Market Segmentation, Targeting, Positioning

Marketing Chapter 9

Target Market

Specific segment of consumers most likely to purchase a particular item

MarketPeople with sufficient purchasing power, authority, and willingness to buy

Types of MarketsConsumer Purchased by

the ultimate consumer for personal use.

Business Purchased to be

used in the production of other goods & services for resale.

Are these consumer products or business products?

Market SegmentationDividing the total market into several homogeneous groups.No single marketing mix can satisfy everyone.

GeographicDemographicPsychographicProduct Related

Targeting a Specific Marketing Segment

Geographic Segmentation

Dividing market on basis of location of population US population is concentrated in

states with large metropolitan areas Major population shifts

To the Sunbelt States To the West

Regional Preferences

Using Geographic Segmentation

Demand for some goods vary according to regionResidence locationClimateGIS

Segmentation by Residence Location

Demographic Segmentation

Segmenting by:GenderAgeEthnic GroupFamily Life-cycleHousehold type

Census Bureauhttp://www.census.gov

Segmenting by AgeCohort effect Members of a

generation which are bound together by significant events occurring during formative years, 17-22.

9/11 Generation- those 17-22 on Sept. 11, 2001.

School Age ChildrenUnder the age of 12Make choices about food, toys, clothing

Tweens & Teens (Preteens)- Also known as Generation Y

or Millenials- Current teens to 25 year olds- Racially diverse- Grew up with internet- ‘Interactive’ describes them- ¼ live in single parent

household- ¾ have mothers who work- 71 million

- Cell phones, text- Music- Snacks and Soft Drinks- Clothing- Music- Electronics

Generation X born between 1966-1981

- 50 million- Family Oriented- Facing financial issues- Well Educated- Comfortable with internet, technology- Optimistic- Not as Defined by Career as Previous

Generation- More Technologically Advanced Than

Previous Generation- Very Peer Influenced- Concerned with social issues &

protecting environment

Baby BoomersBorn 1946-196578 million with a lot of moneyInfluenced by Vietnam War, nostalgia, retro, oldiesHave large amounts of disposable incomeCareer drivenHealthier and more physically active than previous generations, value health & quality of lifeBuy nostalgic, retro productsQuick to buy ‘new’ products & technology

Seniors – over 65

Graying of America- living longer

20% by 2025 over 65Control ¾ of the US assetsDifficult to advertise toBuy & travel, healthcare,

recreation

Targeting Older Consumers

Segmentation based on gender

Several Web-Sites Aimed at Senior Citizens

Segmentation based on

age

Segmenting by Ethnic GroupAfrican American Hispanic – nearly 48 million Fastest growing segmentAsian Americans Approx. 18 million Highest per household

income Concentrated in west coastNative Americans

Ad Aimed at Customers Who Prefer to Speak and Read Spanish: Segmenting by Racial/Ethnic Group

Segmenting by Family Life Cycle

Family formation & dissolutionUnmarried, setting up household for the first timeYoung single livingMarried couples- no childrenBirth of first childDivorced, single householdEmpty nesters

La-Z-Boy

Targeting Families with Small Children

Segmenting by Household Type

Average household size is shrinking in US & globallyTwo parent households have declined

Targeting Smaller Households

Engel’s LawsAs household income increases:

1. A smaller % is spent on food2. % spent on housing & clothing

remains the same3. % spent on other (recreation &

education) increases

Demographic Segmentation Abroad

Some countries don’t take a census regularlySome countries collect religious affiliation, others don’t collect income data

Targeting High-Income Groups

Psychographic Segmentation

Lifestyle or mode of livingPsychological make-up Needs, motives, perceptions,

attitudes AIO – activities, interests,

opinions VALS – values, attitudes,

lifestyles

Product Related Segmentation

Based on:BenefitsUsage RatesDegree of brand loyalty

Strategies for Reaching Target MarketsUndifferentiated One product or one product line marketed to

all customers with a single marketing mix

Differentiated Numerous products with different marketing

mixes

Concentrated or Niche Marketing Focus efforts on satisfying smaller target

markets

Micro-marketing Targeting potential customers at very basic

level

Positioning

Placing a product in a certain position in the minds of prospective buyers to differentiate it from the competitor.