MKTG Chapter 8

The Market Segmentation Process

1) Develop a relevant profile for each segment 2) Forecast market potential 3) Forecast profitable market share 4) Select specific market segments

Types of Segmentation

Market, Geographic, Demographic, Psychographic, Product-Related

Positioning Map

a tool that helps marketers place products in a market by graphically illustrating consumer's perceptions of competing products within an industry.

Psychographic segmentation

division of a population into groups that have similar psychological characteristics, attitudes, values, and lifestyles. • AIO statements: items on lifestyle surveys that describe various activities, interests, and opinions of respondents. • VALStm: segmentation system that divides consumers into eight psychographic categories: Ideals (thinkers & believers),Achievement (achievers & strivers), Self-Expression (experiences, makers). Innovators = 1st half of bracket, Survivors = 2nd half of bracket.

Product-related segmentation

division of a population into homogenous groups based on their relationships to the product. • 80/20 principle: generally accepted rule that 80 percent of a products revenue comes from 20 percent of its total customers.

Geographic segmentation

division of an overall market into homogenous groups based on their location. • Census metropolitan area (CMA): geographic area surrounding an urban core with a population of at least 100,000 • Census agglomeration (CA): geographic area with a population over 10,000 • Core region: region from which most major brands get 40 to 80 percent of their sales.

Demographic segmentation

division of an overall market into homogenous groups based on variables such as gender, age, income, occupation, education, sexual, orientation, household size, and stage in the family life cycle; also called socioeconomic segmentation. • Generation X: the group born between 1966-1981 - who are now between the ages of 25-40 • Baby Boomers: people born between the years of 1947 and 1965. • Cohort effect: tendency of members of a generation to be influenced and bound together by events occurring during their key formative years - roughly 17-22 years of age. • Video game generation: a group called by several names (generation Y, the millennial generation, generation next, the 9-11 generation, and the echo boomers - echo of a baby boomer). • Family life cycle: process of family formation and dissolution.

Market segmentation:

division of the total market into smaller, relatively homogenous groups.

Positioning

placing a product at a certain point or location within a market in the minds of prospective buyers.

Strategies for Reaching Target Markets:

• Undifferentiated marketing: strategy that focuses on producing a single product and marketing it to all customers also called mass marketing. • Differentiated marketing: strategy that focuses on producing several products and pricing, promoting, and distributing them with different marketing mixes designed to satisfy smaller segments. • Concentrated marketing: focuses marketing efforts on satisfying a single market segment also called niche marketing. • Micromarketing: targeting potential customers at very narrow, basic levels, such as by postal code, specific occupation, of lifestyle 0- possibly even individuals themselves.