target marketing strategies

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Target Marketing Strategies

Chapter 8Lecture Slides

Solomon, Stuart,

Carson, & Smith

Your name here

Course title/number

Date


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Copyright 2003 Pearson Education Canada Inc. 8-2

Chapter Learning Objectives

When you have completed your study of this chapter,

you should be able to:

Understand the three steps ofdeveloping a target marketingstrategy.

Understand the need for marketsegmentation in todays businessenvironment.

Know the different dimensionsmarketers use to segment consumermarkets.

Understand the bases forsegmentation in business-to-business markets.

Explain how marketers evaluateand select potential marketsegments.

Explain how marketers

develop a targeting strategy.

Understand how a firm

develops and implements a

positioning strategy.
http://www.ford.ca/


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Introduction to the Topic

If your product: is completely unique,

has no substitute,

people need it to survive,

you have no competition,

and demand is without

limits,

then market segmentation is

not likely to interest you.

However, if your products are like the other 99.9% in

the market place, then listen up!

This topic forms the basis for the vast majority of marketing

efforts by organizations, hence its importance to our study.

Figure 8.1
http://www.acnielsen.com/research/segmentation.htm


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Selecting andEntering a Market

You can have it any colour you want, as long as it is black. Thisfamous quote is attributed to Henry Ford, who was providing his

opinion about the necessity of offering the customer a choice.

Market fragmentation:creation of many consumer groups dueto a diversity of distinct need and wants in modern society.

Having it your wayis a good way to describe theconsumers desire for products that more closely suit

their tastes, rather than putting up with only one

version.

Target marketing strategy:dividing the totalmarket into different segments based on customer

characteristics, selecting one or more segments, and

developing products to meet the needs of those specific

segments.
http://www.burgerking.com/


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Segmentation,Targeting, and Positioning

Develop profiles of

resulting segments

MarketSegmentation

Develop measures of

segment attractiveness

Select the

target segment(s)

Develop positioningfor each segment

Develop marketing mix

for each segment

Identify bases for

segmenting market

Market

targeting

Market

positioning


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The Process of Segmentation

Segmentation:the process of dividing a larger market into smallerpieces, based on one or more meaningful, shared characteristics.

The purpose of segmenting a market

is to design a separate marketing mix

tailored to the specific desires of each

segment.

Segmentation variables:basesfor dividing the total market into

fairly homogeneous groups, each with

different needs and preferences.

Segmentation strategies can be basedon demographic, psychographic, or

behavioural factors.
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Segmentation by Demographics

Demographics:statistics that measure observable aspects of apopulation, including age, gender, ethnic group, income, education,occupation, and family structure.

Demographic factors are

attractive to use as

segmentation variablesbecause they are

(relatively) easy to

identify and measure.

Segmenting by age is

interesting due toCanadas unusual

population distribution,

caused by our recent

history.

1996 Canadian Population by Selected Age Group

0 1E+06 2E+06 3E+06 4E+06 5E+06

Under 15

15 to 24

25 to 44

45 to 64

65 to 74

75 plus

Population

Age groups

Female

Male
http://www.statcan.ca/


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Segmentation by Demographics (continued)

Baby boomers:the largest age group in Canada, it includespeople born between 1947 and 1966. This trend is also repeated inthe United States, only ten times larger.

Due to their numbers, the

needs of the baby

boomers have dominatedthe marketplace and our

culture for the past 50

years, and will continue

to do so for another 30

years. Just be careful about

calling them old!

1996 Canadian Population by Selected Age Group

0 1E+06 2E+06 3E+06 4E+06 5E+06

Under 15

15 to 24

25 to 44

45 to 64

65 to 74

75 plus

Population

Age groups

Female

Male
http://demography.anu.edu.au/VirtualLibrary/


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Segmenting bygender

will work for many products that are

actually gender-specific, but one must be careful not to make too

many assumptions in todays politically correct marketplace.

Family structure is a useful basefor segmentation as consumption

changes in relatively predictable waysas a family begins and grows.

The only problem is that todays

definition of what a family is has

changed due to a number of social

trends.

Income and social class can beuseful bases, but difficult to define

precisely.
http://family.go.com/


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Segmenting byethnicorigin can be useful, if we

know that consumption

behaviour is different

between groups.

Canada has a diversepopulation by ethnic origin,

and this trend will continue

in the future as the majority

of population growth

continues to be due toimmigration, and not birth

rate.

