Market Segments

CUSTOMER-DRIVEN merchandiseING surfaceline CREATING VALUE FOR TARGET CUSTOMERS PREVIEWING THE CONCEPTS CHAPTER OBJECTIVES define the quadruple major steps in pattern a node-driven marting outline securities industry departmentation, food foodstuff coffin nailing, disparateiation, and view list and hash out the major bases for subdivisioning consumer and production line trades explain how companies tell pleasant securities industry instalments and choose a market derriereing dodging discuss how companies strike out and grade their proceedss for maximum competitive advantageJUST THE basics This chapter smacks further into key customer-driven trade strategy decisionshow to divide up markets into meaningful customer groups (cleavage), choose which customer groups to serve ( tailing), do market flings that beaver serve targeted customers ( incompatibleiation), and coif the offerings in the minds of consumers ( location). Then, the chapters that follow explore the tactical merchandise toolsthe Four Psby which marketers bring these strategies to disembodied spirit. INTRODUCTION out equip procure Embracing the Angels and Ditching the Demons. shell Buy set out to come in its outdo customers and win their loyalty by serving them better. At the corresponding time, it identifies less(prenominal) seductive customers and began to send them packing. To better several(predicate)iate itself in a move marketplace, Best Buy needed to s comprise out is own turn to identify its best customers and serve them in shipway that no discount on online competitor could. quite an than trying to make all customers able all of the time, Best Buy segment its market and sharpened its side.This resulted in what they term customer centricity. How has this worked for Best Buy? Very well. They guide designed a customer-driven trade strategy that builds the reform relationships with the right customers. Market divider involves dividing a marke t into little groups of buyers with distinct inevitably, characteristics, or ports that major position require separate selling strategies or premixes. Market targeting (or targeting) consists of evaluating each market segments attractiveness and selecting iodine or more than(prenominal) market segments to enter. specialisation involves actually differentiating the heartys market offering to cook superior customer assess. spatial relation consists of set up for a market offering to fulfil a clear, distinctive, and desirable place sexual relation to competing products in the minds of target consumers. MARKET divider Through market variance, companies divide large, motley markets into smaller segments that whoremonger be reached more efficiently and effectively with products and go that match their rum needfully. Segmenting Consumer Markets Geographic partitioningGeographic segmentation calls for dividing the market into different geographical units such as nations, regions, states, counties, cities, or even neighborhoods. Demographic partitioning Demographic segmentation divides the market into groups ground on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality. Demographic factors atomic number 18 the approximately general bases for segmenting customer groups. Age and LifeCycle Stage is offering different products or using different marketing approaches for different age and lifecycle groups.Gender segmentation has long been commit upd in clothing, cosmetics, toiletries, and magazines. Income segmentation has long been recitationd by the marketers of products and dish outs such as automobiles, clothing, cosmetics, financial services, and start. Psychographic sectionalisation Psychographic segmentation divides buyers into different groups based on social class, life carriage, or in the flesh(predicate)ity characteristics. Marketers use personality variables to segment markets. Behavioral Segmentation Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product.Occasion segmentation is classify buyers gibe to occasions when they get the creative opineer to buy, actually make their purchase, or use the purchased item. Benefit segmentation is grouping buyers fit to the different benefits that they seek from the product. User position is segmenting markets into nonusers, ex-users, potential users, first-time users, and regular users of a product. employment Rate is grouping markets into light, medium, and heavy product users. Loyalty Status is dividing buyers into groups according to their floor of loyalty. Using Multiple Segmentation BasesMarketers seldom limit their segmentation analysis to exclusively one or a a few(prenominal) variables. PRIZM NE (one of the leading segmentation systems) classifies e really(prenominal) Amerifanny household base d on a host of demographic factors. Segmenting argumentation Markets Consumer and line marketers use galore(postnominal) of the same variables to segment their markets. Business marketers also use some additional variables, such as customer operating characteristics, purchasing approaches, situational factors, and personal characteristics. some(prenominal) marketers believe that acquire behavior and benefits provide the best undercoat for segmenting business markets.Segmenting International Markets Companies bath segment internationalist markets using one or a combination of several variables. * Geographic factors Nations stodgy to one an early(a) leave behind have galore(postnominal) common traits and behaviors. * Economic factors Countries whitethorn be grouped by macrocosm income aims or by their overall level of sparing development. * Political and legal factors case and stability of government, receptivity to foreign firms, pecuniary regulations, and the amount of bureaucracy. * Cultural factors Grouping markets according to common languages, religions, think ofs and attitudes, customs, and behavioral patterns.Intermarket segmentation is segmenting of consumers who have similar needs and buying behavior even though they atomic number 18 located in different countries. Requirements for sound Segmentation To be useful, market segments mustiness be Measurable The size, purchasing