Market Segments and Targets • TMT, MKT 460
Mass Marketing • The seller engages in the mass production, mass distribution and mass promotion of one product for all buyers. • Creates the largest potential market. • Lower Cost • Lower price or higher margin
Segmentation • Segment Marketing: Consists of a group of customers who share a similar set of needs and wants. • Niche Marketing: Is a more narrowly defined customer group seeking a distinctive mix of benefits. • Local Marketing: Tailored to the needs and wants of local customer groups in trading areas, neighborhoods, even individual stores. • Individual Marketing: “Segments of one”, “customized marketing” or one-to-one marketing” • Customerization: A company is customerized when it is able to respond to individual customers by customizing its products.
Benefits of Market Segmentation • Identifies opportunities for new product development • Helps in design of marketing programs that are most effective for reaching homogeneous groups of consumers • Improves the allocation of marketing resources.
Geographic Behavioral Demographic Psychographic Segmenting Consumer Markets
Life Stage Social Class Age and Life Cycle Generation Income Gender Demographic Segmentation
Psychographic Segmentation • Science of using psychology & demographics to better understand consumers. • Divided into different groups on the basis of psychological/personality traits, lifestyle or values. • People within same demographic group can exhibit very different psychographic profile.
Behavioral Segmentation • Behavioral Variables • Occasions • Benefits • User Status • Usage Rate • Buyer-Readiness • Loyalty Status • Attitude • Decision Roles • Initiator • Influencer • Decider • Buyer • User
The Brand Funnel Illustrates Variations in the Buyer-Readiness Stage • Aware • Ever tried • Recent trial • Occasional user • Regular user • Most often used
Loyalty Status Hard-core Split loyals Shifting loyals Switchers
Needs-based segmentation Segment acid test Segment positioning Segment profitability Segment attractiveness Segment identification Marketing-Mix Strategy Steps in Segmentation Process
Measurable Substantial Actionable Accessible Differentiable Effective Segmentation Criteria
Estimating Market Sales Potential Market Sales Potential = B × Q × P Market Sales for cola-flavored carbonated soft drinks = Population aged 8 years and over × proportion of the population that consumes carbonated soft drinks on a regular basis × proportion of the population preferring cola-flavored soft drinks × the average number of soft drinks consumed per day (in ounce) × 365 days in a calendar year × average price of per ounce of cola
Recent Applications of Segmentation • SNA (Social Network Analysis): Refers to methods used to analyze social networks, social structures made up of individuals (or organizations) called "nodes", which are tied (connected) by one or more specific types of interdependency, such as friendship, kinship, common interest, financial exchange, dislike, sexual relationships, or relationships of beliefs, knowledge or prestige. • Database Marketing: Database marketing is a form of direct marketing using databases of customers or potential customers to generate personalized communications in order to promote a product or service for marketing purposes. The method of communication can be any addressable medium, as in direct marketing.