Assignment and Reflection about Principles of Marketing

Segmenting and Targeting

Unrestricted

• People or organizations with needs or wants and the ability and willingness to buy

Market

• Subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs

Market segment

• Process of dividing a market into meaningful, relatively similar, and identifiable segments or groups

Market segmentation

Some important terms

• Identify groups with similar needs • Provides marketers with information for

designing specific marketing mixes • Helps satisfy customer wants and needs

(as directed by the marketing concept)

Why segment?

• Substantiality • Identifiability and measurability • Accessibility • Responsiveness

Criteria for successful segments

“characteristics of individuals, groups, or organizations, to divide a total market into

segments”

What are segmentation bases?

• Segmenting markets by region, market size, market density, or climate

Geographic segmentation

• Segmenting markets by age, gender, income, ethnic background, and/or family life cycle

Demographic segmentation

• Segmenting markets by personality, motives, lifestyles, geodemographics

• Geodemographics combines geographic, demographic, and lifestyle segmentations (like college students)

Psychographic segmentation

• Groups customers into market segments according to the benefits they seek from the product

Benefit segmentation

• Divides a market by the amount of product bought or consumed

Usage-rate segmentation

• Principle holding that 20 percent of all customers generate 80 percent of the demand

80/20 principle

Benefit and usage-rate segmentation

Source: Jennifer Marsh, BSU Foundation

Usage-rate segmentation

ProducersProducers ResellersResellers

GovernmentsGovernments InstitutionsInstitutions

B2B Segmentation Bases

• Company characteristics: • Geographic location • Type of company • Company size • Product use

• Purchasing strategies of buyers • Influenced by the personal characteristics of buyers

B2B Segmentation Bases

• Business customers who place an order with the first familiar supplier to satisfy product and delivery requirements

Satisficers

• Business customers who consider numerous suppliers, both familiar and unfamiliar, solicit bids, and study all proposals carefully before selecting one

Optimizers

B2B Segmentation: Purchasing strategies

• Selecting a market or product category for study • Choosing a basis or bases for segmentation • Selecting segmentation descriptors • Profiling and analyzing segments • Selecting markets • Designing, implementing, and maintaining

appropriate marketing mixes

Steps in segmenting the market

Source: The Center on Philanthropy, 2008.

Choosing a basis for segmentation

• Age • Donor status • Student loan status • Reason for giving (motive)

Selecting segmentation descriptors

Source: The Center on Philanthropy, 2008.

Profiling and analyzing segments

• Alumni • 70% of which are “non-donors” • Mostly recent graduates – Millennial generation

Source: McDearmon, 2009.

Selecting the target market

• Place • Promotion • Price • Product

Design and implement the marketing mix

• Positioning • Process

Present ideas to Board

1 month: Approval by

Board

2-3 months: Delegation by

Strategic Planning

Committee

3rd month or so: Approval

of plan by Board

4-10th months:

Development and Hiring

1 year: Promotion,

website updated,

mailings sent

Other factors to consider

• “A group of people or organizations for which an organization designs, implements, and maintains a marketing mix”

• Strategies for selection: • Undifferentiated targeting • Concentrated targeting • Multisegment targeting

Selecting a target market

• Views the market as one big market with no individual segments and thus uses a single marketing mix

Undifferentiated targeting strategy

• Selects one segment of a market for targeting marketing efforts

Concentrated targeting strategy

• Chooses two or more well-defined market segments and develops a distinct marketing mix for each

Multisegment targeting strategy

Selecting a target market

“When sales of a new product cut into sales of a firm’s existing products”

What is cannibalization?

• Companies that successfully implement CRM tend to customize the goods and services offered to their customers

• Based on data generated through interactions between carefully defined groups of customers and the company

• Can allow marketers to target customers with extremely relevant offerings

CRM as a targeting tool

Personalization Time savings

Loyalty Technology

CRM as a targeting tool

• Influences potential customers’ overall perception of a brand, product line, or organization in general

Positioning

• Means of displaying or graphing the location of products, brands, or groups of products in customers’ minds

Perceptual mapping

• Changing consumers' perceptions of a brand in relation to competing brandsRepositioning

Positioning

Positioning

Attribute Price andquality Use or

application

Product user

Product class Competitor

Emotion

Positioning