market segments and targets

Market Segments and Targets

TMT, MKT 460

Mass Marketing• The seller engages in the mass production, mass distribution and mass promotion of one product for all buyers.

• Creates the largest potential market.

• Lower Cost

• Lower price or higher margin

Segmentation• Segment Marketing: Consists of a group of customers

who share a similar set of needs and wants.

• Niche Marketing: Is a more narrowly defined customer group seeking a distinctive mix of benefits.

• Local Marketing: Tailored to the needs and wants of local customer groups in trading areas, neighborhoods, even individual stores.

• Individual Marketing: “Segments of one”, “customized marketing” or one-to-one marketing”

• Customerization: A company is customerized when it is able to respond to individual customers by customizing its products.

Benefits of Market Segmentation

• Identifies opportunities for new product development

• Helps in design of marketing programs that are most effective for reaching homogeneous groups of consumers

• Improves the allocation of marketing resources.

Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioral

Demographic Segmentation

Age and Life Cycle

Life Stage

Gender

Income

Generation

Social Class

Psychographic Segmentation

• Science of using psychology & demographics to better understand consumers.

• Divided into different groups on the basis of psychological/personality traits, lifestyle or values.

• People within same demographic group can exhibit very different psychographic profile.

Behavioral Segmentation

• Decision Roles

• Initiator

• Influencer

• Decider

• Buyer

• User

• Behavioral Variables

• Occasions

• Benefits

• User Status

• Usage Rate

• Buyer-Readiness

• Loyalty Status

• Attitude

The Brand Funnel Illustrates Variations in the

Buyer-Readiness Stage

• Aware

• Ever tried

• Recent trial

• Occasional user

• Regular user

• Most often used

Loyalty Status

Switchers

Shifting loyals

Split loyals

Hard-core

Figure 8.3 Behavioral Segmentation Breakdown

Nokia’s Differentiated Marketing Strategy

Steps in Segmentation Process

Needs-based segmentation

Segment identification

Segment attractiveness

Segment profitability

Segment positioning

Segment acid test

Marketing-MixStrategy

Effective Segmentation Criteria

Measurable

Substantial

Accessible

Differentiable

Actionable

Estimating Market Sales Potential

Market Sales Potential = B × Q × P

Market Sales for cola-flavored carbonated soft drinks

=

Population aged 8 years and over × proportion of the population that consumes carbonated soft drinks on a regular basis × proportion of the population preferring cola-flavored soft drinks × the average number of soft drinks consumed per day (in ounce) × 365 days in a calendar year × average price of per ounce of cola

Sales and Profit Forecasting

Total estimated prospective buyers 1 million

times

Target market (25% of total buyers) × .25

times

Distribution/Communication coverage (75% of target market)

× .75

times

Annual purchase rate (20 units per year)

× 20

times

Average offering unit price (BDT 10.00) × 10

Forecasted sales BDT 37.5 million

Figure 8.4 Patterns of Target Market Selection

Figure 8.4 Patterns of Target Market Selection

Figure 8.4 Patterns of Target Market Selection

Recent Applications of Segmentation

• SNA (Social Network Analysis): Refers to methods used to analyze social networks, social structures made up of individuals (or organizations) called "nodes", which are tied (connected) by one or more specific types of interdependency, such as friendship, kinship, common interest, financial exchange, dislike, sexual relationships, or relationships of beliefs, knowledge or prestige.

• Database Marketing: Database marketing is a form of direct marketing using databases of customers or potential customers to generate personalized communications in order to promote a product or service for marketing purposes. The method of communication can be any addressable medium, as in direct marketing.

SNA