Ethnic Origin Number PercentTotal Canadian Population 26,994,045 100.0%

Total single origins 19,199,790 71.1%Total multiple origins 7,794,250 28.9%

British alone 5,611,050 20.7%

British alone or with other 12,047,920 44.6%

French alone 6,129,680 22.6%

French alone or with other 8,389,180 31.1%

Single European 4,146,065 15.2%

German 911,560 3.4%

Italian 750,055 2.8%

Ukrainian 406,645 1.5%

Dutch 358,180 1.3%

Polish 272,810 1.0%

Portuguese 246,890 0.9%

Greek 151,150 0.6%

Hungarian 100,725 0.4%

Aboriginal alone 470,615 1.7%

Aboriginal alone or with other 1,002,670 3.7%

Single Asian 1,607,230 5.9%Chinese 586,645 2.2%

East Indian 324,840 1.2%

Filipino 157,250 0.6%

Vietnamese 84,005 0.3%

Black 214,265 0.8%

Jewish 245,840 0.9%

Other single origins 1,446,355 5.4%
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Segmenting by geography means using different marketing mixesto appeal to different regional tastes, such as offering stronger tasting

coffee in Western Canada.

For most companies, segmenting by geography in Canada may be

impractical due to the small size of our regional markets.

Geodemography:asegmentation technique that

combines geography with

demographics.

The basic assumption of

geodemography is that people wholive near one another tend to share

similar characteristics.
http://www.polk.ca/flash.htm


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Segmentation by Psychographics

Psychographics:information

about the activities and interests,and opinions of consumers that is

used to construct market

segments.

VALS (Values and

Lifestyles): psychographicsystem that divides people into

eight segments.

The dimensions used are based on

psychological characteristics, such

as willingness to take risks andinnovativeness, and access to

resources.

You can take the survey by

clicking on the link.
http://future.sri.com/VALS/


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Segmentation by Behaviour

Behavioural segmentation:technique that divides consumersinto segments on the basis of how they act toward, feel about, or use aproduct or service.

Usage occasions:indicator used inone type of market segmentation based

on when consumers use a product most.

80/20 Rule:a marketing rule of thumbthat 20% of purchasers account for 80%

of a products sales. Also known as the

concentration principle.

This explains why beer companies seem

to be preoccupied with under-25 year old

males!
http://www.soyaworld.com/


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Segmenting Business Markets

Segmenting business customers can be done by industry using theNAICS classification system (Chapter 7), or by their consumptionbehaviour using various operating variables.

Operating variables:theproduction technology used, the

business customers degree of technical,financial, or operations expertise,and

whether the prospect is a current user or

non-user of the product.

Companies will also differentiate

customers based on how they buy, suchas the competitive bidding systems used

by governments.
http://www.dell.ca/


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Targeting

Target market:group or groups that a firm selects to turn intocustomers as a result of segmentation and targeting.

The objective of targeting is to choose

the segment(s) that the company can

most profitably serve, given its resources

and capabilities.

Segment profile:a description of thetypical customer in a segment. This is

done to help determine the best way to

reach them.

Market potential:the maximumdemand expected among consumers in a

segment for a product or service.
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Criteria for Evaluating Segments

Measurable:can the buyer characteristics be easilyidentified and segmented into groups at reasonable cost?

Similarity of needs:buyers within the group havesimilar needs and wants.

Distinctness of needs: buyers in each group havedistinct needs and wants.

Profit potential:is there greater potential for profitby segmenting a market than attempting to serve the

mass market?

Accessible:can the buyers in the segment be reachedeffectively with a simple marketing action?

Capability:does the company have the resources andcapability of satisfying the segment?
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Choosing a Targeting Strategy

Differentiated targeting strategy:developing one or moreproducts for each of several distinct customer groups and making

sure these offerings are kept separate in the marketplace.

Example: Black & Decker sell under own brand

name to homeowners and the DeWalt line to

professional contractor users. Undifferentiated targeting strategy:

appealing to a broad spectrum of people.

Example: selling one version of the product to

many different markets, such as baking soda.

Concentrated targeting strategy:focusing a forms efforts on offering one or more

products to a single segment.

Example: Burton snowboards
http://www.burton.com/


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Choosing a Targeting Strategy(continued)

Custom marketing strategy:approach that tailors specificproducts and the messages about them to individual customers.

As practiced by most professional service

providers, and some on-line retailers.

Mass customization:approach thatmodifies a basic product or service tomeet the needs of an individual.

Made to measure has traditionally

meant expensive and low volume.

Mass customization uses technology to

take this idea to a larger scale to bring the

costs down to a more affordable level.

You can have a mountain bike built to

your exact measurements!
http://www.ticycles.com/


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Positioning

Positioning:developing a marketing strategy aimed at influencinghow a particular market segment perceives a product or service incomparison to the competition.

Repositioning:redoing a products position to respond tomarketplace changes.

Brand personality:adistinctive image that

captures a product or

services character and

benefits.

Perceptual map:apicture of where products or

brands are located in

consumers minds. Figure 8.4


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FamousLast Words

The three processes of

segmentation, targeting, and

positioning form the

essence of marketing in

todays competitive

environments.

Without them, mass

marketing would be our

only alternative, and we

know how boring that can

be!

target marketing strategies

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