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Week5-FinalMarketSegmentationandTargetMarkets-7.pptxIntegrated Marketing
Session 5
Market Segmentation and Target Markets
More efficient and cost effective marketing
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What we’ll cover today
What is the difference between a target market and market segmentation?
Define Market Segmentation
How it is used as the basis of marketing strategy
Bases for segmenting markets;
Geographic
Demographic
Behavioral
STP
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Target Marketing
To compete more effectively, companies are focusing on a “target” consumer and creating a strategy with these precepts for consumers in mind:
- product appeals to their need and desires
-they have the greatest chance of appealing to this market
Target marketing is the overall term for directing your marketing endeavors toward a specific group of people
Effective target marketing requires:
Identify and profile distinct group of buyers who differ in their needs (segmentation)
Select one or more market segments to enter (market targeting)
For each target segment, establish, communicate and deliver the right benefits for the company’s market offering (market positioning)
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Target market of a new construction tool would be? (adult male). Target market of new diaper product? Primary - mother with new baby, secondary- father with new baby
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Market Segmentation
Market Segmentation is the breaking down of the market into smaller groups “slices” with the intention of promoting the product or service differently to each of them
Market segmentation allows your target marketing to become more specific
It divides broad markets (male, female, teen, adult ) into smaller segments in which people are grouped by shared characteristics)
How do different segments exhibit different needs or product responses?
E.g. Working segment - blue collar workers versus professionals - how would their attitudes differ on car features; Safety? fuel efficiency? Car performance?
How might you market differently for the same car?
Black & Decker segmented market into three groups and designed and marketed a separate power tool range based on their characteristics - For each segment they use specific product lines with different brand names
Market segmentation, targeting and brand positioning are known as STP
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Types of Market Segmentation
Geographic Segmentation - separates people based on variables such as region, climate, international/domestic, urban/suburban/rural
Regional marketing - marketing to a zip code
Mapping software identifies locations of their customers
Customer cloning - can assume best prospects live where their current customers live
PRIZM - Potential rating index by markets - geo-clustering approach
500 million people
14 distinct groups
66 distinct lifestyles
Broken down by zip codes
39 factors relating to education and affluence, family life cycle, urbanization, race and ethnicity, mobility
Identifies where valuable customers are, depth of segment penetration, most effective distribution channels and promotional media
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Categories; Blue Blood Estates, Winners Circle, Hometown Retired, Shotguns and pick-ups. Used by Barnes & Nobles where Money & Brians hang out.
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Types of Market Segmentation
Demographic Segmentation - variables such as age, gender, ethnicity, education, social class, occupation, family status, income
Toothpaste Crest and Colgate -have 3 brand to target kids, adults and older consumers
Life stage - presents opportunities for marketers to help people deal with decisions relating to stage; wedding, divorce, home buying
Gender - difference of male versus female consumer - Now there are targeted media outlets (Lifetime, Oxygen, We, Women’s Magazines - for women) (History Channel, ESPN, Comedy Central, Spike TV, Maxim, Men’s Health for men).
Gender changes in certain area- supermarket shopping,
Income segmentation - financial services, automobiles. Premium priced versus discount priced brands - each has an audience and crossover
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Types of Market Segmentation
Generation Variations
Millennials (Gen Y) 1977-1994 - 75MM n US - $200billion
Digital natives; internet saavy, downloading music, texting and social media, own multiple devices, multi-task moving across mobile, social and PC platforms
Marketers approach, brand ambassadors, street teams, cool events
Gen X - Born 1964-1978 - 50 million - raised in more challenging times, wary of hype and pitches, unable to surpass parent’s economic achievements
Baby Boomers - 76 million - Born 1946-1964 $1.2 trillion in annual spending power, control ¾ of nation’s wealth marketers overlook them - interest in 18-49; change brands, spend on technology, use social networking and purchase on-line
Silent Generation - 1925-1945 - don’t feel old, leave active lives. Don’t like cliches, role as grandparents well-received. Need their own products - GE designs appliances for elderly
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Types of Market Segmentation
https://www.youtube.com/watch?v=vLnFHKppZWk&index=5&list=PLknpWDbO-x4-1VGK37NJvM-soxc2yfYpg
Race & Culture - multi-cultural marketing encompasses norms, language, buying habits and business practices
McDonald’s =40% of business with ethnic minorities
Hispanic Americans - Largest minority in US $1 Trillion buying power, median age 37, strong family values
Asian Americans - more brand conscious, care about what others think, share core values of safety and education.
