Part 3 of the Definition of Marketing Series on Market Segmentation and Target Marketing

1. Definition of Marketing Series Segmentation/ Target Market

2. What is Market Segmentation ? Aggregating prospective buyers into groups that: Share a problem Are similar – in terms of demographics, geography, or psychographics (attitudes and beliefs) Respond similarly to market forces

3. What is a “Target Market” ? One or more groups toward which a firm focuses its marketing efforts? McDonalds Everyone – price conscious, convenience Happy Meals for kids Salads for moms Angus burgers for men

4. Why Segment the Market? One size fits all (mass) markets are ineffective They may please no one They’re expensive to serve Fail to match customer desires with firm competencies

5. How to Segment the Market. Identify market needs Features/ benefits Price Options Form Tylenol chooses to some segments to target and develops a product aimed at each target market Pain Reliever Example Relief from headache, arthritis, cold, etc Branded, generic Large bottle, small bottle Capsules, pills, liquid, powder

6. How to Segment Market Form Segments Substantial – the size and purchasing power of the segment must have potential for profit Accessible – the segment can be effectively reached and served (ie. They read the same magazine or frequent the same stores, etc.) Actionable – programs can effectively be developed to reach the segment

7. Segmentation Variables Demographics Age – cruises focus on seniors Gender – women watching sports Income – bottom of the pyramid Ethnicity - grocery stores carry more Hispanic foods Education, life cycle, religion, family size …

8. Segmentation Variables Geographic Country Region – NE, SW, … Population density Climate Rural versus Urban MSA

9. Segmentation Variables Psychographic Social class – middle class striving Lifestyle – achievers Personality - introverted

10. Segmentation Variables Behavioral Loyalty Attitude toward Brand Usage occasion Usage rate – 80/20 Readiness stage

11. Targeting Options Mass market – 1 product to all segments 1 product to multiple segments (book translations, split runs) Multiple products to multiple segments (Coke, P& G) Mass customization – individualized products (Mac computers, Sabre)

12. How Can This Help You Succeed? Products targeted at a specific segment are likely more valuable to that segment Promotions aimed at a segment convert at higher rates Results in better allocation of firm resources

13. More questions? Check out other videos in this series http://www.MarketingThatWorks.TV