L3A-MARKET SEGMENTATION
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PeterPreface14e_PPT_Ch05.pptxChapter 5 Market Segmentation
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Market Segmentation
Process of dividing a market into groups of similar consumers and selecting the most appropriate group for the firm to serve
Target market: Group or segment a company selects to serve
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Figure 5.1 - A Model of The Market Segmentation Process
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Delineate The Firm’s Current Situation
Firms must do a complete situational analysis when embarking on a new or modified marketing program
Aids in determining objectives, opportunities, and constraints to be considered when selecting target markets and developing marketing mixes
Intended to be a reminder of tasks to be performed prior to marketing planning
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Determine Consumer Needs and Wants
Successful marketing strategies depend on discovering and satisfying consumer needs and wants
Consumer needs and wants are translated into operational concepts at a strategic level
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Divide Markets on Relevant Dimensions: Priori Versus Post Hoc Segmentation
Marketing manager decides on the appropriate basis for segmentation in advance of doing any research on a market
Priori segmentation
People are grouped into segments on the basis of research findings
Post hoc segmentation
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Divide Markets on Relevant Dimensions: Relevance of Segmentation Decision
Selecting appropriate dimensions requires:
Managerial expertise
Managerial experience
Previous research
Purchase trends
Managerial judgment
Consideration and research of sought benefits
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Divide Markets on Relevant Dimensions: Bases for Segmentation
Benefit segmentation: Focuses on satisfying needs and wants by grouping consumers on the basis of the benefits they are seeking in a product
Psychographic segmentation: Focuses on consumer lifestyles as the basis for segmentation
VALS: Psychographic approach
Stands for values and lifestyles
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VALSTM Framework and Segments
Vertical dimension segments people based on the degree to which they are innovative and have resources
Horizontal dimension represents primary motivations for buying
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Figure 5.4 - VALSTM Framework and Segments
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Geodemographic Segmentation
Identifies specific households in a market by focusing on local neighbourhood geography
Creates classifications of actual, addressable, mappable neighbourhoods where consumers live and shop
Nielsen PRIZM
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Develop Product Positioning
Positioning strategies used
Focusing on the superiority to competitive products
Based on use or application
Targeting particular types of product users
Relativity to a product class
Pitching directly against particular competitors
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Positioning Map
Visual depiction of consumer perceptions of competitive products, brands, or models
Used to investigate how to position a product
Constructed by:
Surveying customers about various product attributes
Developing dimensions and a graph indicating the relative position of competitors
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Figure 5.6 - Positioning Map for Automobiles
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Decide Segmentation Strategy
Not to enter the market
Segment but to be a mass marketer
Market to one segment
Market to more than one segment and design a separate marketing mix for each
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Criteria for Segmentation
Viable segments must be:
Measurable - Firms must be capable of measuring its size and characteristics
Meaningful - Should have sufficient sales and growth potential to offer long-run profits
Marketable - Can be reached and served by the firm in an efficient manner
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Design Marketing Mix Strategy
Selection of target market and designing the market should go hand in hand
Marketing mix decisions are made in conjunction with target market selection
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