Target Markets: Segmentation and Evaluation

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Target Markets Segmentation and Evaluation
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Whats a Market?

• Need
• Ability
• Willingness
• Authority

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Definitions

• Market Segment - group of actual or potential
  customers who can be expected to respond in a
  similar way to a product or service offer
• Target Market - market that a company choose to
  serve
• Market Segmentation

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Market Segmentation
Heterogeneous Market
Homogeneous Market
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Basic Market-Preference Patterns
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Target Market Selection Process
1. Determine Which Segmentation Variables to Use
2. Develop Market Segment Profiles
3. Evaluate Relevant Market Segments
4. Select Specific Target Markets
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Target Market Selection Process
1. Determine Which Segmentation Variables to Use
2. Develop Market Segment Profiles
3. Evaluate Relevant Market Segments
4. Select Specific Target Markets
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Consumer Market Segmentation Variables
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Demographic
Consumer Market Segmentation Variables
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Detailed View of Demographic Variables

• Age
• Gender
• Race
• Ethnicity
• Income
• Education

• Occupation
• Family Size
• Family Life Cycle
• Religion
• Social Class

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Demographic
Geographic
Consumer Market Segmentation Variables
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Detailed View of Geographic Variables

• State Size
• Market Density
• Climate
• Terrain

• Region
• Urban, Sub-urban, Rural
• City Size
• County Size

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Demographic
Geographic
Consumer Market Segmentation Variables
Psychographic
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Detailed View of Psychographic Variables

• Personality Attributes
• Motives
• Lifestyles

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http//future.sri.com/VALS/vals.segs.shtml
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Actualizers

• Actualizers are successful, sophisticated,
  active, "take-charge" people with high
  self-esteem and abundant resources. They are
  interested in growth and seek to develop,
  explore, and express themselves in a variety of
  ways--sometimes guided by principle, and
  sometimes by a desire to have an effect, to make
  a change.
• Image is important to Actualizers, not as
  evidence of status or power but as an expression
  of their taste, independence, and character.
  Actualizers are among the established and
  emerging leaders in business and government, yet
  they continue to seek challenges. They have a
  wide range of interests, are concerned with
  social issues, and are open to change. Their
  lives are characterized by richness and
  diversity. Their possessions and recreation
  reflect a cultivated taste for the finer things
  in life.

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Strugglers

• Struggler lives are constricted. Chronically
  poor, ill-educated, low-skilled, without strong
  social bonds, elderly and concerned about their
  health, they are often resigned and passive.
  Because they are limited by the need to meet the
  urgent needs of the present moment, they do not
  show a strong self-orientation. Their chief
  concerns are for security and safety.
• Strugglers are cautious consumers. They
  represent a very modest market for most products
  and services, but are loyal to favorite brands.

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Demographic
Geographic
Psychographic
Behavioristic
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Detailed View of Behavioristic Variables

• Occasions
• Benefits
• Usage Rate
• Brand Loyalty
• Multi-Attribute

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Heavy and Light Users of Common Consumer Products
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Target Market Selection Process
1. Determine Which Segmentation Variables to Use
2. Develop Market Segment Profiles
3. Evaluate Relevant Market Segments
4. Select Specific Target Markets
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Profiling Segments
Who Are These People?

• Choose Variables Which Help
• Measure the size and purchasing power of the
  segments
• Determine the degree to which you can effectively
  reach and serve the segments
• Develop effective programs to attract customers

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Target Market Selection Process
1. Determine Which Segmentation Variables to Use
2. Develop Market Segment Profiles
3. Evaluate Relevant Market Segments
4. Select Specific Target Markets
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Effective Segmentation
Measurable
Substantial
Accessible
Differential
Actionable
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Target Market Selection Process
1. Determine Which Segmentation Variables to Use
2. Develop Market Segment Profiles
3. Evaluate Relevant Market Segments
4. Select Specific Target Markets
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General Target Strategies

• Undifferentiated
• Concentrated
• Differentiated

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Undifferentiated Strategy
Single Marketing Mix
Organization
Target Market
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Concentrated Strategy
Single Marketing Mix
Organization
Target Market
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Differentiated Strategy
Marketing Mix 1
Marketing Mix 2
Organization
Target Market
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Positioning and Differentiation
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The Role of Positioning

• Positioning vs. Segmentation
• The goal of positioning is to create a
  product-price position that is attractive to
  target customers and creates a good source of
  cash flow for the business

Market Share
Product Position
Marketing Effort

X
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• Positioning is not what you do to the product.
  Positioning is what you do to the mind of the
  prospect Ries and Trout
• Questions
• What dimensions do consumers use to evaluate
  competitive marketing programs?
• How important is each of these dimensions in the
  decision making process?
• How do we and the competition compare on these
  dimensions?
• How do consumers make choices on the basis of
  this information?

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Very Latest
Perceptual Map
The Limited
Neiman-Marcus
Bloomingdales
Saks
Macys
Nordstrom
Worst Value
High Value
Hit or Miss
Garfinkels
Dress Barn
T.J. Maxx
Casual Corner
The Gap
Marshalls
Hechts
K-Mart
Sears
Penney
Talbot
Conservative
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Differentiation - The Route to Positioning

• A firm differentiates itself from its
  competitors if it can be unique at something that
  is valuable to customers (Porter)
• Differentiation works to provide a SCA because,
  in delivering unique benefits valued by the
  market, the firm effectively removes itself from
  direct competition (Czepiel)
• A differentiation strategy is one in which a
  product offering is different from that of one or
  more competitors in a way that is valued by the
  customers (Aaker)

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Routes to Differentiation

• Product
• Service
• Personnel
• Channel
• Image