LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 9, YOU SHOULD BE ABLE TO:
Explain what market segmentation is and when to use it.
Identify the five steps involved in segmenting and targeting markets.
Recognize the bases used to segment consumer and organizational markets.
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McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.Explain what market segmentation is and when to use it.LO1Identify the five steps involved in segmenting and targeting markets.Recognize the bases used to segment consumer and organizational markets.LO3LO2LEARNING OBJECTIVES (LO)AFTER READING CHAPTER 9, YOU SHOULD BE ABLE TO:Develop a market-product gridto identify a target market and recommend resulting actions.Explain how marketing managers position products in the marketplace.LO4LO5LEARNING OBJECTIVES (LO)AFTER READING CHAPTER 9, YOU SHOULD BE ABLE TO:ZAPPOS.COM’S “WOW” =SEGMENTS + SERVICEA Clear Market Segmentation StrategyDelivering WOWCustomer ServiceWHY SEGMENT MARKETS?WHAT MARKET SEGMENTATION MEANSLO1Product DifferentiationMarket SegmentationMarket SegmentsSegmentation: Linking Needs to ActionsThe Zappos Segmentation StrategyFIGURE 9-1 Market segmentation links market needs to an organization’s marketing program through marketing mix actionsWHY SEGMENT MARKETS?WHAT MARKET SEGMENTATION MEANSLO1Using Market-Product GridsFIGURE 9-2 A market-product grid shows the kind of sleeper that is targeted for each of the bed pillows with a different firmnessWHY SEGMENT MARKETS?WHEN AND HOW TO SEGMENT MARKETSLO1One-Size-Fits-All Mass MarketsNo Longer ExistOne Product andMultiple Market SegmentsMultiple Products and Multiple Market SegmentsSporting News Baseball YearbookWhat market segmentation strategy is used?LO1WHY SEGMENT MARKETS?WHEN AND HOW TO SEGMENT MARKETSLO1Segments of One: Mass CustomizationMass CustomizationBuild-to-Order (BTO)WHY SEGMENT MARKETS?WHEN AND HOW TO SEGMENT MARKETSLO1The Segmentation Tradeoff:Synergies vs. CannibalizationOrganizational SynergyCannibalization“Tiffany/Wal-Mart” StrategiesFIGURE 9-3 The five key steps in segmenting and targeting markets that link market needs to a firm’s marketing programSTEPS IN SEGMENTING AND TARGETING MARKETSSTEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTSLO2Criteria to Use in Forming the SegmentsSimplicity and Cost-Effectiveness of AssigningPotential Buyers to Segments Potential for Increased ProfitSimilarity of Needs of Potential BuyersWithin a SegmentPotential of a Marketing Action to Reacha SegmentDifference of Needs of Buyers Among SegmentsWays to Segment Consumer MarketsGeographic SegmentationDemographic SegmentationSTEPS IN SEGMENTING AND TARGETING MARKETSSTEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTSLO3Ways to Segment Consumer MarketsPsychographic SegmentationBehavioral Segmentation Product Features Usage Rate or Frequency Marketing 80/20 RuleSTEPS IN SEGMENTING AND TARGETING MARKETSSTEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTSLO3MARKETING MATTERS To Which “Flock” Do You Belong?LO3FIGURE 9-4 Segmentation bases, variables, and breakdowns for U.S. consumer marketsFIGURE 9-5 Patronage of fast-food restaurants by adults 18 years and older Source: Experian Simmons Spring 2011 Full Year NCS/NHCS Choices 3 System Crosstabulation Report: Based on Visits within the Past 30 DaysFIGURE 9-6 Comparison of various kinds of users and nonusers for Wendy’s, Burger King, and McDonald’s fast-food restaurants Source: Experian Simmons Spring 2011 Full Year NCS/NHCS Choices 3 System Crosstabulation Report: Based on Visits within the Past 30 DaysVariables to Use in Forming SegmentsStudentsNonstudents Dorms, Sororities, & Fraternities Faculty & Staff Apartments Day Commuters Night Commuters Residents in Area Workers in AreaSTEPS IN SEGMENTING AND TARGETING MARKETSSTEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTSLO3Ways to Segment Organizational MarketsGeographic SegmentationDemographic SegmentationBehavioral SegmentationSTEPS IN SEGMENTING AND TARGETING MARKETSSTEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTSLO3FIGURE 9-7 Segmentation bases, variables, and breakdowns for U.S. organizational marketsFIGURE 9-8 Wendy’s new products and innovations target specific market segments based on a customer’s gender, needs, or university affiliationWendy’s AdSTEPS IN SEGMENTING AND TARGETING MARKETSSTEP 2: GROUP PRODUCTS INTO CATEGORIESLO3Individual Wendy’s ProductsBreakfastGroupings of Wendy’s Products: MealsLunchBetweenMeal SnackDinnerAfterDinnerSnackSTEPS IN SEGMENTING AND TARGETING MARKETSSTEP 3: DEVELOP A MARKET-PRODUCT GRID AND ESTIMATE THE SIZE OF MARKETS LO4Forming a Market-Product GridEstimating Market SizesFIGURE 9-9 Selecting a target market for your Wendy’s fast-food restaurant next to an urban