African Americans - $1.1 trillion spending power, fashion conscious, proud of heritage and family ties
LBGT - 5 to 10% of population, $700 billion spending power
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Types of Market Segmentation
Users and User Related Variables
Occasions - Refer to a specific event in a consumer’s life when they develop and purchase a product of use product
Example: Air travel/hotels/restaurants - triggered by business, family or friend occasion, vacation. Segmentation can expand product usage
User Status - Frequent to Non user - Goal for company is to build relationship for share of future purchases (membership benefits, loyalty cards)
User Rate - Segmented into light, medium and heavy product users (small percentage of users but high percentage of total consumption. Heavy beer drinkers account for 87% of usage - 7 times the amount of light users
Buyer Readiness stages are from lack of awareness to various stages , informed, interested, intent to buy. Marketer needs to understand the marketing funnel to make decisions on how to approach consumer _educate, offer free trial, generate awareness, with simple message, dramatize benefits (and risks if do not purchase it - example pap smear)
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Buyer Readiness Stages -
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Psychographic Segmentation
Psychographic segmentation - values, attitudes, beliefs, lifestyle,
People broken down into groups based on their personality/psychological traits, In same demographic group can display very different traits
Strategic Business Insights VALS Framework - classification system on psychological measurements
Classifies US adults into 8 primary groups of psychological traits
Defines consumer motivation - horizontal
Defines consumer resources- vertical
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Psychographic Segmentation
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Consumers inspired by primary motivators; ideals (knowledge, principles) , achievement ( Llok for product or services that demonstrate success) , self-expression (social or physical activity, variety and risk). Personality traits (energy, leadership, innovative, self-confidence determine an individuals’ resources
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Types of Market Segmenation
Behavioral segmentation - behavioral patterns, price sensitivity, brand loyalty, benefits sought - relates to attitude about the brand, need and wants. Examples of wine target segmentation:
Enthusiast - 12% - female, $75,000 income,
Image Seekers - 20% Male age 35 - wine says who they are
Saavy Shoppers - (15%)love to shop and don’t have to spend a lot for good bottle of wine
Traditionalist - 16% Like to buy what they know, established wineries, avg age 50, 68 percent women
Satisfied Sippers - 14 % - don’t know much about wine. Tend to buy same brands. Half of what they drink is white Zinfindel
Overwhelmed - 23% - find purchasing wine confusing - excellent target market
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Function
Allows marketer to tweak its advertisements and promotion to different segments of its target market
Same ad - different race actors
Same ad to adult males - How would it differ if going towards different segments
Presented on country music channel
Presented on sports channel
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Benefits/Considerations
Helps company focus on needs and desires of customers most likely to buy the product
Helps identify and understand its competition
It can be difficult to select the most profitable groups for business - that’s why research and test marketing should come into play before investing large budgets on particular segment
You may in the process re-evaluate which market segment is most attractive for its business potential
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Criteria for Effective Segmentation
To be useful, market segmentation must be:
Measureable - size, purchasing power, characteristics of segment
Substantial - Segments are largest homogeneous group worth going after and profitable to serve
Accessible - Effectively reached and served
Differentiable - Distinguishable and respond to different marketing mix and programs
Actionable - Effective programs can be formulated for attracting and serving segments
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Criteria for Effective Segmentation
Michael Porter has defined these threats:
Threat of Intense segment rivalry - unattractive if numerous, strong or aggressive competitors - or if declining. Is it too expensive to compete?
Threat of new entrants- low entry but high exit barriers means struggle during economic downturns
Threat of substitute products -Places a limit on prices and profits (generic brands, copy cat brands at lower prices) or Airlines versus Amtrak and Greyhound Bus
Threat of buyers growing bargaining power - Walmart and Box stores will lower profit of packaged good companies Best defense is providing superior offers
Threat of suppliers growing bargaining power - If suppliers are able to raise prices or reduce quantity provided - Best recourse is to build valued relationships with suppliers and use multiple suppliers
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Assignment # 5 - Group Work
Assignment # 5 Instructions
This assignment is a continuation of the group work in Assignment #4. You will revise specific parts of your Assignment #4 paper and begin developing slides for your Midterm Powerpoint. Group will begin work in class and continue to work together to prepare for Midterm submission and presentation.
Refine initial work on your Brand Assignment #4 and turn it into a powerpoint presentation - use charts, illustrations as appropriate. Be sure to put in each category requested and use bullet points for descriptions.
1. Refine Brand Description - what it is, how it works, brand category it is in, and competitors
2. Revise your Brand Positioning Statement as per new format provided in class lecture
3. Identify major product benefits and attributes. Identify brand price and how appropriate price is to brand based on benefits
4 -5. Define how brand meets a consumer need(s), wants, desires on following levels:
Economic
Functional
Psychological
6. Target audience -Provide description of your primary and secondary audience and incorporate your 4-5 segments of the population that you will market to and explain why this audience is relevant and will engage with product.
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Assignment #5 - Group Work
7. Include SWOT analysis chart on the product based upon documented research
8. Create a Value Proposition House for selected KickStarter product
9 - 10. Conduct a form of qualitative research on how interested consumers are in your product. In your research ask your survey respondents to assess the following about your chosen product:
importance to the consumer - do they want or need this product and why?
What is consumer's assessment of product benefits
What is perception of product quality?
How does consumer feel about the price point?
Would consumer use/buy this product?
Determine each of these factors and how respondent feels through the research instrument you chose; focus group, personal interviews, on-line survey, telephone survey, etc. Try to get at least 10 -20 people to respond and provide insights. Include summary of how they rated product and the chart on consumer insights
11. Based on this research, provide conclusion on your group's assessment or viability of this product for the future and why you believe it can be successful and valuable in the marketplace. Provide convincing argument.
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Assignment #5
12. Provide References
This assignment formatted, illustrated should be approximately 12 Powerpoint slides . It will be part of your Midterm grade and will become the basis for the Integrated Marketing plan submission that will serve as the final exam. Provide Reference in APA format for all research used within presentation
Every student must contribute to developing this presentation and every student must present a specific portion of the powerpoint as part of the Midterm Exam. See date in assignments.
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