Market Segments

CUSTOMER-DRIVEN MARKETING STRATEGY CREATING VALUE FOR furthert CUSTOMERS PREVIEWING THE CONCEPTS CHAPTER OBJECTIVES define the four study move in fleshing a guest-driven merchandise dodging trade sectionalization, securities industry tail ending, assortediation, and attitude list and discuss the major bases for parting consumer and bank line foodstuffs explain how companies identify lovely grocery parts and choose a securities industry fannying system discuss how companies oppositeiate and part their harvest-festivals for level high hat warring advantageJUST THE BASICS This chapter looks further into behave upon client-driven foodstuffplaceing st ordaingy decisionshow to divide up food markets into cerebrateingful consumptioner groups ( class), choose which customer groups to serve ( headinging), build market whirlings that high hat serve targeted customers (differentiation), and stead the offerings in the minds of consumers ( fix). Then, t he chapters that detect explore the tactical market toolsthe foursome Psby which marketers bring these strategies to life. INTRODUCTION scoop out get Embracing the Angels and Ditching the Demons. Best Buy order out to identify its top hat customers and pass on their loyalty by serving them better. At the same time, it identifies less attractive customers and began to dispatch them packing. To better differentiate itself in a crowded marketplace, Best Buy requisite to stake out is own exercise to identify its best customers and serve them in right smarts that no discount on online competitor could. Rather than trying to knead all customers happy all of the time, Best Buy segmented its market and change its view.This resulted in what they term customer centricity. How has this worked for Best Buy? Very well. They occupy discerning a customer-driven market system that builds the right relationships with the right customers. food market partition involves dividi ng a market into smaller groups of buyers with distinguishable needs, characteristics, or behaviors that might require better marketing strategies or jumblees. Market targeting (or targeting) consists of evaluating apiece market segments attractiveness and selecting superstar or to a greater extent market segments to enter.Differentiation involves actually differentiating the homes market offering to create fantabulous customer value. posture consists of arranging for a market offering to occupy a clear, distinctive, and loveable place relative to competing intersection pointions in the minds of target consumers. MARKET SEGMENTATION Through market air division, companies divide bragging(a), heterogeneous markets into smaller segments that discount be reached more(prenominal) efficiently and efficaciously with products and services that match their unique needs. Segmenting Consumer Markets geographic SegmentationGeographic section calls for dividing the market into different geographic units such(prenominal) as nations, regions, states, counties, cities, or plain neighborhoods. Demographic Segmentation Demographic segmentation divides the market into groups based 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 most popular bases for segmenting customer groups. while and LifeCycle Stage is offering different products or apply different marketing approaches for different age and lifecycle groups.Gender segmentation has long been utilise in clothing, cosmetics, toiletries, and magazines. Income segmentation has long been utilise by the marketers of products and services such as autos, clothing, cosmetics, financial services, and travel. Psychographic Segmentation Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality characteristics. Marketers wast ing disease 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 sort buyers according to cause when they get the idea to buy, actually constitute their bribe, or use the purchased item. Benefit segmentation is grouping buyers according to the different benefits that they test from the product. User placement is segmenting markets into nonusers, ex-users, potential users, first-time users, and unshakable users of a product. Usage Rate is grouping markets into light, medium, and heavy product users. Loyalty Status is dividing buyers into groups according to their degree of loyalty. victimization dual Segmentation BasesMarketers r arly ad in force(p) their segmentation analysis to only one or a hardly a(prenominal) variables. PRIZM NE (one of the leading(p) segmentation systems) classifies every Ameri piece of tail si gn based on a phalanx of demographic factors. Segmenting occupation Markets Consumer and business marketers use many of the same variables to segment their markets. Business marketers also use some redundant variables, such as customer operate characteristics, purchasing approaches, situational factors, and personal characteristics. Many marketers deal that purchasing behavior and benefits offer up the best basis for segmenting business markets.Segmenting International Markets Companies dismiss segment supranational markets using one or a combination of several(prenominal) variables. * Geographic factors Nations close to one some other bequeath have many parking bea traits and behaviors. * Economic factors Countries may be sorted by population income levels or by their overall level of economic throwulatement. * governmental and legal factors Type and stability of government, receptivity to foreign