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IDENTIFYING MARKET SEGMENTS & TARGET CHAPTER 8 PHILLIP KOTLER & KEVIN LANE KELLER Prepared for: Universitas Ciputra Slide 2 Marketing Process Slide 3 Steps in Target Marketing Market Segmentation 1. Identify bases for segmenting the market 2. Develop segment profiles Market Targeting 3. Develop measure of segment attractiveness 4. Select target market Market Positioning 5. Develop positioning for target segment 6. Develop a marketing mix for each segment Market Segmentation: Dividing a market into distinct groups of buyers on the basis of needs, characteristics, or behavior who might require separate products of marketing mixes Market Targeting: The process of evaluating each market segments attractiveness and selecting one or more segments to enter Market Positioning: Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumer; eg. 7-up the Uncola7-up the Uncola Slide 4 Level of Market Segmentation Mass Marketing (no segmentation) Segment MarketingNiche Marketing Micro Marketing (Complete Segmentation) Slide 5 Segmenting Consumer Market World region, Country region, City or metro size, Density, Climate Geographic Age and life cycle, Life stage, Gender, Family size, Family life-cycle, Income, Occupation, Education, Generation, Nationality, Social class Demographic Lifestyle, Personality, Values Psychographic Occasions, Benefits, User status, Usage rate, Loyalty Status, Readiness status, Attitude toward product Behavioral Slide 6 Behavioral Segmentation Breakdown Target Market UnawareAware Not Tried Negative Opinion Neutral Favorable Opinion Tried Rejector Not yet repeated Repeated Loyal to other brand Switcher Loyal to brand Light user Regular user Heavy user Slide 7 Segmenting Business Market [1] Demographic IndustryIndustry to serve Company SizeSize of company to serve LocationGeographic area to serve Operating Variables TechnologyCustomer technology should we focus on User-nonuser statusServe heavy, medium, light or non-user Customer capabilityServe customer needing many or few services Purchasing Approaches Purchasing function organization Serve companies with highly centralized or decentralized purchasing organization? Power structureServe companies that are engineering dominated, financing dominated, or so on? Nature of existing relationship Serve companies with which we have strong relationship or simply go after the most desirable one? General purchase policies Serve company that prefers leasing, service contract, system purchased, sealed bidding (tender) Purchasing criteriaServe company that focus oriented to quality? service? price? Slide 8 Segmenting Business Market [2] Situational factors UrgencyFocus on company that needs quick and sudden delivery or service Specific applicationFocus on company that prefer certain application of our product or all application Size of orderFocus on company with small or large orders Personal characteristics Buyer-seller similarityFocus on company which people and values are similar to ours Attitude toward riskFocus on company that is risk-taking or risk-averse LoyaltyFocus on company that shows high loyalty to their suppliers Slide 9 Step in Segmentation Process Needs-based segmentation Segment identification Segment attractiveness Segment profitability Segment positioning Segment Acid Test Marketing- mix strategy Group customers into segments based on similar needs Determine which demographics, lifestyle, and usage behavior make the segment distinct and identifiable Determine the overall attractiveness of each segment (market growth, market access, etc) Determine segment profitability Create a value proposition& product- price positioning strategy Create segment storyboard to test the attractiveness of each segment positioning strategy Expand segment positioning strategy to include all aspects of the marketing mix Slide 10 Effective Segmentation Criteria 1. Measurable 2. Substantial 3. Accessible 4. Differentiable 5. Actionable Slide 11 Selecting and Evaluating Market Segment M1M1 M2M2 M3M3 P1P1 P2P2 P3P3 M1M1 M2M2 M3M3 P1P1 P2P2 P3P3 Single-segment concentration Selective specialization Product specialization M1M1 M2M2 M3M3 P1P1 P2P2 P3P3 M1M1 M2M2 M3M3 P1P1 P2P2 P3P3 M1M1 M2M2 M3M3 P1P1 P2P2 P3P3 Market specialization Full-market Coverage Slide 12 Additional Consideration Ethical choice of market target Segment-by- segment invasion plan Intersegment cooperation