Chapter 8 Marketing LABM/HAIR/McDANIEL 12th Ed.
susceptible
(adj.) open to; easily influenced; lacking in resistance
a recent study of baby boomers by Unilever found four segments partially based on lifestyle characteristics:
-Savvy savers -Daily planners -Plain and practicals -No-Frills Independents
Steps in Segmenting Markets
1. select market to study. 2.choose bases for segmentation. 3. select descriptors. 4. profile and analyze segments. 5. select target markets. 6. design implement and maintain marketing mix
The Importance of Market Segmentation: Market segmentation was rare before the ___'s. Consider Coca-Cola with its one product aimed at the entire soft drink market. Today over a dozen different products are marketed by the company to different market segments. Market segmentation plays a key role in the ____ of organizations, leading to ___.
1960, marketing strategy, competitive advantage
Geodemographic Segmentation
A form of market segmentation that identifies neighborhoods around the country that share common demographic characteristics.
Unilever
Axe, Dove, Degree, Vaseline, Lipton
Demographic Segmentation
Based on a population's statistical characteristics such as sex, age, ethnicity, education, occupation, income, or other quantifiable factors
Concentrated Targeting Strategy Advantages
Concentration of resources, Meets narrowly defined segment, Small firms can compete, Strong positioning
____ segmentation provides the "skeleton," but ____ segmentation adds "meat to the bones."
Demographic, psychographic
Gender Segmentation
Dividing a market into different groups based on gender
marketing objectives
Goals to be accomplished by an organization's overall marketing program such as sales, market share, or profitability.
Multisegment Targeting Strategy Advantages
Greater financial success Economies of scale
Multisegment Targeting Strategy Disadvantages:
High costs Cannibalization
Ethnic Segmentation 3 major groups
Hispanic Americans, African-Americans, Asian Americans
scarce
Limited
Accessibility
Members of targeted segments must be reachable with marketing mix.
Benefits of Regional Segmentation
New ways to generate sales in sluggish and competitive markets, Scanner data allow assessment of best selling brands in region, Regional brands appeal to local preferences, and Quicker reaction to competition
In U.S., women Influence 80% of consumer purchases. Other brands that have targeted men are trying to target women: ___
Nintendo, Gillette razors, Nike, Reebok.
market size
Total number of sales in a market measured by volume and value
firms that have adopted a niche strategy. Examples:
Trader Joe's, watchmakers Patek Philippe, Rolex, and Breguet. Porsche, OshKosh B'Gosh, Starbucks, AOL, and Enterprise Rent-A-Car.
Strategies for Selecting Target Markets
Undifferentiated Strategy; Concentrated Strategy; Multisegment Strategy
Undifferentiated Targeting Strategy Disadvantages
Unimaginative product offerings Company more susceptible to competition
Responsiveness
Unless segment responds to a marketing mix differently, no separate treatment is needed.
descriptors
Variables that describe customers based on their inherent characteristics.
80/20 Principle
a principle holding that 20 percent of all customers generate 80 percent of the demand
One-to-One Marketing
an individualized marketing method that utilizes customer information to build long-term, personalized, and profitable relationships with each customer
Segmentation Bases
are characteristics of individuals, groups, or organizations used to divide a total market into segments (variables).
optimizers
business customers who consider numerous suppliers, both familiar and unfamiliar, solicit bids, and study all proposals carefully before selecting one
satisficers
business customers who place an order with the first familiar supplier to satisfy product and delivery requirements
prospects
chances or possibilities, especially for success or profit
Market segmentation is the first step in determining whom to approach about buying a product. The next task is to _______
choose one or more target markets.
A ________ strategy often enables small firms to compete effectively with much larger firms.
concentrated
Buyer Characteristics
demographic, decision style, tolerance for risk, confidence level, job responsibilities
Lifestyle Segmentation
divides people into groups according to how time is spent, the importance of things around them, beliefs, and socioeconomic characteristics such as income and education.
