Segmenting and targeting

Prepared by
Charles Lamb, Joseph Hair, Carl McDaniel & Alison Barker
Lecture Slides available on Moodle on the Friday BEFORE the lecture occurs
Lecture Presentation Slides

Learning outcomes:
Describe the characteristics of markets and market segments
Explain the importance of market segmentation
Discuss the criteria for successful market segmentation
Describe the bases commonly used to segment consumer and business markets
List the steps involved in segmenting markets
Discuss alternative strategies for selecting target markets
Explain how and why firms implement positioning strategies and how product differentiation plays a role.
Understand how a perceptual map is created.
Chapter 8: Segmenting and
Targeting Markets

Characteristics of a Market
people or organizations with
needs or wants, and with
the ability and
the willingness to buy.
A group of people that lacks any one of these characteristics is NOT a market.

Market Segmentation

Three Reasons for Segmentation
Enables marketers to identify groups of customers with similar needs
Provides marketers with information to help them design marketing mixes
Consistent with the marketing concept of satisfying customer wants and needs while meeting organization’s objectives

Four Criteria for Segmentation
Substantiality
Is it large enough?
Identifiability and measurability
Can you measure or identify this market?
Accessibility
Can you get to this market?
Responsiveness
Will they respond to your product or marketing mix?

Bases for Segmentation

Geographic Segmentation
Region of the country or world
Market size
Market density
Climate

Market segmentation/
Region examples
Examples of regional segmentation
In Asia ‘Diet Coke’ is ‘Coke light’
Pepsi max in Australia is Pepsi One in USA
KFC customised for Japanese market- positioned as a trendy and high class store- not as a fast food outlet. Chips were substituted for mashed potato and a menu of fried fish and smoked chicken were added
McDonalds don’t sell thick shakes in Singapore and Hong Kong; Singapore and HK have spicy McLamb burgers; burgers come with chilli sauce not tomato sauce.
Krispy Kreme – Green Tea donut in Malaysia
CRICOS Provider Code 00301J

Demographic Segmentation

CRICOS Provider Code 00301J
General Segments
Baby boomers
Generation X
Generation Y
Generation W
Tweens
Yummy Mummies
Market segmentation/
Demographic

Demographic segmentation
McDonalds targets children with McHappy meals, adults with McCafe and Salads Plus Menu
McDonalds use different media vehicles to target senior citizens, kids, adults
National Australia Bank is targeting women for credit cards by promoting in Cosmopolitan
Toyota website in the USA has a section for women
Health Clubs for WOMEN only e.g. Curves
Ready to drink alcohol ‘Smirnoff Ice’ targeted at women, VB is targeted at men
S’OK Potato Chips are targeting health conscious women
Best for Less/Crazy Clarks- targeting low income consumers
CRICOS Provider Code 00301J

Softdrink People
CRICOS Provider Code 00301J

Age/Gender segmentation
CRICOS Provider Code 00301J
Kids
Women
Adults
Men

Bases for Psychographic
Segmentation

Benefit Segmentation
The process of grouping customers into market segments according to the benefits they seek from the product.

Usage-Rate Segmentation

Note that steps 5 and 6 are actually marketing activities
that follow market segmentation (steps 1 through 4).
Steps in Segmenting Markets

Strategies for Selecting
Target Markets

Undifferentiated Targeting
Strategy
Adopts a mass-market philosophy, viewing the market as
One big market with no individual segments.
The firm uses one marketing mix for the entire market.
Assumes that individual customers have similar needs that can be met with a common marketing mix.
Good for products with no competition

Concentrated Targeting
Selects a market niche
Concentrating on a narrowly defined market
May be too defined and will shrink or be too small when environment changes

Multisegment Targeting
Chooses one or more well defined market segments to serve
Greater sales volume, higher profits, larger market share and economies of scale in manufacturing and marketing
Side effects: Cannibalization
Prada and Miu Miu

Toyota
CRICOS Provider Code 00301J

Positioning
developing a specific marketing mix to influence potential customers’ overall perception or a brand, product line, or organization in general.

Perceptual Mapping
a means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers’ minds.

Perceptual Map

Positioning Bases

Repositioning
changing consumers’ perceptions of a brand in relation to competing brands.