university (target market is shaded)STEPS IN SEGMENTING AND TARGETING MARKETSSTEP 4: SELECT TARGET MARKETSLO4Criteria to Use in SelectingTarget Markets Those That Divide a Market into SegmentsTwo Types of Criteria Those That Actually Pick the Target SegmentsSTEPS IN SEGMENTING AND TARGETING MARKETSSTEP 4: SELECT TARGET MARKETSLO4Criteria to Use in Selecting Target MarketsMarket SizeExpected GrowthCompetitive PositionCost of Reaching the SegmentCompatibility with OrganizationalObjectives and ResourcesSTEPS IN SEGMENTING AND TARGETING MARKETSSTEP 4: SELECT TARGET MARKETSLO4Choose the Products & SegmentsNo BreakfastFour Student Segments OnlySTEPS IN SEGMENTING AND TARGETING MARKETSSTEP 5: TAKE MARKETING ACTIONS TOREACH TARGET MARKETS LO4Immediate Wendy’s Segmentation StrategyDay CommutersBetween-Meal SnacksDinners to Night CommutersFuture Strategies for Wendy’sKeeping an Eye on CompetitionFIGURE 9-10 Advertising actions to market various meals to a range of possible market segments of studentsSTEPS IN SEGMENTING AND TARGETING MARKETSSTEP 5: TAKE MARKETING ACTIONS TOREACH TARGET MARKETS LO4Apple’s Ever-Changing Segmentation StrategyMarketing SynergiesMarket-Product Synergies: A Balancing ActProduct SynergiesApple’s1984 AdMARKETING MATTERSApple’s Segmentation Strategy—Camp Runamok No LongerLO4POSITIONING THE PRODUCTLO5Product PositioningHead-to-Head PositioningProduct RepositioningTwo Approaches to Product PositioningDifferentiation PositioningWriting a Positioning StatementPOSITIONING THE PRODUCTLO5Identify Important Attributes for aProduct or Brand ClassProduct Positioning w/ Perceptual MapsCustomers’ Ratings of CompetingProducts or Brands on These AttributesCustomer’s Ratings of the Company’sProducts or Brands on These AttributesReposition the Company’s Products orBrands in the Minds of ConsumersFIGURE 9-A A perceptual map of the location of beverages in the minds of American adultsPOSITIONING THE PRODUCTLO5Perceptual MapA Perceptual Map to RepositionChocolate Milk for AdultsIdentify Important Attributes for Adult DrinksDiscover How Customers See Chocolate MilkReposition Chocolate Milk to Make ItMore Appealing to AdultsDiscover How Adults See Competing DrinksFIGURE 9-11 The strategy American dairies are using to reposition chocolate milk to reach adultsPRINCE SPORTS, INC.: TENNIS RACQUETS FOR EVERY SEGMENTVIDEO CASE 9FIGURE 1 Prince Sports targets racquets at specific market segments VIDEO CASE 9PRINCE SPORTS1. In the 21st century, what trendsin the environmental forces (social, economic, technological, competitive, and regulatory)(a) work for and (b) work against success for Prince Sports in the tennis industry?VIDEO CASE 9PRINCE SPORTS2. Because sales of Prince Sports in tennis-related products depends heavily on growth of the tennis industry, what marketing activities might it use in the U.S. to promote tennis playing?VIDEO CASE 9PRINCE SPORTS3. What promotional activitiesmight Prince use to reach(a) recreational players and(b) junior players?VIDEO CASE 9PRINCE SPORTS4. What might Prince do to helpit gain distribution and salesin (a) mass merchandisers like Target and Walmart and(b) specialty tennis shops?VIDEO CASE 9PRINCE SPORTS5. In reaching global markets outside the U.S., (a) what are some criteria that Prince should use to select countries in which to market aggressively, (b) what three or four countries meet these criteria best,and (c) what are some marketing actions Prince might use to reach these markets?Market SegmentationMarket segmentation involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.Market SegmentsMarket segments are the relatively homogeneous groupsof prospective buyers that result from the market segmentation process.Product DifferentiationProduct differentiation is a marketing strategy that involvesa firm using different marketing mix activities to help consumers perceive the product as being different and better than competing products.Market-Product GridA market-product grid is a framework to relate the market segments of potential buyersto products offered or potential marketing actions by an organization.Usage RateUsage rate is the quantity consumed or patronage (store visits) during a specific period. Also called frequency marketing.80/20 RuleThe 80/20 rule is a conceptthat suggests 80 percent of a firm’s sales are obtained from20 percent of its customers.Product PositioningProduct positioning is theplace an offering occupies in a consumer’s mind on important attributes relative to competitive products.Product RepositioningProduct repositioning involves changing the place an offering occupies in a consumer’s mind relative to competitive products.Perceptual MapA perceptual map is a means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands, as well as the firm’s own product or brand.