Chapter 7: Segmentation, Targeting, and Positioning PDF

Chapter 7: Segmentation, Targeting, and Positioning ©McGraw-Hill Education.  Market Segmentation 1 The Importance of Market Segment...

Chapter 7: Segmentation, Targeting, and Positioning ©McGraw-Hill Education.  Market Segmentation 1 The Importance of Market Segmentation Understanding market segments help firms in three major ways: Define needs and wants of customers. Design specific marketing strategies. Decide how to allocate marketing resources. ©McGraw-Hill Education.  Market Segmentation 2 Segmentation is the process of dividing potential customers into groups to better understand them Targeting is determining which segments are most likely to become customers and directing marketing efforts to best satisfy them ©McGraw-Hill Education.  Objectives of Segmentation To improve an organization’s understanding of who their prospective customers are and how to serve them To reduce risk in deciding where, when, how, and to whom a product, service, or brand will be marketed To increase marketing efficiency by directing effort toward designated segment(s) in ways that are consistent with that segment’s characteristics 5-4  Market Segmentation 3 Criteria for Effective Market Segmentation Substantial: large enough for firm to make a profit. Measurable: size and purchasing power clearly identified. Differentiable: identifying segments that will respond differently to different marketing strategies. Accessible: be able to reach and serve. Actionable: able to attract certain segments. ©McGraw-Hill Education.  Four Bases of Segmentation Lifestyl e ©McGraw-Hill Education.  Combining Bases for Segmentation Geo-cluster approach demographic + geographic data Geographic + behavioral data Can point companies toward locations where customers are clustered Demographic + lifestyle or behavioral segments 5-7  Examples of Segmentation - Toyota African American consumers – “Strut” (Burrell) “[B]ecause “we wanted people to take notice of us.” (Vicki Bolton, a group account director) https://www.youtube.com/watch?v=iD06uTMU2nw&t=1s Asian American consumers - “Captivating” (InterTrend) https://www.youtube.com/watch?v=44B8cJBTQHc “[I]t’s not really a stereotype — it really is a core value that is embraced.” (Julia Huang, interTrend’s chief executive) Hispanic consumers - “Rebellios” and “Striking” (Connil) https://vimeo.com/314872609 https://vimeo.com/314872759 The ”Transcultural Mainstream” market – “Thrill” (Saatchi & Saatchi) https://www.youtube.com/watch?v=_ih-MiUX2oQ 5-8  Selecting Target Markets Targeting – marketers evaluate each market segment and determine which segments are the most attractive. Factors in Selecting Target Markets What to consider while targeting Growth potential Level of competition Strategic fit Target-Marketing Analytics Provide detailed data of target market: size, lifestyle, revenue, etc.) Google Analytics. ©McGraw-Hill Education.  Target Marketing Strategies Strategy Target Market Example Undifferentiated (mass) Everybody everywhere Walmart, Target marketing Differentiated marketin Large groups within the total Proctor and Gamble, g market Marriott High penetration within smaller, Niche marketing Most luxury brands specialized segments Individual customers or Micromarketing localized microsegments Etsy, Groupon https://www.youtube.com/watch?v=C ON1iBjz-Ek&t=3s ©McGraw-Hill Education.  Ethical Issues in Target Marketing Ethical Concerns For children and older adults. Rise of “tween” consumers (“buy-now-pay-later” services) “Sephora girls” Reverse mortgages Violation of privacy Ethical implications should be considered for all target marketing strategies. ©McGraw-Hill Education.  In-Class Activity Creating your persona 1. Define features and benefits of your product (your “The Ask” assignment) 2. Based on the features and benefits you described, develop a character (a person) who represents people you think are in the company’s target market for this product. Use as much detail as you can to describe who they are, how they live and anything else about them that reflects the wants and needs this product fulfills. 3. Point out characteristics that reflect specific needs. Explain why those characteristics reflect the wants and needs of the target audience. ©McGraw-Hill Education.  “To Do’s” For Wednesday, October 9th  Ch 7 Video Case: The Perfect Room: Marriott International ©McGraw-Hill Education.  Questions ©McGraw-Hill Education.