p 5-1. p 5-2 chapter 5 marketsegmentation p 5-3 a model of the market segmentation process decide...
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P 5
-1P
1-1
MarketingManagement
6th Edition
Knowledge and Skills
J. Paul Peter•
James H. Donnelly, Jr.
P 5
-3
A Model of the Market Segmentation Process
Decide segmentation strategyDecide segmentation strategy
Develop product positioningDevelop product positioning
Divide markets on relevant dimensionsDivide markets on relevant dimensions
Determine consumer needs and wantsDetermine consumer needs and wants
Delineate firm’s current situationDelineate firm’s current situation
Design marketing mix strategyDesign marketing mix strategy
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
P 5
-4
Developing Market Segments for Woman’s Apparel
ConservativeConservative TraditionalTraditional UpdateUpdate
SizeSize
AgeValues
AgeValues
EmploymentEmployment
23% of population
16% of total sales
35-55 years old
Conservative values
Satisfied with present
status
Has job, nor career
38% of population
40% of total sales
25-49 years old
Traditional values
Active, busy,
independent, self
confidant
Family-and Job/
career-oriented
16% of the population
24% of total sales
25-49 years old
Contemporary values, Active,
busy,independent
very self-confident
Family-and Job/
career-oriented
(continued)
SOURCE: Michael Levy and Barton A. Weitz, Retailing Management, 3d ed. (Boston, MA: Irwin/McGraw-Hill, 1998), p. 148.
P 5
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Developing Market Segments for Woman’s Apparel
ConservativeConservative TraditionalTraditional UpdateUpdate
IncomeIncome
Benefits SoughtBenefits Sought
Limited disposable income
Price driven, reacts to salesWants easy care and comfortNot interested in fashionDefines value as:
PriceQualityFashion
ConsiderableIncome
Quality driven, will pay a little moreWants traditional styling, seeks clothes that lastInterested in newnessDefines value as:
QualityFashion
Price
ConsiderableIncome
Fashion driven, expresses self through apparelWants newness in color and styleShops oftenDefines value as:
FashionQualityPrice
SOURCE: Michael Levy and Barton A. Weitz, Retailing Management, 3d ed. (Boston, MA: Irwin/McGraw-Hill, 1998), p. 148.
P 5
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Useful Segmentation Bases for Consumer and Organizational Buyer Markets
Segmentation Base
Geographic:
Continents
Global regions
Countries
Country regions
City, county, or SMSA size
Population density
Climate
Examples of Market Segments
Africa, Asia, Europe, North America, South America
Southeast Asia, Mediterranean, Caribbean, China, Canada
France, United States, Brazil,
Pacific Northwest, Middle Atlantic, Midwest
Under 5,000people, 5,000-19,999, 20,000-49,999, 50,000+
Urban, suburban, rural
Tropical, temperate, cold
Consumer Markets
(continued)
Figure 5-2Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
P 5
-7
Useful Segmentation Bases for Consumer and Organizational Buyer Markets
Examples of Market Segments
Under 6 years old, 6-12, 13-19, 20-29, 30-39, 40-49, 50+
Male, female
1-2 persons, 3-4 persons, more than 4 persons
Single, young married, married with children, sole survivor
Under $10,000 per year, $10,000-$19,999, $20,000-$29,999, 40,000-$39,999, $40,000-49,999, $50,000+
Segmentation Base
Demographic:
Age
Gender
Family size
Family life cycle
Income
Consumer Markets
(continued)
Figure 5-2Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
P 5
-8
Examples of Market Segments
Grade school or less, some high school, graduated from high school, some college, graduated from college, some graduate work, graduate degree
Single, married, divorced, widowed
American, Hispanic, African, Asian, European
Jewish, Catholic, Muslim, Mormon, Buddhist
European-American, Asian-American, African-American, Hispanic-American
Useful Segmentation Bases for Consumer and Organizational Buyer Markets
Segmentation Base
Education
Marital status
Social
Culture
Subculture
Religion
Race
Consumer Markets
(continued)
Figure 5-2Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
P 5
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Examples of Market Segments
French, Malaysian, Australian, Canadian, JapaneseUpper class, middle class, working class, lower class
Expert, noviceHigh, medium, lowPositive, neutral, negativeConvenience, economy, prestigeInnovator, early adopter, early majority, late majority laggers, nonadopterUnaware, aware, interested, desirous, plan to purchaseHigh, moderate, low
Useful Segmentation Bases for Consumer and Organizational Buyer Markets
Segmentation Base
Nationality Social classThoughts and feelings Knowledge
Involvement Attitude Benefits sought Innovativeness
Readiness stage
Perceived risk
Consumer Markets
(continued)
Figure 5-2Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
P 5
-10
Useful Segmentation Bases for Consumer and Organizational Buyer Markets
Segmentation Base
Behavior
Media Usage
Specific media usage
Payment method
Loyalty status
Usage rate
User status
Usage situation
Examples of Market Segments
Newspaper, magazine, TV, internet
Sports Illustrated, Life, Cosmopolitan
Cash, Visa, MasterCard, American Express, check
None, some, total
Light, medium, heavy
Non user, ex-user, current user, potential user