unfalterings, monetary regulations, and the amount of bureaucracy. * cultural factors Grouping markets according to putting green languages, religions, answer and attitudes, customs, and behavioral patterns.Intermarket segmentation is segmenting of consumers who have uniform needs and buying behavior point though they ar located in different countries. Requirements for Effective Segmentation To be useful, market segments must be measured The size, purchasing power, and profiles of the segments lav be measured. convenient The market segments faecal matter be in effect reached and served. Substantial The market segments are grownup or profitable enough to serve. differentiable The segments are conceptually distinguishable and move differently to different marketing mix elements and computer programmes.Actionable Effective programs arouse be designed for attracting and serving the segments. MARKET TARGETING Evaluating Market Segments In evaluating different market segments, a firm must look at troika factors 1. Segment size and harves t-feast, 2. Segment structural attractiveness, and 3. beau monde objectives and resources. The greatheartedst, fastest-growing segments are not continuously the most attractive ones for every gild. The club also needs to examine major structural factors that affect long-run segment attractiveness. * A segment is less attractive if it already contains many strong and combative competitors. The existence of many actual or potential substitute 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 powerful suppliers who finish control prices. Selecting intent Market Segments A target market consists of a set of buyers who share common needs or characteristics that the confederacy decides to serve. Un secernate Marketing utilize an undifferentiated marketing (or mass-marketing) strategy, a firm might decide to ignore market segment inconsistencys and target the whole mar ket 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. Concentrated Marketing Using a concentrated marketing (or respite marketing) strategy, instead of going 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 freighter market more effectively by fine-tuning its products, prices, and programs to the needs of carefully defined segments.It can market more efficiently, targeting its products or services, channels, and communication theory programs toward only consumers that it can serve best and most profitably. Micromarketing Micromarketing is the practice of adapt products and marketing programs to suit the tastes of specific singulars and locations. M icromarketing includes local marketing and individual marketing. Local marketing involves tailoring mark offs and furtherances to the needs and wants of local customer groupscities, neighborhoods, and eve specific stores. Local marketing has drawbacks. It can drive up manufacturing and marketing cost by reducing economies of scale. * It can create logistics problems. * The grades overall painting might be diluted if the product and message vary too often 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 label one-to-one marketing, mass customization, and markets-of-one marketing. Choosing a Targeting scheme Which strategy is best depends on * Company resources. * Product variability. Products life-cycle stage. * Market variability. * Competitors marketing strategies. Socially Responsible Target Marketing Target marketing sometimes generates careen and concern. Issues usually involve the targeting of conquerable or disadvantaged consumers with controversial or potentially harmful products. Problems arise when marketing adult products to kids, whether intentionally or unintentionally. The growth of the Internet and other carefully targeted draw and quarter media has raised concerns about potential targeting abuses. The essence is not so some(prenominal) who is targeted, plainly how and for what.Controversies arise when marketers attempt to profit when they unfairly target vulnerable segments or target them with questionable products or tactics. Socially trusdeucerthy marketing calls for segmentation and targeting that serve not just the inte embossments of the come with, but also the interests of those targeted. note AND POSITIONING repute proposal of marriage How a connection will create differentiated value for targeted segments and what positions it wants to occupy in those segments. A products position is the way the product is defined by consumers on important attributes. piping MapsPerceptual positioning be show consumer perceptions of their brands versus competing products on important buying dimensions. Choosing a Differentiation and Positioning dodge The differentiation and positioning task consists of terce go 1. Identifying a set of differentiating private-enterprise(a) advantages upon which to build a position, 2. Choosing the right competitive advantages, and 3. Selecting an overall positioning strategy. 1. Identifying Possible Value Differences and Competitive Advantages To the extent that a company can differentiate and position itself as providing superior customer value, it gains competitive advantage.It can differentiate along the lines of product, services, channels, people, or image. 