A. Consumer perceptions
in 1982 [o] and GM goals
for 1990 [ ]
High Price
Low Price
Family/
Conservative
Personal/
Expressive
Cadillac o
Buick o
Chevrolet o
o Pontiac
Saturn
(1990)
smobile Old
o
B. Potential change in goals
from 1990 [ ] to 2002
High Price
Cadillac
Low Price
Family/
Conservative
Personal/
Expressive
Buick
Oldsmobile
?
?
?
? ?
Chevrolet
Pontiac
Saturn
Professor Freddy Lee
– How many people are in this market and how frequently will they purchase the
product?
– What market share can we expect?
– What is the growth potential?
– How strong is the competition and is it likely to change?
– How satisfied are the consumers in this market with current offerings?
Market Evaluation Questions
• Marketability Questions
– Can this segment be reached with current channels of distribution?
– Can we establish new channels efficiently, if needed?
– What promotion media does this segment read, listen to, or watch?
– Can we afford to promote to this segment and is there a media to reach them?
– Are people in this segment willing to pay a price necessary for profit?
– Can we produce a product for this market profitably?
Selecting Segments to Target
• Segment size and growth
– Current dollar sales;
– Projected growth rate;
– Estimated profit margins.
• Segment structural attractiveness
– Competitors;
– Substitute products;
– Power of buyers;
– Power of suppliers.
• Company objectives and resources
– Consistent;
– Feasible.
Market Coverage Strategies
Marketing Mix The whole market
Mass (or Undifferentiated) Marketing
Single-offer
strategy
Marketing Mix 1
Marketing Mix 2
Marketing Mix 3
Segment 1
Segment 2
Segment 3
Multiple Target Market Approach / Differentiated
Multi-off
er
Marketing Mix
Segment 1
Segment 2
Single Target Market Approach /Concentrated
Single-offer
strategy
S t 3
Segmenter
Marketing Mix
Segment 1
Segment 2
Segment 3
Combined Target Market Approach
Single-offer
strategy
Combiner
Professor Freddy Lee
doc_159616412.pdf
Successful marketing strategies depend on meeting consumer needs and wants, A firm with a good deal of venture capital may seek to discover broad variety of unmet needs, Operate within your firm's need satisfaction activities
Market Segmentation and Targeting
Target Marketing
Market Segmentation
Meeting the Consumer Needs
• Successful marketing strategies depend on meeting consumer needs and wants
• A firm with a good deal of venture capital may seek to discover broad variety of unmet
needs
• Operate within your firm’s need satisfaction activities
• At a strategic level, need and wants usually are translated into more operational
concepts
Market Division
• Three important questions to be considered
– Should the segmentation be a priori or a post hoc?
– How does one determine the relevant dimensions or bases to use for segmentation?
– What are some bases for segmenting consumer and organizational buyer markets?
Consumer Market Segmentation
• Customers can be divided or segmented by using
Segmentation
is about identifying
Targeting
is about selecting
Positioning
is about differentiating
and communicating
Modern Marketing =STP Marketing
DETERMINE CONSUMER NEEDS AND WANTS
DIVIDE MARKETS ON RELEVANT DIMENSIONS
DEVELOP PRODUCE POSITIONING
DECIDE SEGMENTATION STRATEGY
DESIGN MARKETING MIX STRATEGY
Professor Freddy Lee
– Geography
– Demography
– Sociography
– Behavior
Market Segments for High-Tech Products
The pessimists
Business Family Entertainment
Less Affluent
Sidelined citizens
Organizational Buyer Markets
• Company size
• Purchase quantity
• Product application
• Organization type
• Location
• Purchase status
• Attribute importance
More Affluent
Not interested in technology
Media-junkies
Old consumers Willing to use Seek entertainment
typically managers technology but and can’t find much
who don’t touch slow to upgrade. of it online. Prefer
their computers TV and other media
at work
The optimists
Less Affluent Entertainment Family
Techno-strivers
Use technology from Families with limited Favor online
cell phones to pagers budget but still entertainment but have
to online service Interested in new less cash to spend
primarily to gain technology. on it
career edge
More Affluent
These customers are Also big spenders but They like the on-line
thebiggest spenders focused on technology world for
and they’re early for home uses such entertainment and
adopters of new are willing to spend as family PC
technology for for the latest
personal use technotainment
Professor Freddy Lee
Psychographic Segmentation
• VALS 2 (“values and lifestyles”)
• Life styles are measured by asking consumers about their
– Activities
– Interests
– Opinions
• Segmentation research based on VALS™ is a product of SRI Consulting Business
Intelligence
VALS Profiles
Geodemographic Segmentation
• PRIZM: Potential Ranking Index by Zip Markets
– PRIZM assumes that similar customers live within the same or proximate
neighborhood (s)
– PRIZM classifies every U.S. neighborhood into one of 62 distinct types or clusters of
consumers
– PRIZM helps marketers understand customers in selected markets
Market Segmentation Strategies
• The firm may decide not to enter the market
• The firm may not decide to segment but to be a mass marketer if
– The market is so small it’s not profitable to market to one portion of it
– Heavy users comprise so much of sales they are the only relevant target
– Dominant brand does not need segmentation
Differentiation
• Differentiation is to design a set of meaningful differences to distinguish the
company’s offering from competitors’ offering.
