CHAPTER THREE Market Segmentation and Strategic Targeting Copyright 2010 Pearson Education, Inc.
Learning Objectives 1. To Understand Why Market Segmentation Is Essential. 2. To Understand the Criteria for Targeting Selected Segments Effectively. 3. To Understand the Bases for Segmenting Consumers. 4. To Understand How Segmentation and Strategic Targeting Are Carried Out. 2
What Kind of Consumer Does This Ad Target? 3
This Ad Targets Runners Who Are Physically Active People, serious about running and Also Relish the Outdoors. 4
Why Segmentation is Necessary Consumer needs differs Differentiation helps products compete Segmentation helps identify media OOH/print/TVC/web etc 5
Positioning The value proposition, expressed through promotion, stating the product s or service s capacity to deliver specific benefits. 6
Criteria for Effective Targeting find the characteristic they have chosen for segmentation large enough to be profitable to the marketer consumers are not fickle and likely to change very quickly to reach that market in an affordable way 7
Which Distinct Benefit Does Each of the Two Brands Shown in This Figure Deliver? 8
The Dentyne Ad s Benefit is Fresh Breath and the Nicorette Ad is Whitening and Smoking Cessation 9
Bases for Segmentation 10
Discussion Questions Considering the largest bank in your city or town: How might consumers needs differ? What types of products might meet their needs? What advertising media makes sense for the different segments of consumers? 11
Consumer Rooted Segmentation Bases 12
Bases for segmenting consumer markets Demographic Age, gender, family size and life cycle, race, occupation, or income... Geographic Region, city size, density, climate Psychographic Lifestyle, personality, values Behavioral Occasions, benefits, uses, or attitudes
Examples of segmentation bases they may be used singly or in combination Geographic climate for woollen clothes Demographics Age group for designer clothing Psychographics personality for political choices and brands eg Nike Personal values Behavioural occasions for drinking eg tea to relax and juice to refresh attitudes for a beer mateship
Demographic Segmentation 15
Discussion Questions What types of marketers might segment according to social class? What ethical issues might marketers have when marketing to different social classes? Copyright 2010 Pearson Education, Inc. 16
Geodemographic Segmentation Based on geography and demographics People who live close to one another are similar Birds of a feather flock together 17
One PRIZM Segment Table 3.4 (excerpt) 18
Personality Traits People often do not identify these traits because they are guarded or not consciously recognized Consumer innovators (WOM/exemplary) Open minded Perceive less risk in trying new things 19
Lifestyles Psychographics Includes activities, interests, and opinions They explain buyer s purchase decisions and choices 20
Discussion Questions How might you differ from a person with similar demographics to yourself? How would this be important for marketers? 21
Two Views of Post Retirement Lifestyle Table 3.6 (excerpt) 23
VALS Figure 3.4 VALS is the most popular segmentation system that combines lifestyles and values Maslow s hierarchy of needs and the concept of social character 24
Socio Cultural Values and Beliefs Sociological = group Anthropological = cultural Include segments based on Cultural values (Broad perspective US, China, Japan etc..) Sub cultural membership (mixes in race in a single broad cultural platform) Cross cultural affiliations (Singapore, Hongkong etc) 25
Consumption Specific Segmentation Bases 26
Consumption Specific Segmentation Usage Behavior Usage rate group of consumers are heavy, medium, light, or nonusers of a product Awareness status target the other usage segments to fuel their growth in the marketplace Level of involvement 27
Consumption Specific Segmentation Usage Behavior Usage situation segmentation Segmenting on the basis of special occasions or situations Example : When I m away on business, I try to stay at a suites hotel. Valentine s Day.. Like to order bouquet of flowers for loved ones 28
Which Consumption Related Segmentation Is Featured in This Ad? Copyright 2010 Pearson Education, Inc. 29
This is an Example of a Situational Special Usage Segmentation. 30
Benefits Segmentation Benefits sought represent consumer needs Important for positioning Benefits of media 28
Benefits Visiting Tourists Seek in National Park Table 3.13 (excerpt) Segment Environmentalists Description Interested in an unpolluted, un spoilt natural environment and in conservation. Not interested in socializing, entertainment, or sports. Desire authenticity and less man made structures and vehicles in the park. Want it all Tourists Value socializing and entertainment more than conservation. Interested in more activities and opportunities for meeting other tourists. Do not mind the urbanization of some park sections. Independent Tourists Looking for calm and unpolluted environment, exploring the park by themselves, and staying at a comfortable place to relax. Influenced by word of mouth in choosing travel destinations. 32
Brand Loyalty and Relationships Brand loyalty includes: Behavior Attitude Frequency award programs are popular Customer relationships can be active or passive Retail customers seek: Personal connections vs. functional features Banking customers seek: Special treatment Confidence benefits Social benefits 33
Implementing Segmentation Strategies Micro and behavioral targeting Personalized advertising messages Narrowcasting Email Mobile Use of many data sources 34
Sample Acxiom Clusters Table 3.16 (excerpt) This table shows three sample clusters, including shooting stars, tots & toys 35
Basic Market Preference Patterns for Ice Cream Buyers Exercise on cars eg.. Mercedes, BMW, Toyota, SUVs, MPVs,, Sports,
Implementing Segmentation Strategies Concentrated Marketing One segment Differentiated Several segments with individual marketing mixes Counter segmentation combining existing segments for a company to become more efficient and profitable 37