Chapter 4

Identifying Market Segments and Selecting Target Markets

The Learning Objectives

Levels and Patterns of Marketing Segmentation

Marketing Target Positioning Strategy

Market Segmentation

Dividing a market into distinct groups of buyers on the basis of needs,characteristics,or behavior who might require separate products or marketing mixes.

Segment Market

A group of consumers who respond in a similar way to a given set of marketing effort.

Market targeting

The process of evaluating each market segment’s attractiveness and selecting one or more segment to enter.

Marketing positioning

Arranging for a product to occupy a clear,distinctive, and desirable place relative to competing products in the minds of target consumers.

Levels of market segmentation

Mass marketing Segment marketing Niche marketing

micromarketing

Local marketing Individual Marketing

Discussion

1. How do you think the relationship between local marketing and international marketing?

2. How to interpret One –one marketing?

(eg. Del: smart marketing)

Steps in Market Segmentation, Targeting,and Positioning

1. Identifysegmentationvariables andsegment themarket

2. Develop profiles ofresultingsegments

MarketMarketSegmentationSegmentation

3. Evaluateattractivenessof eachsegment

4. Select thetargetsegment(s)

MarketMarketTargetingTargeting

5. Identifypossible

positioningconcepts foreach target

segment

6. Select,develop, andcommunicate

the chosenpositioning

concept

MarketMarketPositioningPositioning

Basic Market-Preference Patterns

((a) Homogeneousa) Homogeneouspreferencespreferences

SweetnessSweetness

Cre

amin

ess

Cre

amin

ess

((c) Clusteredc) Clusteredpreferencespreferences

Cre

amin

ess

Cre

amin

ess

SweetnessSweetness

((b) Diffusedb) Diffusedpreferencespreferences

Cre

amin

ess

Cre

amin

ess

SweetnessSweetness

Market-Segmentation Procedure

Survey– Motivations– Attitudes– Behavior

Analysis– Factors– Clusters

Profiling

Segmenting consumer markets(p252)

Geographic Segmentation Demographic Psychographic Behavioral

Bases for Segmenting Consumer Markets

Occasions, Benefits, Uses, or Attitudes

Behavioral

GeographicRegion, City or MetroSize, Density, Climate Demographic

Age, Gender, Family size and Fife cycle, Race, Occupation, or Income ...

Lifestyle or PersonalityPsychographic

Discussion

How to choose the segmenting variables? Consider the following products,please list the

segmenting standard for each product and explain the reasons for them.

1.computer; 2.shampoo; 3. Life insurance; 4.book

Bases for Segmenting Business Markets

Demographic Operating Variables Purchasing Approaches Situational Factors Personal Characteristics

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

DifferentialDifferential

• Segments must be large or profitable enough to serve.

• Segments can be effectively reached and served.

ActionableActionable

• Size, purchasing power, profiles of segments can be measured.

• Segments must respond differently to

different marketing mix elements & actions.

• Must be able to attract and serve

the segments.

Effective Segmentation

Heavy and Light Users of Common Consumer Products

HEAVY HALFHEAVY HALF LIGHT HALFLIGHT HALFPRODUCT (% USERS)PRODUCT (% USERS)

75%

71%

Soups andSoups anddetergents (94%)detergents (94%) 25%

29%

79% 21%

Toilet tissue (95%)Toilet tissue (95%)

Shampoo (94%)Shampoo (94%)

75% 25%

17%

17%

Paper towels (90%)Paper towels (90%)

Cake mix (74%)Cake mix (74%)

Cola (67%)Cola (67%)

83%

83%

13%

5%

87%

19%

Beer (41%)Beer (41%)

Dog food (30%)Dog food (30%)

Bourbon (20%)Bourbon (20%)

81%

95%

Additional Segmentation Criteria

Ethical Choice of Market Targets Segment Interrelationships & Supersegments Segment-by-Segment Invasion Plans Intersegment Cooperation

