Segmentation target
- 2. What Is Market Segmentation? Market segmentation is the subdividing of a market into distinct subsets, where any subset may conceivably be selected as a marketing target to be reached with a distinct marketing mix
- 3. Segmentation Dilemma MASS MARKETING Economies of Scale CUSTOMIZATION Everyone Wants Something Different
- 4. Segmentation Criteria I. Customer Characteristics II. Benefits Sought III. Customer Behaviors
- 5. Customer Characteristics DEMOGRAPHICS Consumer Markets: Gender Age Income Dual income family Industrial Markets: SIC code Size of company
- 6. Customer Characteristics PSYCHOGRAPHICS Consumer Markets: Environmentally-conscious Value and lifestyles VALS (1978); VALS 2 (1989) Distinct patterns based on attitudes and values Industrial Markets: Corporate culture Purchasing orientation
- 7. Struggler Customer Characteristics VALS CLASSIFICATION Principle Status Action Abundant Resources Minimal Resources Fulfilled Achiever Experiencer Believer Striver Maker Actualizer Fulfilled Achiever Experiencer Believer Striver Maker Struggler http://www.future.sri.com/vals/vals2desc.shtml
- 8. Customer Characteristics GEOGRAPHY Regional Segmentation Zip Clustering Distinct marketing strategies created for similar types of neighborhoods stretched across the nation Examples include PRIZM, Market Metrics
- 9. Benefit Segmentation WHAT BENEFIT DO YOU WANT? Rationale - The benefits people are seeking in consuming a given product are the true reasons for the existence of segments Example - Toothpaste Cavity prevention (e.g., Crest) Fresh breath (e.g., Aquafresh) White teeth (e.g., Rembrandt)
- 10. Behavior Segmentation USAGE BEHAVIORS Volume of usage Heavy users, moderate users, light users and nonusers 80/20 rule Brand usage Increase usage among users Get users of competing brand to switch Get nonusers to start Usage occasion
- 11. What Is “Targeting” a Market Segment? “ You can’t be all things to all people” Therefore, companies typically focus on one or more segments and orient their marketing activities to those (potential) customers
- 12. Which Are the “Good” Segments to Target? The most attractive market segments are: Large Growing and have: High purchase volume High margins High customer value
- 13. Which Are the “Good” Segments to Target? However, the most attractive segments are frequently already well-served and so are highly competitive … so you must also consider: Number and strength of competitors Ease of entry into the segment Company’s current positioning
- 14. Targeting Dilemma - Segment Attractiveness SEGMENT VALUE More Opportunity COMPETITION More Companies Compete for Valuable Segments
- 15. Which Are the “Good” Segments to Target? Additional considerations for targeting: Customers are addressable - you can reach them The company is capable of building a marketing program to target them
- 16. Targeting Examples of successful targeting: Wal-Mart - Value-conscious shoppers that do not want to worry about short-term sales Lexus - People with high disposable income who value reliability and service, as well as prestige and luxury Cray - Price insensitive computer users that require maximum computing power Dupont - Less price-sensitive innovators in the use of plastics (skim pricing)
- 17. Porter’s Market Forces Model
- 18. Porter’s Market Forces Model An important tool to help us understand the character of competition in a market is Michael Porter’s market forces model It assists in evaluating the attractiveness of a market for potential entry
- 19. Porter’s Market Forces Model The character of competition in markets varies widely: “ Cooperative” Competition Intense Rivalry Character of Competition in a Market
- 20. Porter’s Market Forces Model What determines the attractiveness, or potential long-term profitability, of a market? Buyers (Buyer Power) Substitutes (Threat of Substitutes) Suppliers (Supplier Power) Potential Entrants (Threat of Mobility) Industry Competition (Segment Rivalry) Michael E. Porter
- 21. Porter’s Market Forces Model How does the model predict the intensity of competitive rivalry?