1. Marketing and Segmentation

2. Suppose a teenage girl is looking for a pair of jeans. What influences her?

3. Demographics • Psychographics • Perceptual clues • Symbolism • Past experience • Group dynamics Rituals Family Reference groups Race & ethnic factors Social class Subculture Culture

4. Market Segmentation

5. “Smart marketing starts with smart segmentation.” Jeffrey J. Fox

6. Target Market: A group of people or organizations which a business creates and maintains a marketing mix specifically designed to satisfy the needs of group members • Market Segment: Individuals, groups, or organizations with one or more similar characteristics that cause them to have similar product needs • Market Segmentation: The process of dividing a total market into groups with relatively similar product needs to design a marketing mix that matches those needs

7. Marketing Concept: “All marketing strategies should be based on known customer needs and or wants.” Segmentation is the practical application of marketing research and consumer behavior.

8. Reminder: The “marketing mix” consists of: Product Price Promotion Distribution (Place)

9. Almost no one tries to sell to everyone!

10. Concentrated Undifferentiated

11. Major kinds: • Undifferentiated marketing strategy: • Generic Differentiation • Same marketing mix for ALL segments • Overlooks segment differences • 4-Ps designed for everyone • Advantage: • Concentrated resources

12. Major kinds: • Undifferentiated marketing strategy: • Generic Differentiation • Same marketing mix for ALL segments • Overlooks segment differences • 4-Ps designed for everyone • Disadvantage: • 4-Ps for everyone? • Competing against focused firms

13. Major kinds: 2.Single Marketing Strategy: Targeted Differentiation Niche Marketing Go after one segment (ethnic marketing) Advantage: Sharp focus… good expertise efficiency… high profits gives smaller firms a chance good place to start

14. Major kinds: 2.Single Marketing Strategy: Targeted Differentiation Niche Marketing Go after one segment (ethnic marketing) Disadvantage: More risk… eggs in one basket Competition can wipe you out

15. Major kinds: 3. Full-coverage marketing strategy: Segmented Differentiation Treat each segment as separate market 4-Ps designed for every market Advantage: Focus…

16. Major kinds: 3. Full-coverage marketing strategy: Segmented Differentiation Treat each segment as separate market 4-Ps designed for every market Disadvantage: Development costs (must weigh increased costs increased sale)

17. Major kinds: 4. Concentrated marketing strategy: Hybrid Differentiation Single product to several segment 5. Micromarketing Local marketing and individual marketing Mass Customization Build-to-Order (BTO)

20. To work, segments must have: 1. Substantiality Must be large enough enough money, customers, etc enough room to grow

21. Basic marketing rule: The best product, best prices, and best business in the world will fail if there are no customers!

22. To work, segments must have: 2. Identifiablity Must be able to identify segment and measure it

23. To work, segments must have: 3. Reachability Must be accessible must be actionable (can action be taken?)

24. The Segmentation Tradeoff:Synergies vs. Cannibalization • Organizational Synergy Increased customer value through efficient marketing and manufacturing • Cannibalization • “Tiffany/Walmart” Strategies • two-tier products 8-24

25. The five key steps in segmenting and targeting markets that link market needs to a firm’s marketing program 8-25

26. Step 1. • Criteria to Use in Forming the Segments • Simplicity and Cost-Effectiveness of assigningpotential buyers to Segments • Potential for increased Profit • Similarity of needs of potential buyerswithin a Segment • Difference of needs of buyers among Segments • Potential of a marketing action to reacha Segment 8-26

27. Step 1. Common Segments Geographical Climate Region City size Population density 8-27

28. Market Segmentation • Geographic

31. Market Segmentation • Geographic • Demographic

32. Step 1. • Common Segments Demographics Age (Generational marketing) Gender (?) Marital status Income Education Occupation Racial and Ethnic 8-32

33. Market Segmentation • Geographic • Demographic • Psychographic

34. Step 1. • Common Segments Psychographics Perception Gender (?) Motivation Personality Attitudes http://www.expedia.com/Waterloo-Hotels-Baymont-Inn-Suites-Waterloo.h17890.Hotel-Information?chkin=10%2F29%2F2013&chkout=10%2F30%2F2013&rm1=a2&hwrqCacheKey=3ac1ed16-2067-4bf3-b2a0-8b521c84be7aHWRQ1381949822543&c=30126d42-02ed-4261-9ade-64b0ef193af1& 8-34

35. Market Segmentation • Geographic • Demographic • Psychographic

36. The Nine Nations

37. Step 1. • Common Segments Lifestyle Combination of: Place Person Products VALs 8-37

39. Step 1. Common Segments Usage Use-related usage rate brand loyalty awareness Use-situation where… when… why… with whom http://www.youtube.com/watch?v=vbsyEI78m5s 8-39

40. Step 1. Common Segments Behavioral Product features Usage rates (frequency) 80/20 rule Long tail Selling small amounts to few customers, BUT have lots of things to sell (Netflix) 8-40

41. Step 1. • Common Segments Socio-cultural Culture and subculture Social class Religion 8-41

42. Social class may be hard to define, but we all know it when we see it.

47. Segmentation bases, variables, and breakdowns for U.S. consumer markets 8-47

48. The five key steps in segmenting and targeting markets that link market needs to a firm’s marketing program 8-48

49. Step 2: Target Marketing The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.

50. Marketing positioning Arranging for a product to occupy a clear, distinctive , and desirable place relative to competing products in the minds of target consumers.