billet, and profiles of the segments groundwork be measured. Accessible The market segments laughingstock be effectively reached and served. Substantial The market segments ar large or fat enough to serve. Differentiable The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs.Actionable Effective programs chiffonier be designed for attracting and serving the segments. MARKET TARGETING Evaluating Market Segments In evaluating different market segments, a firm must look at three factors 1. Segment si ze and growth, 2. Segment structural attractiveness, and 3. guild objectives and resources. The largest, fastest-growing segments are not always the more or less attractive ones for every association. The accompany also needs to examine major structural factors that pertain long-run segment attractiveness. * A segment is less attractive if it already contains many strong and aggressive competitors. The existence of many actual or potential easing products may limit prices and the profits. * The relative power of buyers also affects segment attractiveness. * A segment may be less attractive if it contains correctly suppliers who can control prices. Selecting indicate Market Segments A target market consists of a set of buyers who conduct common needs or characteristics that the company go unders to serve. un noted selling Using an undifferentiated marketing (or big money-marketing) strategy, a firm might decide to ignore market segment differences and target the whole m arket with one offer.This mass-marketing strategy focuses on what is common in the needs of consumers rather than on what is different. Differentiated Marketing Using a differentiated marketing (or segmented marketing) strategy, a firm decides to target several market segments and designs separate offers for each. unvoiced Marketing Using a concentrated marketing (or niche marketing) strategy, instead of spillage afterward a small share of a large market, the firm goes after a large share of one or a few smaller segments or niches. It can market more effectively by fine-tuning its products, prices, and programs to the needs of guardedly be segments.It can market more efficiently, targeting its products or services, channels, and communications programs toward only consumers that it can serve best and most profitably. Micromarketing Micromarketing is the radiation diagram of tailoring products and marketing programs to suit the tastes of detail individuals and locations. Micro marketing includes topical anesthetic marketing and individual marketing. topical anaesthetic marketing involves tailoring shops and forward motions to the needs and wants of local customer groupscities, neighborhoods, and even specific stores. topical anesthetic marketing has drawbacks. It can drive up manufacturing and marketing costs by step-down economies of scale. * It can nominate logistics problems. * The brands overall image might be diluted if the product and message change too much in different localities. Individual marketing is the tailoring of products and marketing programs to the needs and preferences of individual customers. Individual marketing has also been labeled one-to-one marketing, mass customization, and markets-of-one marketing. Choosing a take aiming Strategy Which strategy is best depends on * Company resources. * reaping variability. Products life-cycle stage. * Market variability. * Competitors marketing strategies. socially Responsible Target M arketing Target marketing sometimes generates controversy and concern. Issues normally involve the targeting of unprotected or discriminate consumers with controversial or potentially insalubrious products. Problems arise when marketing adult products to kids, whether by design or unintentionally. The growth of the Internet and other carefully targeted direct media has raised concerns just about potential targeting abuses. The issue is not so much who is targeted, and how and for what.Controversies arise when marketers onset to profit when they unfairly target vulnerable segments or target them with questionable products or tactics. Socially responsible marketing calls for segmentation and targeting that serve not just the interests of the company, but also the interests of those targeted. DIFFERENTIATION AND POSITIONING respect proposition How a company will create differentiated value for targeted segments and what positions it wants to run through in those segments. A p roducts position is the way the product is defined by consumers on important attributes. Positioning MapsPerceptual pose map show consumer perceptions of their brands versus competing products on important buying dimensions. Choosing a Differentiation and Positioning Strategy The differentiation and place task consists of three steps 1. Identifying a set of differentiating competitive advantages upon which to build a position, 2. Choosing the right competitive advantages, and 3. Selecting an overall attitude strategy. 1. Identifying Possible Value Differences and Competitive Advantages To the completion that a company can differentiate and position itself as providing superior customer value, it gains competitive advantage.It can differentiate on the lines of product, services, channels, people, or image. 2. Choosing the Right Competitive Advantages How Many Differences to upraise Ad man Rosser Reeves believes a company should develop a unique selling proposition (USP) for eac h brand and stick to it. Other marketers think that companies should position themselves on more than one differentiator. Which Differences to Promote A difference is worth establishing to the completion that it satisfies the following criteria Important The difference delivers a highly valued benefit to target buyers.Distinctive Competitors do not offer the difference, or the company can offer it in a more distinctive way. * prime(prenominal) The difference is superior to other ways that customers might obtain the same benefit. contagious The difference is communicable and visible to buyers. preemptive Competitors cannot easily copy the difference. Affordable Buyers can afford to pay for the difference. Profitable The company can introduce the difference profitably. 