Target Markets: Segmentation & Evaluation
CHAPTER 5Target Markets:Segmentation & EvaluationDevy 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 March10th We will have a quiz on March 8th. Covers Chapters 3 and 4. There is no make-upfor quizzes. Arturo Litwak will be here on March 10th. Exam 1 is March 22nd. 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!
LearningObjectives Discuss the term “market” from a marketingperspective . Explain the importance of segmentation andtargeting. Apply the major segmentation variables. Investigate the importance of sizing a targetmarket.
What will yoube able to doafter thisclass? Conduct basic segmentation analysis. Develop a marketing mix for a particularsegment.
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 benefitfrom the purchased products and do not buy products to make profits. Typically calledB2C.– Business market: Purchase a specific kind of product for resale, direct use in producingother products and use in general daily operations. We will discuss B2B markets in another class.
What type of market do you serve?– Homogenous: Large proportion of customers have similar needs for a product– Examples: salt, sugar, milk, gas,– Heterogeneous: Customers have diverse needs for products in a specific product class– Computers -laptops vs desktops; Macs vs. PCs,– Books –fiction, non-fiction, e-ReadersMarketSegmentation isthe process ofdividing a marketinto a group thathave similar needsA marketsegment is agroup that hassimilar needs
How Do YouSegment aMarket?How do you break apart alarge group to identify a groupthat you are interested in?
Target Marketing Process:Linking Customer Needs to Marketing Action
Objective of Market SegmentationIt is your goal to:Identify segments that havethe greatest profit potentialbased on their requirementsand your capabilitiesMarket Segments
Breakfast Cereal Market Segments
Target MarketSelectionProcess1. Identify the appropriate targetingstrategy2. Determine which segmentationvariables to use3. Develop Market Segmentation Profiles4. Evaluate relevant market segments5. Select Specific Target Markets
Step 1:Identify theappropriatetargetingstrategy Target market– Consumers for whom a business creates andmaintains a marketing mix– Assignment 1 Strategy selection for target marketis affected by:– Target market characteristics– Product attributes– Organization’s objectives and resources
What is anexample ofeach oneof thesetargetingstrategies?UndifferentiatedStrategy (eggs, salt, milk)ConcentratedStrategy (Rolex, HarleyDavidson, Tesla, Forever 21 maybe; typically used forsmall segments)DifferentiatedStrategy (Holiday Inn –Express, Crowne Plaza,Resort, Vacation,Intercontinental; McDonalds;Disneyland; EconomistMagazine)
Holiday Inn’s Differentiated Strategy
Which bucket do these products/brands Fit nityCollegeEducation
Conditions forMarketSegmentationto succeed Customer’s needs must be heterogeneous Segments must be identifiable and divisible Marketer must be able to compare thedifferent market segments– In terms of sales potential, costs, and profits One segment must have enough profitpotential to justify developing a specialmarketing mix Company must be able to reach the chosensegment with a particular marketing mix
What variables do you use to segment? What is a Segmentation Variable?:– Characteristics of individuals, groups or organizationsused to divide a market into segments Should relate to the customers’ needs for, uses of orbehavior toward the product Must be measurable Company resources and capabilities affect the numberand size of the variables Product type and degree variations in customer needs
The following variables are most often used to segmentmarketsEthnicityvs. Race?
GeographicVariable Climate and terrain City size and population density Urban area and rural area Market density:– Number of potential customers within a unit of landarea– Useful segmentation variable for firms because lowdensity markets require different sales, advertising,and distribution activities than high-density markets
GeographicVariableClimate affects numerous markets. Customers’ needsfor automotive accessories, such as tires, vary based onclimate.
PsychographicVariables Personality characteristics Motives - Divides the market according toconsumers’ reasons for making a purchase Lifestyle analysis - Characteristics related topeople’s activities, interests, and opinionsDemographics explainwho your target is,psychographicsexplain WHY they buy!– Lifestyle segmentation groups people by: How they spend their time The importance of things in their surroundings Beliefs about themselves and broad issues
PsychographicVariables
Which bucket do these products/brands Fit in?DEMOGRAPHICGEOGRAPHICPSYCHOGRAPHICBEHAVIORISTIC
Target MarketSelectionProcess1. Identify the appropriate targetingstrategy2. Determine which segmentationvariables to use3. Develop Market Segmentation Profiles4. Evaluate relevant market segments5. Select Specific Target Markets
Segmentation Profile DevelopmentFitness Chain Segmentation entprofiles/segment-profile-example/
Step 4 - Evaluate Relevant Market SegmentsMarket Segment Aspects tobe EvaluatedSalesEstimatesCompetitionEstimatedCosts
MarketPotentialEntrepreneurship Tip!If you are thinking ofstarting your ownbusiness, then thinkabout capturing a shareof a small market not abig one! How big is the overall market?– Remember the market sizing activity you did inthe Target Market homework?– Stated in terms of dollars and units How much of that market share is itrealistic for your to capture?– Can you impact that by adjusting yoursegmentation or marketing mix?– What are your organization’s resources?– What are the environmental factors?
