MKT 360 Chapter 9
To determine the segmentation of an item, consider:
-Who will buy the product? -How or why the product will be used?
marketing data for family lifecycle stage and household type
According to the U.S. Census Bureau, one birth occurs every 8 seconds
demographic variable of ethnicity
America's racial and ethnic composition is constantly changing. The three largest and fastest growing are Hispanics, African Americans, and Asian Americans Examples: white, hispanic, african american, asian, american, native american, mixed race
concentrated marketing (niche marekting)
selecting a single market segment and concentrating efforts on profitably satisfying that segment
Walgreens uses geographic segmentation to help make decisions about store location and what items to carry in those stores
-Florida, California, and Texas have the most stores; Vermont, Wyoming, and Alaska have the fewest stores.
Four geographic variables may influence a consumer's needs as well as the profit potential for a company:
-Market size -Market density -Climate -Region
criteria for effective market segmentation
-Substantial: large enough for firm to make a profit -Measurable: size and purchasing power clearly identified -Differentiable: must be able to do -Accessible: be able to reach and serve -Actionable: able to attract certain segments
marketing application for gender
Dove's Real Beauty Sketches uses an empowering message aimed toward a female demographic to create favorable impressions and more positive perceptions of the brand
marketing data for gender
Female consumers often control purchasing in their households and for others (e.g., aging parents, adult children), and their spending influence is expected to grow.
competitive positioning strategy
Focus on product or company attribute, but specifically in relation to the competition example: Verizon commercials present direct comparisons of their data speed and coverage compared to AT&T Wireless and T-Mobile
Benefits Sought Segmentation
Focuses on the attributes consumers seek and benefits they expect to receive from a good or service. example: Starbucks customers are willing to pay extra to savor a pleasant experience and feel pampered and appreciated
marketing application for age
Food industry spends $10 billion each year marketing to children, and Target, the Minneapolis-based retailer, spent $118 million in a back-to-school campaign in 2015. In 2016, they enlisted kids to design, direct, and perform in a series of seven TV ads
demographic variable of gender
Gender can be an important segmentation base with some products used exclusively by men or women while others are used by both genders. Examples: male and female
demographic variable of income and expenditure
In general, as household income increases, a smaller percentage of expenditures goes for food and a larger percentage goes to recreation, education, and other items. Example: high income, low income, middle income
demographic variable of age
Segmentation based on age may also be effective and can be easily employed. Different ages and generations typically have different income levels and consumer preferences. Examples: school age kids, preteens, teens, millennials, gen x, baby boomers, seniors
Brand Loyalty Segmentation
Segments can be classified according to the strength of brand loyalty a consumer feels toward a product. Companies can target brand loyal customers when launching new products or entering new categories example: American Airlines offers a frequent flyer program to encourage loyalty and reward those who accrue miles with free or discounted travel.
Usage Rates Segmentation
Segments can be classified based upon the amount of product purchased. Segments might be classified as heavy, moderate, and light users example: Those who use Facebook can be classified as heavy, medium, and light users. Heavy users spend an average of 44 minutes per day compared to 17 minutes for medium users and 5 minutes for light users
demographic variable of family life cycle stages and household type
The process of family formation and dissolution, as well as the number of people or composition of a household. Consumer preferences can change—even for the same person—as they travel through family lifecycle stages or shift the composition of their household. Example: Singles Couples with no children Couples with young children Single parents Empty nesters (couples with grown children) Same-sex couples and LGBT households
value proposition
an explanation of how consumers will benefit from the product and why the company is uniquely qualified to provide those benefits
Forms of Behavioral Segmentation
benefits sought, usage rates, brand loyalty
Behavior Segmentation
groups of individuals who exhibit similar behaviors, such as benefits sought, usage rates, and level of brand loyalty
Pay attention to what competitors in the same category say about themselves. How they describe themselves =
positioning
market segmentation
the division of the total market into smaller, relatively homogeneous groups
market density
•the number of residents within a specific geographic area, such as a square mile •Urban areas have the greatest population density; rural areas, the lowest. -Consumer lifestyle can differ dramatically between those areas.
target market
•the segment of consumers most likely to purchase a particular item (think "bulls eye") -Allows marketers to develop more efficient and effective marketing strategies
undifferentiated marketing (mass marketing)
•when all customers are targeted using a single marketing mix
Behavior segmentation is useful to marketers because:
-Behaviors are driven by needs and wants. -They can focus marketing efforts on demonstrated behavior of actual users. -They can use those behaviors to classify individuals who may exhibit similar behavior.
