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Chapter 4:Chapter 4:Segmentation, Segmentation,

Targeting & Targeting & Marketing MixMarketing Mix

Determine yourTarget SegmentsTarget Segments:

Who are you gonna sell your stuff to?

What’s A Target MarketWhat’s A Target Market

“A market segment consists of a group of consumers who share a similar set

of needs and wants.”

Kotler & LaneKotler & Lane

308mm

• A marketmarket is the set of all actual and potential buyers who have sufficient interest in, income for, and access to your products/services.

• Market segmentation Market segmentation divides your market into distinct groups of homogenous consumers who all have similar needs and consumer behavior, and thus require similar marketing mixes.

Target Markets

• Segmentation bases for B2C & B2B markets (Page 95):– Behavioral– Demographic– Psychographic– Geographic– Occasion– Benefits

Target Markets

Behavioral Segmentation

Psychographic Segmentation

• Activities of the target segment• Interests…• Opinions…• Attitudes…• Values…

Psychographic Segmentation

• Segmentation bases for B2C & B2B markets:– Nature of good or service– Buying condition of the consumer– Demographic details

• DescriptiveDescriptive or consumer-basedconsumer-based are related to what kind of person or organization the customer is.

• BehavioralBehavioral or product-orientedproduct-oriented are related to how the customer thinks of or uses the brand, product, or service. Behavioral segmentation bases are often most valuable in understanding branding issues, because they have clearer strategic implications.

Target Markets

• Blanket targetingBlanket targeting: occurs when the firm’s advertising reaches the entire segment.

• Beachhead targetingBeachhead targeting: The initial segment you go after is smaller than the larger segment you go after later.

• Bleed-over targetingBleed-over targeting: The desired target includes others you don’t really wish to target.

Types of TargetingTypes of Targeting

• New opportunity targetingNew opportunity targeting: the firm targets an entirely new segment online. Online targets have different needs and preferences from the firms’ offline segment(s). Typically it involves a new brand name and position.

• Companies that changed their marketing strategy when they went online:– Hush Puppies– Ethan Allen – Midas– Avon

Types of TargetingTypes of Targeting

For behavioral or product-oriented

target segments think “INSURANCEINSURANCE”

Think InsuranceThink Insurance

• Identify who you want to sell your products to and offer your services to.

• Actionable Actionable segmentation:– The segments are easy to identify.– Segments can be easily reached.– Segments can be defined in terms of their growth,

size, profile and attractiveness.

• MeaningfulMeaningful segmentation explains why customers act the way they do:– Customers in a segment behave in similar ways.– Sheds light into customer motivations.– Correlates to differences in profitability or cost to

serve

Find Your Target MarketsFind Your Target Markets

Think CarsThink Cars

A Class Concept< $30k

Chrysler 300> $40k

The Male The Male 18-25 18-25 Segment…Segment…

…and the Male 18-25 Demographic?

• STEP 1 STEP 1 - Identify groups of people with similar shared needs and characteristics.

• STEP 2 STEP 2 - Aggregate the these groups into larger market segments according to their interest in your product’s utility.

2 Steps to Segmentation

Satisfying NeedsSatisfying Needs

The ultimate purpose The ultimate purpose of marketing (thus of marketing (thus advertising) is to advertising) is to

create exchanges create exchanges that that satisfy the perceived satisfy the perceived needsneeds and wants and wants of of

individuals and individuals and organizations.organizations.

Satisfying Needs

The ability to satisfy customer needs is called UTILITY.

There are five types of customer utility:• Form: Produce the physical product.• Task: Do something for the customer.• Possession: How do they get it?• Time: Provide it when they want it.• Place: Have it where they can get it.

Exchange Exchange = =

SatisfactioSatisfaction?n?

It’s JUST Tap Water…It’s JUST Tap Water…

• Stated needs (inexpensive car)• Real needs (car with LOW operating cost)• Unstated needs (good service)• Delight needs (include a cool nav system)• Secret needs (your friends see you as a cool &

savy consumer)

FIVE Kinds of Needs

• Specify the benefits you will deliver to specific target segments:– Volvo (safety)– Nordstrom’s (customer care)– Southwest Airlines (convenience)

Focus on Customer BenefitsFocus on Customer Benefits

Sample Ad Sample Ad CampaignCampaign

You’re Not YOUYou’re Not YOUWhen You’re HungryWhen You’re Hungry

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