Usage-Rate Segmentation
dividing a market by the amount of product bought or consumed
Bases for Segmentation
geography, demographics, psychographics, benefits sought, usage rates
The focus of marketing is often on the _____ segment, based on the 80/20 principle.
heavy-user
Marketers may also segment customers on the basis of ______. Take, for example, key purchasing criteria, such as price, quality, technical support, and service.
how they buy
Examples of multisegment targeting strategy
include Best Buy, Gap, Walmart
Concentrated Targeting Strategy
is a strategy used to select one segment of a market for targeting efforts, often a niche - One segment of a market.
Because most markets will include customers with different lifestyles, backgrounds, and income levels, it is unlikely that a single ____ will attract all segments of the market.
marketing mix
one-to-one marketing will grow because 1: One-size-fits all marketing ___
no longer effective
Instead of wide-spread, scattered messages across the spectrum of mass media, _____ marketers look for ways to communicate with each individual customer.
one-to-one
Two purchasing profiles are
satisficers and optimizers
Markets are segmented for three reasons: 1: Segmentation enables the identification of groups of customers with similar needs, and the analysis of the buying behavior of these groups. 2: Segmentation provides information for the specific matching of the design of marketing mixes with the characteristics of the segment. 3: Segmentation helps marketers _____
satisfy customers wants and needs while meeting the organization's objectives.
mass marketing approach
seeks a large range of customers
Substantiality
segment must be large enough to warrant a special marketing mix
market density
the number of potential customers within a unit of land area
share of customer
the percentage of an individual customer's purchase of a product that is a single brand
warrant
to justify
There are about 20 million ___ (ages 9-12) in the U.S. This group spends over $20 billion per year. Retailers such as Limited Too and Abercrombie serve this market.
tweens
One-to-one marketing focuses on
understanding customers as individuals instead of as part of a group. The goal is to reduce costs through customer retention and increase revenue through customer loyalty.
Marketers of commodity products, such as flour and sugar, are also likely to use __________. Additionally, small stores in small towns with no competition may offer one marketing mix and be successful.
undifferentiated strategy
The first firm in an industry sometimes uses an ______. Consider Coca-Cola when it had a single product and a single size of its original soft drink.
undifferentiated strategy
An _______ is essentially a mass-market philosophy—viewing the market as one big market and using one marketing mix.
undifferentiated targeting strategy
Segmenting by ____ enables marketers to focus efforts on heavy users or to develop multiple marketing mixes aimed at different segments.
usage rate
Bases for Psychographic Segmentation
Personality, Motives, Lifestyles, Geodemographics
_____ reflects a person's traits, attitudes, and habits. Consider the ______ types that describe segmented Porsche buyers.
Personality, Personality
Undifferentiated Targeting Strategy Advantage
Potential savings on production and marketing costs
Identifiability
Segments must be identifiable and their size measurable.
Concentrated Targeting Strategy Disadvantages
Segments too small, or changing, Large competitors may market to niche segment
Psychographic
Studies of consumers based on social and psychological characteristics such as attitudes, interests, and opinions
Criteria for Successful Segmentation:
Substantiality, Identifiability and Measurability, Accessibility, Responsiveness
resource allocation
The appointment of scarce resources to different uses for the production of different goods and services
Family Life Cycle
A series of stages determined by a combination of age, marital status, and the presence or absence of children
marketing mix
A unique blend of product, place, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market.
___ (born between 1946 and 1964) represent more than $2.1 trillion in spending per year. There is marketing potential for products such as retirement properties, health and wellness products, automobiles with features for them, as well as other goods and services.
