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Target Markets:

Segmentation & Evaluation

CHAPTER 5

Devy Schonfeld

Housekeeping

 Turn off your cell phones an put them away.

 Put your Name Cards out.

 Look at Assignment 1; I will review it in class on Thursday. Due in class on March

th

 We will have a quiz on March 8

th

. Covers Chapters 3 and 4. There is no make-up

for quizzes.

 Arturo Litwak will be here on March 10

th

 Exam 1 is March 22

nd

. It will cover Chapters 1-8 (incl). Open book; no technology;

will not cover my notes.

• You will need a #2 Pencil and a Scantron
• There is no make-up for exams!

What will you

be able to do

after this

class?

 Conduct basic segmentation analysis.

 Develop a marketing mix for a particular

segment.

Markets Defined

 A “market” is a group of people, individuals or organizations that have:

• Desire or needs for products in a product class
• Ability, willingness, and authority to purchase such products  There are Two Categories
• Consumer market : Purchasers and household members who intend to consume or benefit from the purchased products and do not buy products to make profits. Typically called B2C.
• Business market : Purchase a specific kind of product for resale, direct use in producing other products and use in general daily operations.
• We will discuss B2B markets in another class.

How Do You

Segment a

Market?

How do you break apart a large group to identify a group that you are interested in?

Target Marketing Process:

Linking Customer Needs to Marketing Action

Breakfast Cereal Market Segments

Target Market

Selection

Process

1. Identify the appropriate targeting

strategy

3. Develop Market Segmentation Profiles

4. Evaluate relevant market segments

5. Select Specific Target Markets

2. Determine which segmentation

variables to use

What is an

example of

each one

of these

targeting

strategies?

Undifferentiated

Strategy (eggs, salt, milk)

Concentrated

Strategy (Rolex, Harley

Davidson, Tesla, Forever 21 … maybe; typically used for small segments)

Differentiated

Strategy (Holiday Inn –

Express, Crowne Plaza, Resort, Vacation, Intercontinental; McDonalds; Disneyland; Economist Magazine)

Holiday Inn’s Differentiated Strategy

Conditions for

Market

Segmentation

to succeed

 Customer’s needs must be heterogeneous  Segments must be identifiable and divisible  Marketer must be able to compare the different market segments

• In terms of sales potential, costs, and profits  One segment must have enough profit potential to justify developing a special marketing mix  Company must be able to reach the chosen segment with a particular marketing mix

What variables do you use to segment?

 What is a Segmentation Variable? :

• Characteristics of individuals, groups or organizations

used to divide a market into segments

• Should relate to the customers’ needs for, uses of or

behavior toward the product

• Must be measurable
• Company resources and capabilities affect the number

and size of the variables

• Product type and degree variations in customer needs

Geographic

Variable

 Climate and terrain  City size and population density  Urban area and rural area  Market density :

• Number of potential customers within a unit of land area
• Useful segmentation variable for firms because low- density markets require different sales, advertising, and distribution activities than high-density markets

Geographic

Variable

Climate affects numerous markets. Customers’ needs for automotive accessories, such as tires, vary based on climate.