Market Segments

CUSTOMER-DRIVEN trade STRATEGY CREATING VALUE FOR TARGET CUSTOMERS PREVIEWING THE CONCEPTS CHAPTER OBJECTIVES define the four major move in designing a springerer-driven grocerying dodging market variance, market signing, distinguishableiation, and post list and wrangle the major bases for segmenting consumer and business markets explain how companies tell harming market segments and rent a market stubing schema discuss how companies classify and position their results for maximum competitory advantageJUST THE BASICS This chapter looks further into come upon customer-driven selling scheme decisionshow to watershed up markets into meaningful customer groups ( part), choose which customer groups to serve ( backsideing), arrive at market claimings that best serve targeted customers (differentiation), and positioning the offerings in the minds of consumers (positioning). Then, the chapters that follow explore the tactical selling with entirelysthe Four Psby w hich marketers bring these strategies to life. INTRODUCTION high hat Buy Embracing the Angels and Ditching the Demons. Best Buy position out to identify its best customers and win their loyalty by portion them better. At the alike(p) time, it identifies less(prenominal) attractive customers and began to send them packing. To better differentiate itself in a crowded marketplace, Best Buy needed to adventure out is own turn to identify its best customers and serve them in ways that no discount on online competitor could. Rather than exhausting to make all customers happy all of the time, Best Buy metameric its market and sharpened its positioning.This resulted in what they term customer centricity. How has this worked for Best Buy? Very well. They have designed a customer-driven selling strategy that builds the right relationships with the right customers. Market segmentation involves dividing a market into littler groups of buyers with distinct needs, characteristics, or behav iors that index require separate merchandise strategies or mixes. Market targeting (or targeting) consists of evaluating each market segments attractiveness and selecting maven or more(prenominal) market segments to enter.Differentiation involves actually differentiating the firms market offering to create superior customer photograph to be. localisation consists of arranging for a market offering to operate a clear, distinctive, and desirable place sexual intercourse to competing productions in the minds of target consumers. market place SEGMENTATION Through market segmentation, companies divide heavy(p), heterogeneous markets into weensyer segments that fuck be reached more efficiently and efficaciously with products and gos that match their unique needs. Segmenting Consumer Markets Geographic sectionalisationGeographic segmentation calls for dividing the market into different geographical units such as nations, regions, states, counties, cities, or pull down n eighborhoods. Demographic class 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 are the most popular bases for segmenting customer groups. term and LifeCycle Stage is offering different products or victimization different trade approaches for different age and lifecycle groups.Gender segmentation has long been utilise in clothing, cosmetics, toiletries, and magazines. Income segmentation has long been used by the marketers of products and services such as automobiles, clothing, cosmetics, fiscal services, and travel. Psychographic Segmentation Psychographic segmentation divides buyers into different groups based on social class, life carriage, or personality 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 chemical group buyers according to occasions when they get the idea to buy, actually make their purchase, or use the purchased item. Benefit segmentation is grouping buyers according to the different benefits that they anticipate from the product. User Status is segmenting markets into nonusers, ex-users, potential users, first-time users, and regular users of a product. Usage yard is grouping markets into light, medium, and heavy product users. Loyalty Status is dividing buyers into groups according to their item of loyalty. Using Multiple Segmentation BasesMarketers rarely limit their segmentation synopsis to all one or a few variables. PRIZM NE (one of the wind segmentation systems) classifies both Ameri ordure household based on a host of demographic factors. Segmenting Business Markets Consumer and business marketers use many of the same variables to segment their markets. Bus iness marketers likewise use some additional variables, such as customer operating characteristics, purchasing approaches, situational factors, and personal characteristics. many marketers remember that buying behavior and benefits provide the best basis for segmenting business markets.Segmenting foreign Markets Companies can segment international markets using one or a combination of some(prenominal) variables. * Geographic factors Nations close to one another go forth have many common traits and behaviors. * Economic factors Countries may be sort by population income levels or by their boilersuit level of frugal development. * Political and legal factors Type and stability of government, receptivity to foreign firms, financial regulations, and the amount of bureaucracy. * Cultural factors Grouping markets according to common languages, religions, values and attitudes, customs, and behavioral patterns.Intermarket segmentation is segmenting of consumers who have similar need s and buying behavior even though they are located in different countries. Requirements for Effective Segmentation To be useful, market segments essential be Measurable The size, purchasing power, and profiles of the segments can be measured. Accessible The market segments can be effectively reached and served. comforting The market segments are large or profitable enough to serve. differentiable The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs.Actionable Effective programs can be designed for attracting and serving the segments. MARKET TARGETING Evaluating Market Segments In evaluating different market segments, a firm must look at trio factors 1. Segment size and emergence, 2. Segment morphologic attractiveness, and 3. high society objectives and resources. The largest, fastest-growing segments are not always the most attractive ones for e really gild. The company also needs to examine major structural fa ctors that prompt 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 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 can control prices. Selecting Target Market Segments A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve. Undifferentiated selling Using an undifferentiated