Explain how a fuel-cell breathalyzer works.
Chapter 8 Segmenting and Targeting Markets Characteristics of a Market - People/organizations with needs/wants and with the ability/willingness to buy - Lacks any one of these characteristics = not a market Market Segmentation Market – people/organization w/ needs/wants and the ability/willingness to buy Market segment – subgroup of people/organization sharing 1+ characteristics that cause them to have similar product needs Market segmentation – process of dividing a market into meaningful, relatively similar, identifiable segments/groups The Importance of Market Segmentation Markets – variety of product needs/preferences Marketers – better define customer needs Decision makers – define objectives/allocate resources more accurately Criteria for Successful Segmentation Substantiality – must be large enough to warrant a special marketing mix Identifiability/measurability – must be identifiable and their size measurable Accessibility – must be reachable with marketing mix Responsiveness – no separate treatment is needed unless segment responds to a marketing mix differently Bases for Segmenting Consumer Markets Geography - Region of the country/world - Market size - Market density - Climate Demographics - Age o uses cohorts (Tweens, teens, millennials…) - Gender o 85% of consumers goods purchases annually are women - Income o Influences consumers’ wants and determines buying power - Ethnic background o Hispanic/African Americans/Asian are three largest US ethnic groups - Family life cycle o Marital status o Age o Children Psychographics - Personality o Reflects a person’s traits, attitudes, habits - Motives o Emotional, rational, status motives - Lifestyles o How time is spent o Importance of things around them o Beliefs o Socioeconomic characteristics - Geodemographic o Segmenting potential customers into neighborhood lifestyle categories o Combines geo/demo/lifestyle - Benefits sought o Process of grouping customers into market segments according to benefits they seek from product - Usage rate o Diving a market by amount of product bought or consumed o 80/20 Holding that 20% of all customers generate 80% of the demand Bases for Segmenting Business Markets - Market consists of four segments 1. Producers 2. Resellers 3. Government 4. Institutions - Company characteristics o Geographic location o Type of company o Size of company o Product use - Segmenting customer type = business marketers tailor marketing mixes to unique needs of particular types of organizations/industries Bases for Segmenting Business Markets - Satisficers o Contact familiar suppliers and place order w/ the first one to satisfy product/delivery requirements - Optimizers o Consider numerous suppliers/obtain bids/study all proposals before selecting one Buyer Characteristics – personal characteristics of the buyers influence their buying behavior/offer viable basis for segmenting some business markets - Demographic characteristics - Decision style - Tolerance for risk - Confidence level - Job responsibilities Steps in segmenting a market - Select a market for study - Choose bases for segmentation - Select descriptors - Profile/analyze segments - Select markets - Design, implement, maintain marketing mix Strategies for selecting target markets - Target market o Group of people/organizations for which the organization designs, implements, and maintains a marketing mix to meet that group’s needs o 3 general strategies Undifferentiated Mass market philosophy Viewing market as one big market/using one marketing mix Commodity products o Advantage Potential savings on production/marketing costs o Disadvantages Unimaginative product offerings Company more susceptible to competition Concentrated Share similar needs and there are different croups (each w/ different needs) One group of consumers = one target market Aimed at one group of consumers, one segment Examples o ESPN Advantages o Concentration of resources o Meets narrowly defined segment o Small firms can compete o Strong positioning o Price sensitivity o Deeper brand loyalty Disadvantages o Segments too small or changing o Large competitors may market to niches segment o Diversified risks o Susceptible to larger competitors especially when successful Multi-segment targeting Share similar needs and there are different groups (each with different need) More than one group of consumers (more than one target market) Each target market gets a separate marketing mix Shoe company for men/women (NIKE) Advantages o Larger market share o Large niche o Expertise/risks Disadvantages o High costs o Cannibalization Reduction sales volume/revenue as a result of introducing a new product o Customer confusion 80/20 Individual Marketing or Mass Customization Each customer has his/her own set of unique needs Marketing mix aims at each consumer Each consumer gets a separate marketing mix Example o Build-A-Bear Advantages o Cost effective o Focus on customer retention/convenience Disadvantages o Not for all markets o Successful for luxury not basic products o Return of customized products is a hassle o Barriers to entry CRM as a Targeting Tool CRM Trends - One size fits all marketing = irrelevant - Direct/personal marketing efforts will grow to meet needs of busy consumers - Consumers will be loyal to companies that have earned/reinforced their loyalty - Mass media approaches will decline as technology allows better customer tracking Positioning - The place a product, brand, or group of products occupies in consumers’ minds relative to competing offerings - Assumes that consumers compare products on the basis of important features - Requires assessing the positions occupied by competing products Product differentiation - Distinguish products from competitors Perceptual Mapping - Displaying/graphing in two or more dimensions, the location of products, brands, or groups of products in customers’ minds Repositioning - To sustain growth in slow markets - Correct positioning mistakes - Changing consumers’ perceptions of brand in relation to competing brands