3. Selecting an boilersuit Positioning Strategy The full positioning of a brand is called the brands value proposition. more than for More positioning involves providing the most upscale product or service and chargi ng a higher price to cut across the higher costs. More for the Same positioning involves introducing a brand offering comparable quality but at a dismantle price. The Same for Less positioning can be a powerful value propositioneveryone likes a undecomposed deal. Less for Much Less positioning is offering products that offer less and so cost less. Less-for-much-less positioning involves meeting consumers lower performance or quality requirements at a much lower price. More for Less positioning is the winning value proposition.In the long run, companies will find it very difficult to sustain such best-of-both positioning. maturation a Positioning Statement Company and brand positioning should be summed up in a positioning dictation. The description should follow the form To (target segment and need) our (brand) is (concept) that (point of difference). communication and Delivering the Chosen Position Once it has chosen a position, the company must take strong steps to delive r and take place the desired position to target consumers. completely the companys marketing mix efforts must support the positioning strategy.Discussing the Issues 1. make and briefly draw and quarter the four major steps in designing a customer-driven marketing strategy. 2. Discuss the behavioral variables utilize to segment buyers and provide an example of each. 3. condone how companies segment international markets. 4. Name and describe the characteristics of useful market segments. 5. In the mise en scene of marketing, what is a products position? How do marketers know what it is? Under the hood Marketing Technology When you think of crown of thorns or voltaic automobiles, you probably think dont think sports car. merely the Fisker Karma is nearly to shatter that stereo fount. Its been called the hybridization with sex appeal and is often compared to a Mercedes-Benz roadster. During the haughty Rolex Monterey Historic Automobile Races, it was seen cruising almost Monterey, California with the likes of Ferraris and Lamborghinis. In the increasingly crowded field of new-generation electric vehicles, Fisker Automotive wants to hack out a niche as a high-performance eco-car with lots of style. The creator, Henrik Fisker, was at once head of design at Aston Martin.The Fisker Karma goes from 0 to 60 in six seconds, can go 125 miles per hour, and can travel 50 miles on electric power and 300 miles on combine electric and gasoline power. All this performance and style does not come cheaply, however. Prices range from $87,900 to $106,000. The company already has orders from 1,400 buyers. If this is above your means, dont worrythe company is promising a lower-priced, mass-market version for the rest of us in a few years. 1. On what basis is Fisker Automotive segmenting the automobile market? Is the company using a single segmentation approach or a combined approach?Explain. 2. What market targeting strategy is Fisker prosecute with this automobile? How is the company differentiating its automobile and which value proposition is it using? Staying on the highway Marketing Ethics In 2009 Anheuser-Busch launched the develop Light Fan Can, a onward motion that included 27 different colourise combinations of its cans in college team colors. For example, students at lah State University could purchase purple-and-gold cans of Bud Light. Anheuser-Busch time the campaign, called police squad Pride, to coincide with students returning to campus and with the starting time of the football season.Several civilizes, such as Wisconsin, Michigan, Iowa State, University of Colorado, and others, objected strenuously. As a result, Anheuser-Busch halted the program in those markets. The forward motion also caught the attention of the Federal pile Commission. Both the FTC and college officials are concerned about the high rate of pocket-size and shove drinking on college campuses. Some school officials also were concerned about tradema rk infringements, and about the appearance that they support Budweisers activities.As criticism brewed around the country, A-B released a statement claiming that it did not mean to encourage underage drinkingit just wanted to create more fun for sports fans. Although the company halted the advance in areas where college officials objected, controversy surrounding the promotion appeared in newspapers and on television nationwide. 1. What type of market targeting strategy is Anheuser-Busch using with the Team Pride promotion? 2. Was this a overbold promotion? Explain. Rough Road before Marketing and the Economy vanilla Bikes Portland-based vanilla Bicycles sells hand-built bikes with price tags ranging from $4,000 to $12,000.Now, after only cardinal years in business, owner Sacha egg white has stopped taking orders not because business had dried up but because he has a five-year waiting list. White and his combination of three make only 40 to 50 bikes a year. Frames are make from exotic metals, are welded with silver alloy, and depend as little as 30 ounces. No two Vanilla bikes are the same. Each is custom fitted to the client and features involved metal carvings and an artisan paint job. Amazingly, almost all of these high-end velocipedes are sold to lower-middle-class customers. Still, orders have not ebbed with the economic downturn.In fact, Vanilla could ramp up production importantly and still sell everything it makes. However, White claims that would via media the special nature of what customers consider to be works of art. Vanilla bikes are so special that when Portland bike couriers describe something as cool, they routinely say, Thats soooo Vanilla. 1. Based on the segmentation variables discussed in the chapter, construct a profile for Vanilla Bicycles probable target market. 2. Given that most luxury products suffer in an economic downturn, why has Vanilla still succeeded?