Work, home, vacation, commuting
Consumer Markets
(continued)
Figure 5-2Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
P 5
-11
Useful Segmentation Bases for Consumer and Organizational Buyer Markets
Segmentation Base
Combined approaches
Psychographics
Person/situation
Geodemography
Examples of Market Segments
Achievers, strivers, strugglers
College students for lunch, executives for business dinner
Blue Blood Estates, Towns and Gowns, Hispanic Mix
Consumer Markets
(continued)
Figure 5-2Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
P 5
-12
Useful Segmentation Bases for Consumer and Organizational Buyer Markets
Segmentation Base
Source loyalty
Company size
Purchase quantity
Product applicationOrganization typeLocationPurchase status
Attribute importance
Examples of Market Segments
Purchases product from one, two, three, four, or more suppliers
Small, medium, large relative to industry
Small, medium, large account
Production, maintenance, product componentManufacturer, retailer, government agency, hospitalNorth, south, east, west sales territoryNew customer, occasional purchaser, frequent purchaser,nonpurchaserPrice, service, reliability of supply
Organizational Buyer Markets
Figure 5-2Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
P 5
-13
Toothpaste Market Benefit Segments
Sensory
Segment
Sociable
Segment
Worrier
SegmentIndependent
Segment
Flavor and product appearance
Principal benefit
soughtBrightest of teeth
PriceDecay prevention
ChildrenDemographic
strengthsTeens, young people
MenLarge Families
Users of spearmint-flavored toothpaste
Special behavioral
characteristicsSmokers Heavy usersHeavy users
SOURCE: Adapted from Russell I. Haley, “Benefit Segmentation: A Decision-Oriented Research Tool, “Journal of Marketing, July 1968, pp. 30-35.
(continued)
Figure 5-3
P 5
-14
Toothpaste Market Benefit Segments
Sensory
Segment
Sociable
SegmentWorrier
Segment
Independent
Segment
ColgateBrands
disproportionately
favored
Macleans, Ultra Brite
Cheapest brand
Crest
HedonisticLifestyle
characteristicsActive Value-
orientedConservative
SOURCE: Adapted from Russell I. Haley, “Benefit Segmentation: A Decision-Oriented Research Tool, “Journal of Marketing, July 1968, pp. 30-35.
Figure 5-3
P 5
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VALS 2 Eight American Lifestyles
orientedoriented Status oriented ActionPrinciple
Minimal resources
Abundant resources
(continued)
Figure 5-4
Actualizers
Makers
Strugglers
Strivers
Experiencers Achivers Fulfilleds
Believers
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
P 5
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SOURCE: Martha Farnsworth Riche, “Psychographics for the 1990s,” American Demographics, July 1989, pp. 24-26ff.
VALS 2 Eight American Lifestyles
Actualizers. Those consumers have the highest incomes and such high self-esteem and abundant resources that they can indulge in any or all self-orientations. They are located above the rectangle. Image is important to them as an expression of taste, independence and character. Their consumer choices are directed toward the finer things in life.
(continued)
Fulfilleds. These consumers are the high-resource group of those who are principle oriented. They are mature, responsible, well-educated professionals. Their leisure activities center on their homes, but they are well informed about what goes on in the world and open to new ideas and social change. They have high incomes but are practical consumers.
Figure 5-4
P 5
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VALS 2 Eight American Lifestyles
Believers. These consumers are the low-resource group of those who are principle oriented. They are conservative and predictable consumers who favor American products and established brands. Their lives are centered on family, church, community, and the nation. They have modest incomes.
(continued)
Achievers. These consumers are the high-resource group of those who are status oriented. They are successful, work-oriented people who get their satisfaction from their jobs and families. They are politically conservative and respect authority and the status quo. They favor established products and services that show off their success to their peers.
SOURCE: Martha Farnsworth Riche, “Psychographics for the 1990s,” American Demographics, July 1989, pp. 24-26ff.
Figure 5-4
P 5
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VALS 2 Eight American Lifestyles
Strivers. These consumers are the low-resource group of those who are status oriented. They have values very similar to achievers but have fewer economic, social, and psychological resources. Style is extremely important to them as they strive to emulate people they admire and wish to be like.
(continued)
Experiencers. These consumers are the high-resource group of those who are action oriented. They are the youngest of all of the segments with a median age of 25. They have a lot of energy which they pour into physical exercise and social activities. They are avid consumers, spending heavily on clothing, fast foods, music, and other youthful favorites-with particular emphasis on new products and services.
SOURCE: Martha Farnsworth Riche, “Psychographics for the 1990s,” American Demographics, July 1989, pp. 24-26ff.
