Market Segmentation, Targeting and Positioning

Identifying steps in selling
Market segmentation to Target market to Positioning
Market segmentation step
identify basis for segmenting the market
Target Market step
develop attractiveness of the segment to consider who to target
Positioning step
Develop the appropriate positioning for a product targeting each segment. Develop a Marketing Mix
Market Research
the systematic gathering, recording, and analysis of data about issues relating to marketing products and servicies
The goal of marketing research is to
identify and assess how changing elements of the marketing mix impacts customer behavior
Individuals or organizations who:
-are willing, able, and capable of purchasing a firm’s products
-segmentation is critical because demand is often heterogenous
Market segmentation definition
the process of dividing the total market for a good or service into smaller groups, each of which tends to be similar insignificant aspects
Segmentation enables marketers to
identify and satisfy effectively specific benefits sought by particular groups
-identify needs, satisfy needs
-divide the market into segments by separating marketing programs
-select target market
-Put the market segmentation plan into action
Limitations of segmentation
-segmentation can be expensive in terms of production and marketing of products to only those specific groups of the market
-increase in promotion, administrative and inventory costs
Segmentation Variables
demographic, geographic, psychographic, benefit-sought, situation, and behavior/usage
Demographic Segmentation
Age, income,family, education, and ethnicity
Geographic Segmentation
when an organization localizes its marketing efforts to accommodate the unique need of specific geographic regions
Psychographic Segmentation
grouping customers together based on social class, life styles and psychological characteristics
-attitudes, interests, and opinions,*personality*
Benefits-Sought Segmentation
markets can be segmented based on benefits that consumers desire from using a specific product
-SAT, whitening strips, special K
Situation Segmentation
physical surroundings, social surroundings, temporal perspective :how much time to make a purchase?: task definition, and pre-purchase attitude
-ie: Vday, not typical target market, no chose but to use product
Behavior/Usage Segmentation
markets can be segmented by how often or heavily consumers use a specific product
Behavior/Usage Segmentation: 80/20 Pareto Principle
80% of revenue generated by 20% of customers. Named after Italian economist Vilfred Pareto
Differentiated
an organization targets multiple market segments and develops segment specific mixes; Tide
Concentrated
when an organization concentrates its marketing efforts on a smaller segment of a larger market; Starbucks
Undifferentiated
an organization develops one strategy appropriate for all members of the total market; shoprite
Segmentation Data- how do we find this information
-Demographics
-Internal sources
-external sources
Demographics- segmentation data
-Us Census Bureau
-Income Tax Returns
-Voter Registration
-Drivers License
-Registration
-Yellow pages
Internal Sources- segmentation data
-In house customer and marketing database
-data mine to explore patterns and relationships in collected data
External Sources- segmentation data
-lists of catalog/magazine subscribers
-US Census information
-Mediamakr, CACI Marketing Systems, etc.
Marketers identify groups of potential customers for
a company’s product: this process is called market segmentation
Markets can be segmented based on variety of
demographics or characteristics of the population
-examples include age, income level, gender, hobbies, or interests. Each group is called a market segment
Target Market Advantages
-easier analysis of potential and actual consumers
-tailoring of products to market
-assessment of demand potential
-identify competing products
-increased sales effectiveness and cost efficiencies
-Product positioning and easy identification of opportunities
Target Market Disadvantages
-increased marketing costs
-personalization can become burdensome to manage
-faux segmentation may be viewed cynically
-*narrowing segmentation can impact brand loyalty; FICKLE*
-ethics and stereotyping issues
Target Market strategies must meet 3 conditons
-target market should be compatible with organizations goals and images
-marketing opportunity presented by the segment must match the company’s resources
-the business much generate a profit if it is to continue its existence
The criteria used to judge the acceptability of a test market region or group include:
-population that is demographically similar to the proposed target market
-relative isolation from densely populated media markets so that advertising to the test audience can be efficient and economical