•The most common method for developing these profiles is to conduct a large-scale survey asking consumers to agree or disagree with statements describing various activities, interests, and opinions
-Based on these responses, marketers can develop a separate marketing strategy to fit the psychographic makeup of particular lifestyle segments. -Can be seen as a way to fill in the "why's" of behavioral segmentation
marketing data for age
Children 12 and under exert considerable influence over family purchases.
marketing application for ethnicity
Clorox Company utilized an integrated marketing campaign, including spots on Telemundo and Univision, as well as radio, digital, and direct mail—all in Spanish—to market Clorox cleaning products as a way to prevent germs.
positioning strategy of product attributes
Specific product attributes or features are highlighted to create the desired perception of the brand or consistency with the buyer's self-concept. example: Cutco emphasizes its lifetime guarantee, riveted construction, double-D blade design, and dishwasher safe attributes
Product use or application positioning strategy
Specifically associate a product with a particular use or application. example: Benadryl is positioned as an anti-allergy medicine, but Unisom—which typically utilizes the same primary ingredient as Benadryl—is positioned as a sleep aid
marketing data for ethnicity
The Hispanic population in the United States is growing faster than the African American population with 54 million consumers, and Hispanic buying power is growing nearly three times the national average.
marketing data for income and expenditure patterns
The median household income is $56,000
marketing application for family lifecycle stage and household type
There will be continuing demand for cribs, changing tables, baby clothes, diapers, and car seats. Changes in this birth rate would signal the need for companies in this category to respond accordingly.
positioning strategy of value
Value represents what the customer receives in exchange for the costs of the product. Value positioning does not require the lowest price, but rather that customers believe the purchase was "worth it." example: Nordstrom's offers top brands, specialized shopping services, and an upscale store ambiance, all at higher prices.
marketing application for income and expenditure patterns
Various automobiles are marketed to lower-income consumers; examples are Hyundai Elantra, Honda Civic and Chevrolet Malibu which can be purchased for $19 - $23,000.
Regional differences can be driven by differences in:
culture, recreational opportunities, and incomes
A segment could be very large (with huge total purchasing power) but still be unprofitable for certain companies and products.
example: India's market of vehicle owners is growing rapidly, but because of low average incomes, the India market wouldn't necessarily be profitable for high-end automobiles like BMW.
Climate is a useful geographic segmentation approach because weather patterns and temperature ranges affect consumer needs
example: Walgreens stores in warmer, sunnier climates might dedicate more shelf space to sunscreen, while stores in colder climates might dedicate more space to gloves, hats and snow shovels.
four elements of a positioning statement
who is in the consumer target? where do you play? where do you win? why should they believe us?
how to find a winning position
winning zone: Consumers want and your competitor does not well on this. dumb zone: Consumers don't want. This can happen if you Think too much of your Strengths or follow your competitor's advertising losing zone: Trying to beat competitor at their strength
disadvantages of concentrated marketing
• Chosen segments may not produce sufficient revenue to be profitable •New competition within targeted segment can greatly impact revenue
disadvantages of differentiated marketing
• Higher production and promotion costs • Inventory costs may increase
advantages of differentiated marketing
• Increased customer satisfaction • Potentially higher overall revenue
advantages of concentrated marketing
• Potential competitive advantage over firms trying to reach multiple markets •Increases efficiency of marketing mix, especially promotion
advantages of undifferentiated marketing
• Provides production efficiencies • Focuses on similarities in needs or desired benefits versus dissimilarities
disadvantages of undifferentiated marketing
• Vulnerable to competitors who offer specialized alternatives to targeted segments
examples of psychographic segmentation
•Parents of Children and TV / video: -'Enablers' who focus on the entertainment value of technology tend to let their children guide tech decisions: Disney Channel, SpongeBob, Angry Birds -'Limiters' who regulate screen time tend to look for technology that offers educational value and family participation options: Sesame Street, VeggieTales, Baby Einstein, Minecraft.
Segmentation can be effective when the segment is:
•Significant in size and purchasing power •Profitable •Consistent with the firm's marketing capabilities
market
•a group of people with sufficient purchasing power, authority, and willingness to buy -Marketers must use their expertise to understand the market for a good or service.
demographic segmentation
•defines consumer groups according to demographic variables such as gender, age, ethnic group, family life cycle stage and household type, and income •One of the primary sources for demographic data in the United States is the Census Bureau.
psychographic segmentation
•differentiating population groups according to values and lifestyle factors which are common to the group
geographic segmentation
•dividing an overall market into homogeneous groups based on their locations -Geographic location doesn't ensure that all consumers in a location will make the same buying decisions, but it helps identify general patterns.
consumer products
•products bought by ultimate consumers for personal use -Most products purchased by individual consumers are considered consumer products.
Positioning
•seeks to put a product in a certain position, or place, in the minds of prospective buyers -Key for marketing success is to 'own' the category benefit in a consumer's mind.
differentiated marketing
•targeting several different market segments using a different marketing mix for each segment
market size
•the number of individuals residing in a particular geographic market area •Population numbers indicate the overall size of a market, but other geographic indicators (e.g., job growth) help guide marketers.
