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Part 3 of the Definition of Marketing Series on Market Segmentation and Target Marketing
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Definition of Marketing
Series
Segmentation/ Target Market
What is Market Segmentation ?
Aggregating prospective buyers into groups that:
Share a problem
Are similar – in terms of demographics, geography, or psychographics (attitudes and beliefs)
Respond similarly to market forces
What is a “Target Market” ?
One or more groups toward which a firm focuses its marketing efforts?
McDonalds
Everyone – price conscious, convenience
Happy Meals for kids
Salads for moms
Angus burgers for men
Why Segment the Market?
One size fits all (mass) markets are ineffective
They may please no one
They’re expensive to serve
Fail to match customer desires with firm competencies
How to Segment the Market.
Identify market needs
Features/ benefits
Price
Options
Form
Tylenol chooses to some segments to target and develops a product aimed at each target market
Pain Reliever Example
Relief from headache, arthritis, cold, etc
Branded, generic
Large bottle, small bottle
Capsules, pills, liquid, powder
How to Segment Market
Form Segments
Substantial – the size and purchasing power of the segment must have potential for profit
Accessible – the segment can be effectively reached and served (ie. They read the same magazine or frequent the same stores, etc.)
Actionable – programs can effectively be developed to reach the segment
Segmentation Variables
Demographics
Age – cruises focus on seniors
Gender – women watching sports
Income – bottom of the pyramid
Ethnicity - grocery stores carry more Hispanic foods
Education, life cycle, religion, family size …
Segmentation Variables
Geographic
Country
Region – NE, SW, …
Population density
Climate
Rural versus Urban
MSA
Segmentation Variables
Psychographic
Social class – middle class striving
Lifestyle – achievers
Personality - introverted
Segmentation Variables
Behavioral
Loyalty
Attitude toward Brand
Usage occasion
Usage rate – 80/20
Readiness stage
Targeting Options
Mass market – 1 product to all segments
1 product to multiple segments (book translations, split runs)
Multiple products to multiple segments (Coke, P& G)
Mass customization – individualized products (Mac computers, Sabre)
How Can This Help You Succeed?
Products targeted at a specific segment are likely more valuable to that segment
Promotions aimed at a segment convert at higher rates
Results in better allocation of firm resources
More questions?
Check out other videos in this series
http://www.MarketingThatWorks.TV