Figure 5-4
P 5
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VALS 2 Eight American Lifestyles
Makers. These consumers are the low-resource group of those who are action oriented. They are practical people who value self-sufficiency. They are focused on the familiar-family,work, and physical recreation-and have little interest in the broader world. As consumers; they appreciate practical and functional products.
Strugglers. These consumers have the lowest incomes. They have too few resources to be included in any consumer sell-orientation and are thus located below the rectangle. They are the oldest of all the segments with a median age of 61. Within their limited means, they tend to be brand-loyal consumers.
SOURCE: Martha Farnsworth Riche, “Psychographics for the 1990s,” American Demographics, July 1989, pp. 24-26ff.
Figure 5-4
P 5
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Claritas PRIZM Cluster 36-Towns and GownsThe “towns and gowns” cluster describes most of our college towns and university campus neighborhoods. With a typical mix of half locals (towns) and half students (gowns). It is wholly unique, with thousands of penniless 18- to 24-year-old kids, plus highly educated professionals, all with a taste for prestige products beyond their evident means.
Predominant Characteristics• Households (% U.S.) 1,290,200 (1.4%)• Population: 3,542,500• Demographic caption: College-town singles• Ethnic Diversity: Dominant white, high Asian• Family type: Singles•Predominant age ranges: Under 24, 25-34• Education: College graduates• Employment level: White collar/service• Housing type: Renters/multiunit 10+• Density percentile: 58 (1=sparse, 99 = dense)
(continued)SOURCE: Valarie Walsh and J. Paul Peter, “Claritas Inc.: Using Compass and PRIZM,” in Marketing Management: Knowledge and Skills, 5th ed., eds. J. Paul Peter and James H. Donnelly, Jr. (Burr Ridge, IL: Irwin/McGraw-Hill, 1998), p. 334
Figure 5-5
P 5
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More Likely to:Lifestyle Products and ServicesGo to college football games Have personal education loanPlay racquetball Use an ATM cardGo skiing Own a HondaPlay billiards/pool Buy 3+ pairs of jeans annuallyUse cigarette rolling paper Drink Coca-Cola ClassicUse a charter/tour bus Eat Kraft Macaroni and Cheese
Claritas PRIZM Cluster 36-Towns and Gowns
SOURCE: Valarie Walsh and J. Paul Peter, “Claritas Inc.: Using Compass and PRIZM,” in Marketing Management: Knowledge and Skills, 5th ed., eds. J. Paul Peter and James H. Donnelly, Jr. (Burr Ridge, IL: Irwin/McGraw-Hill, 1998), p. 334
Radio/TV PrintWatch VH1 Read SelfListen to alternative rock music Read newspaper comic sectionWatch “Jeopardy” Read Rolling StoneListen to variety radio Read GQWatch “The Simpsons”
Figure 5-5
P 5
-22
Positioning Map for Automobiles
Traditional Sporty
Luxurious
Functional
Cadillac •
• Mercedes
Lincoln •
Oldsmobile • •Chrysler • Buick
Ford •
Plymouth •
Dodge •
Mercury •
•Pontiac
•BMW •Porsche
•Lexus
•Chevrolet •Nissan
•Toyota
•Saturn
•VW
SOURCE: Gilbert A. Churchill, Jr., and J. Paul Peter, Marketing: Creating Value for Customers, 2d ed. (Burr Ridge, IL: Irwin/McGraw-Hill, 1998), p. 221.
Figure 5-6
P 5
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Differences in Marketing Strategy for Three Segmentation Alternatives
MultipleStrategy Mass Single Market MarketElements Marketing Segmentation Segmentation
Market definition Broad range of One well-defined Two or more well-defined
consumers consumer group consumer groups
Product strategy Limited number of One brand tailored Distinct brand for eachproducts under one to one consumer consumer groupbrand for many types group
of consumers
Pricing strategy One “popular” price One price Distinct price range forrange range tailored to each consumer group
the consumer group
SOURCE: Joel R. Evans and Barry Berman, Marketing, 5th ed. (New York: Macmillan, 1992), p. 219. © 1992. Reprinted by permission of Prentice Hall, Inc., Upper Saddle River, NJ.
(continued)
P 5
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Differences in Marketing Strategy for Three Segmentation Alternatives
MultipleStrategy Mass Single Market MarketElements Marketing Segmentation Segmentation
Distribution strategy All possible outlets All suitable outlets All suitable outlets
differs by segment
Promotion strategy Mass media All suitable media All suitable mediadiffers by segment
Strategy emphasis Appeal to various Appeal to one specific Appeal to two or more types of consumers consumer group distinct market seg- through a uniform, through a highly spe-
ments through different broad-based cialized, but uniform marketing plans
cateringmarketing program marketing program to each segment
SOURCE: Joel R. Evans and Barry Berman, Marketing, 5th ed. (New York: Macmillan, 1992), p. 219. © 1992. Reprinted by permission of Prentice Hall, Inc., Upper Saddle River, NJ.