Five Patterns of Target Market Selection

Single-segmentSingle-segmentconcentrationconcentration

ProductProductspecializationspecialization

M1 M2 M3 P1

P2

P3

SelectiveSelectivespecializationspecialization

M1 M2 M3 P1

P2

P3

M1 M2 M3

Full marketFull marketcoveragecoverage

P1

P2

P3

MarketMarketspecializationspecialization

M1 M2 M3 P1

P2

P3

P1

P2

P3

M1 M2 M3

P = ProductP = ProductM = MarketM = Market

2.Market Targeting

Target market Undifferentiated marketing Differentiated marketing Concentrated Marketing

Undifferentiated Marketing

A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer.

Differentiated marketing

A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each.

Concentrated marketing

A market-coverage strategy in which a firm goes after a large share of one or a few submarkets.

Discussion

How to choose the Target market?

3.Positioning

Product position Competitive advantage Value propositioning

Product Position

The way the product is defined by consumers on important attributes----the place the product occupies in consumers’ minds relative to competing product.

The BCG CompetitiveAdvantage Matrix

Volume

FragmentedStalemated

Specialized

Siz

e o

f th

eS

ize

of

the

Ad

van

tag

eA

dva

nta

ge

SmallSmall

LargeLarge

Number of ApproachesNumber of Approachesto Achieve Advantageto Achieve Advantage

FewFew ManyMany

Product Differentiation

FormFea-tures

Perfor-mance

QualityConform-

anceQuality

Dura-bility

Relia-bility

Repair-ability

Style Design

DeliveryDelivery

Services Differentiation

OrderingEase

OrderingEase

Maintenance& Repair

Maintenance& Repair

CustomerTraining

CustomerTraining

InstallationInstallation CustomerConsulting

CustomerConsulting

MiscellaneousS

ervices

Differentiation

Personnel Channel

Media Atmosphere

Symbols

Events

Image Differentiation

Differences WorthDifferences WorthEstablishingEstablishing

AffordableAffordable SuperiorSuperior

ProfitableProfitable

PreemptivePreemptive

DistinctiveDistinctive

ImportantImportant

PositioningPositioning is the act of is the act of designing the company’s designing the company’s

offering and image to offering and image to occupy a distinctive occupy a distinctive

place in the the target place in the the target market’s mind. market’s mind. P 298 P 298

Perceptual Map

0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 -1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 -1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2

1.01.0

0.80.8

0.60.6

0.40.4

0.20.2

-0.2-0.2

-0.4-0.4

-0.6-0.6

-0.8-0.8

MagicMagicMountainMountain

JapaneseDeer Park

BuschBuschGardensGardens

Knott’sKnott’sBerryBerryFarmFarm

LionLionCountryCountrySafariSafari

MarinelandMarinelandof theof thePacificPacific

DisneylandDisneyland

EconomicalEconomical

Fun ridesFun ridesExerciseExercise

FantasyFantasyGood foodGood food

Easy to reachEasy to reach

Educational,Educational,animalsanimals

Little waitingLittle waitingLive showsLive shows

Sales & Profit Life Cycles

IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline

TimeTimeSal

esS

ales

&& p

rofi

tsp

rofi

ts (

$)($)

Four IntroductoryMarketing Strategies

Rapid-Rapid-skimmingskimmingstrategystrategy

Rapid-Rapid-skimmingskimmingstrategystrategy

Rapid-Rapid-penetrationpenetration

strategystrategy

Rapid-Rapid-penetrationpenetration

strategystrategy

Slow-Slow-penetrationpenetration

strategystrategy

Slow-Slow-penetrationpenetration

strategystrategy

Slow-Slow-skimmingskimmingstrategystrategy

Slow-Slow-skimmingskimmingstrategystrategy

PricePrice

LowLow

HighHigh

PromotionPromotionHighHigh LowLow

Case study

香港大班月饼 Background