Survivors
Achievement
Achievers
Strivers
Innovators
Abundant Resources
Ideals Self Expression
Thinkers
Believers
Experiencers
Makers
Minimal Resources
Professor Freddy Lee
• Differentiation can happen in
– Physical product
– Services
– Personnel
– Distribution channel
– Image
Major Product Differentiators
• Horizontal Differentiation
– Features
The characteristics that supplement the product’s basic function
– Style and design
• Vertical Differentiation
– Performance quality
– Conformance quality
The degree to which all the produced units are identical and meet the
promised target specification
– Durability
– Reliability
– Reparability
Product Positioning
• Positioning can be achieved according to selected attributes or functions
– Superiority to competitive products
– Positioned by use or application
– Positioned in terms of particular types of users
– Positioned relative to a product class
• Position mapping is a visual depiction of customers perception of competitive products
Visualizing A Positioning Strategy
Perceptual map
– Dimensions of attributes (i.e., product space)
– Customers’ perceptions
Perceptual Map: The Bar Soaps
Professor Freddy Lee
High Moisturizing
Repositioning: Case of GM
Market Evaluation Measures
• 3Ms of market evaluation
– Measurable – large enough to measure size and characteristics
– Meaningful – large enough to deliver sufficient sales and growth potential
– Marketable – can be reached and served in an efficient manner
Market Evaluation Questions
• Measurability questions
– What are the appropriate bases for segmenting this market and can they be
measured?
– Is secondary data available so this can be done inexpensively?
– If primary data are needed, will there be a return on investment?
– Are specific names/addresses needed?
– Can purchases by this segment be measured and tracked?
Market Evaluation Questions
• Meaningfulness Questions
Nondeodorant Deodorant
7 Tone Zest
4
Lever 2000
Dove
2
Safeguard
5
Coast
Lux
8
3
1
Dial
Lifebuoy
Lava
Low Moisturizing
6
A. Consumer perceptions
in 1982 [o] and GM goals
for 1990 [ ]
High Price
Low Price
Family/
Conservative
Personal/
Expressive
Cadillac o
Buick o
Chevrolet o
o Pontiac
Saturn
(1990)
smobile Old
o
B. Potential change in goals
from 1990 [ ] to 2002
High Price
Cadillac
Low Price
Family/
Conservative
Personal/
Expressive
Buick
Oldsmobile
?
?
?
? ?
Chevrolet
Pontiac
Saturn
Professor Freddy Lee
– How many people are in this market and how frequently will they purchase the
product?
– What market share can we expect?
– What is the growth potential?
– How strong is the competition and is it likely to change?
– How satisfied are the consumers in this market with current offerings?
Market Evaluation Questions
• Marketability Questions
– Can this segment be reached with current channels of distribution?
– Can we establish new channels efficiently, if needed?
– What promotion media does this segment read, listen to, or watch?
– Can we afford to promote to this segment and is there a media to reach them?
– Are people in this segment willing to pay a price necessary for profit?
– Can we produce a product for this market profitably?
Selecting Segments to Target
• Segment size and growth
– Current dollar sales;
– Projected growth rate;
– Estimated profit margins.
• Segment structural attractiveness
– Competitors;
– Substitute products;
– Power of buyers;
– Power of suppliers.
• Company objectives and resources
– Consistent;
– Feasible.
Market Coverage Strategies
Marketing Mix The whole market
Mass (or Undifferentiated) Marketing
Single-offer
strategy
Marketing Mix 1
Marketing Mix 2
Marketing Mix 3
Segment 1
Segment 2
Segment 3
Multiple Target Market Approach / Differentiated
Multi-off
er
Marketing Mix
Segment 1
Segment 2
Single Target Market Approach /Concentrated
Single-offer
strategy
S t 3
Segmenter
Marketing Mix
Segment 1
Segment 2
Segment 3
Combined Target Market Approach
Single-offer
strategy
Combiner
Professor Freddy Lee
doc_159616412.pdf