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4.1. market segmentation
1.
][Welcome to Marketing Strategy Segmenting,
Targeting, Differentiating, and Positioning Strategy for Attractive Market
2.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. MARKET SEGMENTATION
3.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. Market A Market Segment A group of individuals or organizations (i.e., buyers) having the willingness and ability to buy goods and services to satisfy a class of want or need A group of potential customers in a market who share similar wants and needs that are different from the wants and needs of consumers in other segments 1-3
4.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. Market Segmentation and Target Marketing • Most Markets Are Heterogeneous • Segmentation is important because markets are rarely homogeneous in benefits wanted, purchase rates, and price and promotion elasticities, and their response rates to products and marketing programs differ. • Variation among market segments in product preferences, size and growth in demand, media habits, and competitive structures further affect the differences and response rates. • Today’s Market Realities Often Make Segmentation Imperative 1-4
5.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. Why Should Segment Markets And Target Certain Segments? • Market segmentation has become increasingly important in the development of marketing strategies for the following reasons. •Population growth has slowed, and more product-markets are maturing. This sparks more intense competition as firms seek growth via gains in market share as well as in an increase in brand extensions. •Such social and economic forces as expanding disposable incomes, higher educational levels, and more awareness of the world have produced customers with more varied and sophisticated needs, tastes, and lifestyles than ever before. This has led to an outpouring of goods and services that compete with one another for the opportunity of satisfying some group of consumers. •There is an increasingly important trend toward microsegmentation, in which extremely small segments are targeted. •Many marketing organizations have made it easier to implement sharply focused marketing programs by more sharply targeting their own services.1-5
6.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. Benefits and Drawbacks of Market Segmentation Benefits of Market Segmentation: •It identifies opportunities for new product development. •It helps in the design of marketing programs that are most effective for reaching homogeneous groups of customers. •It improves the strategic allocation of marketing resources. Drawbacks of Market Segmentation: •Potential customers who do not fit into the target segment are missed. •Marketers may misjudge who their target market is, which could result in product failure or poor sales. 1-6
7.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. Market Segmentation Traditional Market Segmentation Approaches Individualized Segmentation Approaches Mass Marketing One-to-One Marketing Differentiated Marketing Mass Customization Niche Marketing Permission Marketing 1-7
8.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. Criteria for Successful Segmentation 1. Identifiable and Measurable. The characteristics of the segment’s members must be easily identifiable. This allows the firm to measure identifying characteristics, including the segment’s size and purchasing power. 2. Substantial. The segment must be large and profitable enough to make it worthwhile for the firm. The profit potential must be greater than the costs involved in creating a marketing program specifically for the segment. 3. Accessible. The segment must be accessible in terms of communication (advertising, mail, telephone, etc.) and distribution (channels, merchants, retail outlets, etc.). 4. Responsive. The segment must respond to the firm’s marketing efforts, including changes to the marketing program over time. The segment must also respond differently than other segments. 5. Viable and Sustainable. The segment must meet the basic criteria for exchange, including being ready, willing, and able to conduct business with the firm. The segment must also be sustainable over time to allow the firm to effectively develop a marketing strategy for serving the needs of the segment.
9.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. How Are Market Segments Best Defined? Demographic Descriptors Geographic Descriptors Geodemographic Descriptors Behavioural Descriptors Innovative Segmentation: A Key to Marketing Breakthroughs
10.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. Defining Market Segments Customer Segmentation Organizational Markets Segmentation Who .. the customers are? Tools: Demographic Descriptors Who? Tools: Demographic Descriptors Where .. they are? Tools: Geographic Descriptors Where? Tools: Geographic Descriptors How they behave? Tools: Benefits Sought Product Usage Lifestyle/Psychographics Social Class How they behave? Tools: Benefits Sought Product Usage Lifestyle/Psychographics Social Class 1-10
11.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. Identifying Market Segments Segmenting Consumer Markets Segmenting Business Markets Behavioral Segmentation Type of Organization. Demographic Segmentation Organizational Characteristics Psychographic Segmentation Benefits Sought or Buying Processes. Geographic Segmentation Personal and Psychological Characteristics Relationship Intensity 1-11
12.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. 1-12
13.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. 1-13
14.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. 1-14
15.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. Thank You 1-15
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