marketing (or mass-marketing) strategy, a firm might decide to ignore market segment differences and target the whole market 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 tough marketing (or niche marketing) strategy, instead of going after 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 carefully defined 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 practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Micromarketing includes local marketing and individual marketing. topical anesthetic marketing involves tailoring brands and furtherances to the needs and wants of local customer groupscities, neighborhoods, and even specific stores. Local marketing has drawbacks. It can drive up manufact uring and marketing costs by reducing economies of scale. * It can create logistics problems. * The brands overall enter might be diluted if the product and message vary 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 matched marketing, mass customization, and markets-of-one marketing. Choosing a Targeting system Which strategy is best depends on * Company resources. * Product variability. Products life-cycle stage. * Market variability. * Competitors marketing strategies. Socially liable Target Marketing Target marketing sometimes generates controversy and concern. Issues normally involve the targeting of vulnerable 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 direct media has raised concerns active potential targeting abuses. The issue is not so much who is targeted, entirely how and for what.Controversies arise when marketers onrush to profit when they unfairly target vulnerable segments or target them with impugnable products or tactics. Socially responsible marketing calls for segmentation and targeting that serve not just the inte take a breaths of the company, but also the interests of those targeted. DIFFERENTIATION AND POSITIONING Value proposition How a company 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. Positioning MapsPerceptual positioning constitute show consumer perceptions of their brands versus competing products on important buying dimensions. Choosing a Differentiation and Positioning Strategy The differentiation and positioning task consi sts of three stairs 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 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 Right Competitive Advantages How Many Differences to Promote Ad man Rosser Reeves believes a company should develop a unique selling proposition (USP) for each brand and stick to it. another(prenominal) marketers call back 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 Important The difference delivers a highly valued benefit t o 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 obtain the same benefit. Communicable The difference is communicable and visible to buyers. preemptive Competitors cannot easily copy the difference. Affordable Buyers can afford to pay for the difference. paid The company can introduce the difference profitably. 3. Selecting an Overall Positioning Strategy The full positioning of a brand is called the brands value proposition.More for More positioning involves providing the most upscale product or service and charging a higher price to cover the higher costs. More for the homogeneous positioning involves introducing a brand offering comparable quality but at a lower price. The Same for little positioning can be a powerful value propositioneveryone likes a unspoiled deal. Less for Much Less positioning is offering products that offer l ess 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 sustain such best-of-both positioning. Developing a Positioning disputation 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 elect Position Once it has chosen a position, the company must take strong steps to deliver and communicate the desired position to target consumers. All the companys marketing mix efforts must escort the positioning strategy.Discussing the Issues 1. List and briefly describe 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. describe 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 Technology When you think of hybrid or electric automobiles, you probably think gaint think sports car. But the Fisker Karma is about to shatter that stereotype. Its been called the hybrid with sex appeal and is often compared to a Mercedes-Benz roadster. During the haughty Rolex Monterey past Automobile Races, it was seen cruising around Monterey, California with the likes of Ferraris and Lamborghinis. In the increasingly crowded dramatic art of new-generation electric vehicles, Fisker self-propelled wants to carve out a niche as a high-performance 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 one hundr ed twenty-five miles per hour, and can travel 50 miles on electric power and three hundred 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 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 pursuing with this automobile? How is the company differentiating its automobile and which value proposition is it using? Staying on the Road Marketing Ethics In 2009 Anheuser-Busch launched the develop unobjectionable Fan Can, a promotion that included 27 different colouration combinations of its cans in college team 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 coincide 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 attention of the Federal Trade Commission. Both the FTC and college officials are concerned about the high rate of underage and binge drinking on college campuses. many school officials also were concerned about trademark infringements, and about the way 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 promotion in areas where college officials objected, controversy border th e 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. Rough Road Ahead Marketing and the Economy vanilla Bikes Portland-based vanilla extract Bicycles sells hand-built bikes with price tags ranging from $4,000 to $12,000.Now, after only nine years in business, proprietor Sacha sporty has stopped taking orders not because business had dried up but because he has a five-year waiting list. White and his crew of three make only 40 to 50 bikes a year. Frames are make from exotic metals, are welded with silver alloy, and weigh as little as 30 ounces. No two vanilla bikes are the same. Each is custom fitted to the client and features intricate metal carvings and an artisan 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 extract could ramp up production significantly and still sell everything it makes. However, White claims that would compromise 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. minded(p) that most luxury products suffer in an economic downturn, why has Vanilla still succeeded?