Marketing

Chapter 8
Market Segmentation
Gilbert A. Churchill, Jr. J. Paul Peter

Slide 8-1

Basic Definitions
Definition Individuals or organizations with the desire and ability to buy goods and services

Approach
Market

Market Segmentation

The process of dividing a market into groups of potential buyers who have similar needs and wants, value perceptions, or purchasing behavior The particular market segment that the organization selects to serve.

Target Market

Slide 8-2 Table 8.1

Approaches to Serving Markets

Description A single marketing mix for the entire market Niche Marketing A single marketing mix for one segment of the market Examples Phone service, WEB pages Women's Workout World (exercise facilities for women); American Association for Retired Persons (lobbying and membership services for people over 50) McDonalds (Happy Meals for young children, Big Macs for Teens, Arch Deluxe for adults); Toshiba copiers (several sizes and features to meet different levels of business needs) Personalized amenities for repeat guests at Ritz-Carlton hotels; management consulting services tailored to an organizations needs

Approach
Mass Marketing

Segment Marketing Differentiated Marketing Separate marketing mixes for two or more segments of the market Individual Marketing A marketing mix customized for an individual or organization

Slide 8-3

Market Segmentation
used to develop a competitive advantage
Market Potential - the total
purchases that buyers in a segment will likely make during a specified period of time, given a specified level of marketing activity

Criteria for Successful Market Segmentation

Measurability - be able
to measure its size and characteristics

Accessibility - be able
to reach members of target segment with customized marketing mixes

Responsiveness respond differently to some aspect of the 4P than other segments

Slide 8-4

P & G Segmentation - Detergent Market

53% market share of the $3.2 billion market
TIDE - Tides in, dirt out ARIEL - tough cleaner IVORY SNOW mild, gentle soap for baby clothes DREFT - a clean you can trust SOLO - liquid detergent with fabric softener ERA - builtin stain remover

CHEER - all temperature Cheer BOLD - cleans, soften,and controls static

GAIN freshens like sunshine

DASH attack tough dirt

OXYDOL makes clothes bright

Slide 8-5

Mass/Undifferentiated Marketing
The Market

Product

Price

Everyone
Placement Promotion

Slide 8-6

Niche Marketing
The Market

Product

Price

Placement Promotion

Market Segment

Slide 8-7

Differentiated Marketing
The Market
Product Price

Placement Promotion

Market Segment

Product

Price

Market Segment

Placement Promotion

Slide 8-8

Individual Marketing
The Market
Product Price Placement Promotion Product Price Placement Promotion Product Price Placement Promotion Product Price Placement Promotion

Customer

Customer

Customer

Customer

Slide 8-9 Table 8.2

Some Bases for Segmenting Consumer Markets

Levis Dockers Demographic

Campbell Soup

Behavior

Geographic Segmentation

Southwest Airlines

Benefit Colgate Toothpaste

Psychological Frito-Lay Snacks

Slide 8-10 Figure 8.2

VALS2 Lifestyle Categories Consumer Markets

Actualizers Achievers Strivers Strugglers Minimal Principal Oriented Status Oriented Action Oriented Self-Orientation

Resources

Abundant

Fulfilleds Believers

Experiencers Makers

Slide 8-11 Table 8.3

Some Bases for Segmenting Organizational Markets

Intel Computer Chips

Geographic

Segmentation Organizational Buyer Behavior

Apple Computer Newton Pocket Computer

Customer Type

Flowers Industries Baked Goods

Slide 8-12 Figure 8.5

The Process of Market Segmentation

Analyze Customer Product Relationship Investigate Segmentation Bases Develop Product Positioning

Select Segmentation Strategy

Slide 8-13

Product Position
Attribute
BMW - performance

The perception of the product relative to competing products in the minds of potential buyers.
Positioning Bases

Price and Quality

Dillards VS KMart

Use or Application
Gatorate

Product User
J&J Baby Shampoo

Product Class
Parkay, Caress

Competitor
VISA VS AMEX

Slide 8-14 Figure 8.6

Sample Positioning Map: Automobiles

Luxurious Mercedes Cadillac Lincoln Chrysler Oldsmobile Buick BMW Pontiac Chevrolet Nissan Dodge Plymouth Functional Toyota VW Saturn Sporty Porsche Lexus

Traditional Mercury Ford