Evaluating the arkets/
Create a Profile for Hiking Club at LAMC What characteristics would you look for to segment themarket and develop your target market? DemographicGeographicPsychographicBehavioristic What is your marketing mix? ProductPricePromotionPlace/DistributionHands on Exercise:Segment a market,create a target marketand develop aProduct/Service!
Create a Profile for Hiking Club at LAMCSegmentation Variables:Marketing Mix:1. Demographic1. Product2. Psychographic2. Price3. Geographic3. Promotion4. Behavioral4. Place/Distribution
How Do You Know Whomto Market To?1. What needs do your product/service address?2. Who values the key attributes of your product3. Use a filter! Example: Baby Strollers1. My product is a stylish, foldable light-weight strollerwith jogging wheels1. All parents (Demographic, but mostly mothers .)2. City Dwellers (Geographic)3. Lifestyle.what does this stroller say about me?(Psychographic)4. End use – Jogging (Behavioral)
How Do You Know Whomto Market To (Cont’d)? Now let’s Segment our Target Market– Parents mostly mothers of children over three months Segmentation is breaking that Target Market down intosmaller pieces so that you can reach them better!– Demographic Age and Gender (women, younger18-45) Income (my stroller is expensive ) Education (requires research)– Geographic City dwellers (those who mostly jog) Urban Terrain– Psychographic Lifestyle Personality– Behavioristic Active Expects high quality performance
In Reality Target MarketDefinition andSegmentation MostlyHappen Together!
Target Marketing comesBEFOREthe Marketing MixWhy?
Another ExampleApple Watch Target Market: Population where Apple has a presence–––––––High Disposable Income (Demographic)Men and Women over 18 (Demographic)Early Adopters of Technology(Behavior)Active (Lifestyle)Apple Loyalists (Behavior)Image conscious (Psychographic)Urban? (Geographic)
All AthletesWho is Nike’sTarget Market?What Marketing Strategy isthis?– Adults and children– Athletes and those who want to be athletes But Then .Nike segments the marketand targets all athletes with a differentmarketing mix?–––––––NikeNike AirAir JordanNike SkateboardingCole HaaanHurleyConverse
Work onIdentifyingSome TargetMarketsas a Group Apple Watch not Apple Tommy Hilfiger Jeans not Tommy Hilfiger Victoria’s Secret Lingerie not lingerie Century 21 Realty; residential only WD 40 Adidas shoes not Adidas Playstation 4 not Sony Gaming Products
End
What Marketing Strategy is this? Work on Identifying Some Target Markets as a Group Apple Watch not Apple Tommy Hilfiger Jeans not Tommy Hilfiger Victoria’s Secret Lingerienot lingerie Century 21 Realty; residential only WD 40 Adidas shoes not Adidas Playstation 4 not
Segmentation, Target Marketing, and Positioning 1. Identify the steps in the target marketing process pp. 218-219 TARGET MARKETING: SELECT AND ENTER A MARKET p. 218 2. Understand the need for market segmentation and the approaches available to do it pp. 219-231 STEP 1: SEGMENTATION p. 219 3. Explain how marketers evalu-ate segments and choose a
Internal Segmentation Firewall Segmentation is not new, but effective segmentation has not been practical. In the past, performance, price, and effort were all gating factors for implementing a good segmentation strategy. But this has not changed the desire for deeper and more prolific segmentation in the enterprise.
Internal Segmentation Firewall Segmentation is not new, but effective segmentation has not been practical. In the past, performance, price, and effort were all gating factors for implementing a good segmentation strategy. But this has not changed the desire for deeper and more prolific segmentation in the enterprise.
segmentation research. 2. Method The method of segmentation refers to when the segments are defined. There are two methods of segmentation. They are a priori and post hoc. Segmentation requires that respondents be grouped based on some set of variables that are identified before data collection. In a priori segmentation, not only are the
Fig. 1.Overview. First stage: Coarse segmentation with multi-organ segmentation withweighted-FCN, where we obtain the segmentation results and probability map for eachorgan. Second stage: Fine-scaled binary segmentation per organ. The input consists of cropped volume and a probability map from coarse segmentation.
Therefore, target 1 has three target drops, i.e., target 1-A-1, target 1-B-1 and target 1-C-2. In this manner we can enumerate all possible target drops from target information. From source and target information we can set all possible assignments, and each of them is composed of a source and sequence of target drops, called a target drop set .
Methods of image segmentation become more and more important in the field of remote sensing image analysis - in particular due to . The most important factor for using segmentation techniques is segmentation quality. Thus, a method for evaluating segmentation quality is presented and used to compare results of presently available .
Psychographic Segmentation is also referred to as behavioral segmentation. Psychographic segmentation is analyzed in literature as a useful tool to explore the link between satisfaction and revisit intention (Gountas & Gountas 2001; Cole 1997). This type of segmentation divides the market into groups according to visitors' lifestyles.