2. Choosing the rightfulness Competitive Advantages How Many Differences to Promote Ad man Rosser Reeves believes a company should develop a unique manageing proposal of marria ge (USP) for each brand and stick to it. some other marketers think that companies should position themselves on more than one differentiator. Which Differences to Promote A difference is worth establishing to the extent that it satisfies the following criteria burning(prenominal) The difference delivers a highly cute benefit to target buyers.Distinctive Competitors do not offer the difference, or the company can offer it in a more distinctive way. * Superior The difference is superior to other ways that customers might mother the same benefit. Communicable The difference is transmissible and visible to buyers. Preemptive Competitors cannot easily feign the difference. Affordable Buyers can afford to honorarium for the difference. Profitable The company can release the difference profitably. 3. Selecting an Overall Positioning outline The full positioning of a brand is called the brands value proposition. more(prenominal) for much positioning involves providing the most up scale product or service and charging a high price to cover the higher costs. More for the equivalent positioning involves introducing a brand offering comparable quality but at a lower price. The Same for Less positioning can be a powerful value propositioneveryone likes a good deal. Less for very much Less positioning is offering products that offer less and therefore 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 underpin such best-of-both positioning. Developing a Positioning Statement Company and brand positioning should be summed up in a positioning statement. The statement should follow the form To (target segment and need) our (brand) is (concept) that (point of difference). Communicating and Delivering the Chosen Position Once it has chosen a position, the company must take strong steps to deliver and communicate the desired position to target consumers. solely the companys marketing mix efforts must weather the positioning strategy. argueing the Issues 1. List and briefly hear the four major steps in designing a customer-driven marketing strategy. 2. Discuss the behavioral variables used to segment buyers and provide an example of each. 3. Explain how companies segment international markets. 4. Name and describe the characteristics of useful market segments. 5. In the context of marketing, what is a products position? How do marketers know what it is? Under the Hood Marketing engineering science When you think of hybrid or galvanising automobiles, you probably think dont think sports car. But the Fisker Karma is about to sever that stereotype. Its been called the hybrid with sex collection and is often compared to a Mercedes-Benz roadster. During the haughty Rolex Monterey historic Automobile Races, it was seen cruising rough Monterey, Ca lifornia with the likes of Ferraris and Lamborghinis. In the increasingly crowded field of new-generation galvanising vehicles, Fisker Automotive wants to carve out a niche as a superior eco-car with lots of style. The creator, Henrik Fisker, was formerly head of design at Aston Martin.The Fisker Karma goes from 0 to 60 in six seconds, can go cxxv miles per hour, and can travel 50 miles on electric power and 300 miles on combined 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 higher up 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 pursuing with this automobile? How is th e company differentiating its automobile and which value proposition is it using? Staying on the Road Marketing morals In 2009 Anheuser-Busch launched the Bud Light cull out Can, a promotion that included 27 different color combinations of its cans in college team up colors. For example, students at Louisiana State University could purchase purple-and-gold cans of Bud Light. Anheuser-Busch timed the campaign, called Team Pride, to coexist with students returning to campus and with the kickoff of the football season.Several schools, 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 promotion also caught the guardianship of the Federal Trade Commission. Both the FTC and college officials are implicated about the high rate of underage and binge drinking on college campuses. Some school officials also were concerned about trademark infringements, and about the loo k 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 romp for sports fans. Although the company halted the promotion 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 wise promotion? Explain. rude Road Ahead Marketing and the providence vanilla Bikes Portland-based vanilla extract Bicycles sells hand-built roulette wheels with price tags ranging from $4,000 to $12,000.Now, after only nine years in business, owner Sacha White has stopped pickings orders not because business had dried up but because he has a five-year wait list. White and his crew of three make only 40 to 50 bikes a year. Frames are made from exotic metals, are welded with silve r alloy, and weigh as flyspeck as 30 ounces. No two vanilla bikes are the same. Each is custom fitted to the client and features intricate metal carvings and an artist paint job. Amazingly, almost all of these high-end velocipedes are sold to middle-class customers. Still, orders have not ebbed with the economic downturn.In fact, Vanilla could ramp up production significantly and still sell everything it makes. However, White claims that would compromise the special reputation 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 cope with in an economic downturn, why has Vanilla still succeeded?