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Agenda
Barco Presentation and discussion BIO-BREAK What is market segmentation? Segmentation Strategy Alternatives BIO-BREAK Basis for segmentation Market Segment evaluation
MARKET SEGMENTATION
Market segmentation What is it?
Divide a market into separate groups
Tailor a marketing strategy for each group Demand Differential
Why segment?
Identifies opportunities and needs. Allows firm to focus on specific needs. Improves marketing mix for each segment. Allows small firm to exist.
MARKET SEGMENTATION
MARKET SEGMENTATION
creaminess
Homogeneous Preference
-no natural segments -all buyers have same preference
sweetness
MARKET SEGMENTATION
creaminess
Diffused Preference
-no pattern (or poor research) -take center position
sweetness
MARKET SEGMENTATION
Clustered Preference
creaminess
sweetness
MARKET SEGMENTATION
MARKET SEGMENTATION
Market Coverage Strategies
Differentiated (segmented) marketing
different marketing strategies for multiple segments increased penetration into each segment higher sales and higher costs
MARKET SEGMENTATION
Market Coverage Strategies
Concentrated (niche)marketing strategy
target a small market go after a large share small firm survival strategy
MARKET SEGMENTATION
Surrogate (or segmentation) Variables
Why surrogate variables?
Customer Characteristics
State of Being
Demographic variables Geographic
State of mind
Psychographics Perceptions, Preferences
MARKET SEGMENTATION
MARKET SEGMENTATION
Surrogate (or segmentation) Variables
Customer Response
Product Usage
Volume Loyalty Market Factors
Benefit Received
MARKET SEGMENTATION
1. 2. 3. 4. 5. 6.
7.
Determine Demand Patterns Establish Possible Bases of Segmentation Identify Potential Market Segments Choose a Target Market Approach Select the Target Market(s) Position the Firms Offering in Relation to the Competition Develop the Appropriate Marketing Mix(es)
Analyze Consumer Demand Target the Market Develop the Marketing Strategy
MARKET SEGMENTATION
Evaluation of Segmenting Variable
Measureable Stable over time Produce behavioral differences among the groups
MARKET SEGMENTATION
Reachable
by your marketing strategy
MARKET SEGMENTATION
1 to 1 (Customized) Marketing
Logical end of segmentation Focus Relationship with buyer rather than on product development Customer Satisfaction Customization See Amazon for example
MARKET SEGMENTATION
Wrap-up
We have discussed market segmentation Key Takeaways
Focus on behavior Be able to judge if you have a good segmentation variable Be able to choose a market segment
Next Time
The Kodak Case Market Segmentation Behavioral Inputs into Marketing Management Please Read Chapters 4 and 5