Baby boomers
____ make up just 50.7% of the U.S. population. _______ make up 42% of the workforce and 40% of home buyers.
Married couples, Unmarried Americans
_______ influence their buying behavior and offer a viable basis for segmenting some business markets.
The personal characteristics of the buyers
Benefit Segmentation
The process of grouping customers into market segments according to the benefits they seek from the product
Price-sensitive consumers
Walmart Money centers, purchase whichever brand has the lowest price and use promotions that reduce the price
According to Nielsen study, ________ (earning more than $100k/ year) are twice as likely to shop at warehouses.
affluent households
______________ is the loss of sales from an existing product when a new product is introduced.
cannibalization
A _____ strategy of focusing on a narrow market is sometimes more profitable than spreading resources over several different segments.
concentrated
A ________ strategy can also be disastrous for a firm that is not successful in its narrowly defined target market.
concentrated
The Importance of Market Segmentation: Markets have a variety of product needs and preferences. - More precise definition of _____ - More accurate marketing ___ - Improved ____ - Better ____
customer needs and wants, objectives, resource allocation, marketing results
Keep in mind that markets are dynamic and must be monitored proactively for changes in age, etc. Even though the segmentation classifications are static, the _________.
customers and prospects are changing
Income Segmentation
dividing a market into different income segments
Market segmentation is the _________
division of a market into meaningful, identifiable segments or groups.
Geodemographic Segmentation Combines _______
geographic, demographic, and lifestyle segmentation
Markets are segmented for three reasons: 1: Segmentation enables the ______ 2: Segmentation provides information for the specific matching of the design of marketing mixes with the characteristics of the segment. 3: Segmentation helps marketers satisfy customers wants and needs while meeting the organization's objectives.
identification of groups of customers with similar needs, and the analysis of the buying behavior of these groups.
The purpose of market segment is to
identify marketing opportunities
Company characteristics
include geographic location, type of company, company size, Volume of purchase, and product use
Markets are segmented for three reasons: 1: Segmentation enables the identification of groups of customers with similar needs, and the analysis of the buying behavior of these groups. 2: Segmentation provides ______ 3: Segmentation helps marketers satisfy customers wants and needs while meeting the organization's objectives.
information for the specific matching of the design of marketing mixes with the characteristics of the segment.
A target market
is a group of people or organizations for which the organization creates a marketing mix to meet that group's needs.
Undifferentiated Strategy
is a marketing approach that views the market as one big market with no individual segments and thus requires a single marketing mix.
Multisegment Strategy
is a strategy that chooses two or more well-defined market segments and develops a distinct marketing mix for each.
Benefit segmentation is different from other segmentation bases because ______
it groups potential customers on the basis of their needs and wants instead of some other characteristic.
Within a market, a _____ is a subgroup of people or organizations with one or more common characteristics that cause them to have similar product needs.
market segment
Most businesses use a mass marketing approach to increase market share by selling their products to the greatest number of people. However, ______ marketing is used to increase share of customer--to sell more products to each customer.
one-to-one
A Market is (1) ___ with (2) ___ or ____, and with (3) the ____ and (4) the _____ to buy.
people or organizations, needs, wants, ability, willingness
Consider supermarket, stock market, labor market, fish market, and flea market. All these types of markets share several characteristics. Markets are composed of people or organizations with needs and wants that can be satisfied by particular ____.
product categories
Costs of Multisegment Targeting
product design, production, promotion, inventory, marketing research and management costs. cannibalization!
Geographic Segmentation
segmenting markets by region of a country or the world, market size, market density, or climate
Most segmentation is based on the assumption that the _______ and _____ are related. On the other hand, benefit segmentation groups potential customers on the basis of their ____ or _____ only.
selected variables, customers' needs, needs, wants
Within a market, a market segment is a subgroup of people or organizations with one or more common characteristics that cause them to have _______ Market segmentation is the division of a market into meaningful, identifiable segments or groups.
similar product needs.
Markets can be segmented using a ___. Today's trend is to use more rather than fewer variables to segment a market.
single variable or multiple variables
Motives: Carmakers appeal to customers with ___ motives, whereas baby products appeal to ___
status-related, emotional motives
In cannibalization, although introduction of a new product may cut into a firm's existing product sales, companies are ________ rather than losing to a competitor. For example, Code Red, part of Pepsi's multisegmentation approach, got a quarter of its volume from Mt. Dew drinkers.
stealing sales from their own brands
Geodemographics
study of people based on the fact that people with similar demographics tend to live close to one another