CHAPTER 9 - Market Segmentation, Targeting & Positioning

Market

 People/institutions with sufficient purchasing power, authority, and willingness to buy.

Market Segmentation

 Process of dividing the total market into several homogeneous groups

MARKET CLASSIFICATIONS

1.

Consumer Products

- goods & services purchased by ultimate consumer ex. Coat 2.

Business Products

- products purchased to be used, either directly or indirectly in the production of other goods & services for resale ex. Cotton for coat

Effective Segmentation

1. Must be measurable in terms of both purchasing power & size ex. Babyboomers 2. Must be able to effectively promote to & serve a market segment 3. Must be sufficiently large to be potentially profitable 4. The number of market segments must match the firm's capabilities

How to Segment Consumer Markets

1.

Geographic Segmentation

- divide overall market by location ex. Texas population, climate 2.

Demographic Segmentation

- divide overall market by: age, sex, income level, occupation, education, household size, &/or stage in family life cycle

3.

Psychographic Segmentation

- divides population into groups that have similar psychological char., values, and lifestyles http://www.sric-bi.com/VALS/ *VALS (values, attitudes & life-styles) is a commercially available psychological segmentation system

4.

Product-Related Segmentation

- divides a population into homogeneous groups based on char of the consumer's relationship to the product

Several different forms of Product Segments 1. By the benefits that people seek when they buy a product Ex. Baking Soda 2. By usage rates for a product Ex. 80/20 Principle 3. Degree of brand loyalty that consumers feel toward an item Ex. frequent flyer programs

4 Strategies for Reaching Target Markets

1. UNDIFFERENTIATED MARKETING (AKA mass marketing) - firms that produce only 1 product or 1 product line AND market it to all customers 2. DIFFERENTIATED MARKETING - firms that produce numerous products w/ dif marketing mixes designed to satisfy smaller segments

3. CONCENTRATED MARKETING (or niche marketing) - firm may choose to focus on satisfying a smaller target market rather than attempting to market its product offerings to an entire market 4. MICROMARKETING - targeting potential customers at a very basic level (ie: by zip codes, specific occupations, lifestyles or indiv households)