SAMG 1200 Bases for Segmenting consumer Markets Case Study

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DescriptionSAMG 1200 Principles of Marketing Online – Ch 08 Assignment TT
Your Name:
©Rebecca Shand, Instructor 21f
MKTG Ch 08 Assignment
Purpose of this Assignment: To study and apply the concepts of
Segmenting and Targeting Markets
Assignment Instructions:
1) READ and STUDY the Chapter to prepare for this assignment.
2) READ the Case Study associated for this assignment.
3) YOU are required to type your responses using THIS WORD Typing Template – Do Not delete anything
from the template.
4) TYPE your Name at the TOP of the assignment.
5) After you read and study the chapter, type up detailed quality answers to the following questions.
College level writing is expected and required.
6) Make sure the Line Spacing is at least 1.5 before you save it.
7) TURN in by the DUE DATE and Time.
Questions:
1. Segmenting Consumer Markets is a KEY to Marketing, and you need to understand it.
Using your TEXT and the following “Woltersworld” Video do the following:
•
Read your Text ’Bases for Segmenting consumer Markets’
•
Watch the following Video:
VIDEO: How to Segment Your Customers, 10:46 min. (Kind of goofy, but memorable)

•
LIST and DESCRIBE the bases or variables commonly used to segment consumer markets.
i. You should have 5 from the text
ii. You should have 6 from the video (Wolter gives you 1 additional). You should list all 6).
Number them 1-6.
•
List an example with each category.
1)
a) EX:
2)
a) EX:
3)
a) EX:
1|Page
SAMG 1200 Principles of Marketing Online – Ch 08 Assignment TT
©Rebecca Shand, Instructor 21f
4)
a) EX:
5)
a) EX:
6)
a) EX:
FROM THE TEXT:
2. Describe the 4 characteristics of a market. Number them 1-4.
1) .
2) .
3) .
4) .
3. Define a market segment?
•
4. What are the 3 important reasons marketers segment markets? Number them 1-3.
1) .
2) .
3) .
5. List and define each of the 4 criteria for successful market segmentation. Number them 1-4.
1) .
2) .
3) .
4) .
6. List and Describe the 2 bases for segmenting business markets and there importance. Number them 1-2.
1) .
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SAMG 1200 Principles of Marketing Online – Ch 08 Assignment TT
©Rebecca Shand, Instructor 21f
2) .
7. List the 6 steps involved in segmenting markets and briefly define each step. Number them 1-6.
1) .
2) .
3) .
4) .
5) .
6) .
8. Define Target Market. WHY is it important to know this?
Define –
WHY –
9. List and Define the 3 alternative strategies for selecting target markets. Number them 1-3.
1) .
2) .
3) .
10. What is a ‘niche’ market? List an example.
11. How is CRM used as a Targeting Tool? What are the 4 trends in CRM – Number them 1-4?
1) .
2) .
3) .
4) .
12. Define Positioning and Position. First – watch this 1 min. helpful video!
What is positioning in marketing, 1.29 min. Of the Sea, LCC, 2015

3|Page
SAMG 1200 Principles of Marketing Online – Ch 08 Assignment TT
©Rebecca Shand, Instructor 21f
1) .
2) .
13. What is Perceptual Mapping? List the 7 bases of positioning a company may use.
Number
them 1-7.
1) .
2) .
3) .
4) .
5) .
6) .
7) .
14. What is Repositioning? Can you give an example of a product/company that has recently ‘Repositioned’
itself – be detailed and support your example.
Refer to the TEXT, Chapter Case, and Videos to complete the following questions:
Read the Chapter Case found on D2L.
1) Chuck E Cheese’s Commercial 2017 Moms, 1.11 min.

2) About Chuck E. Cheese’s TV Commercial, ‘Out on a School Night’, 30 sec.
https://www.ispot.tv/ad/Av7x/chuck-e-cheeses-out-on-a-school-night
3) Super Bowl ads & Commercials – Chuck E Cheeses Commercial 2016, 1 min.

15. What are the 2 Market Segments Chuck E. Cheese is targeting?
1) .
2) .
16. Which bases or variables of market segmentation is Chuck E. Cheese’s using in its new commercials?
Explain your response.
4|Page
SAMG 1200 Principles of Marketing Online – Ch 08 Assignment TT
©Rebecca Shand, Instructor 21f
17. What type of Alternative Targeting Strategy is Chuck E. Cheese’s new commercial using? Explain your
response.
18. Chuck E. Cheese’s is doing which of the following to compete with pizza chains popular among adults.
Explain your response.
a. positioning
b. targeting
c. differentiating
d. concentrating
19. What have you personally learned and taken away from studying the concepts in this unit of study?
8) How do you turn in assignments?
Face2Face Course: Print and turn in by the due date.
Note: Please do not email assignments to instructor or ask your instructor to print them or try to print them 5
minutes before class. Thank you.
Online Course: DEPOSIT the document into the ASSIGNMENTS under ASSESSMENTS by the DUE DATE and
Time. NOTE: Deposit them at least 10-15 minutes EARLY – D2L will shut down EXACTLY at the CLOSE time.
Computers need TIME to upload and process files.
Manage your time; do not let time manage you.
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MKTG, 13e
Chapter 8: Segmenting and
Targeting Markets
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1
Learning Objectives
By the end of this chapter you should be able to:
1.
Describe the characteristics of markets and market segments
2.
Explain the importance of market segmentation
3.
Discuss the criteria for successful market segmentation
4.
Describe the bases commonly used to segment consumer markets
5.
Describe the bases for segmenting business markets
6.
List the steps involved in segmenting markets
7.
Discuss alternative strategies for selecting target markets
8.
Explain how CRM can be used as a targeting tool
9.
Explain how and why firms implement positioning strategies and how product differentiation
plays a role
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2
8-1Markets and Market
Segments
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3
8-1 Markets and Market Segments (1 of 2)
• Market – people or organizations
with needs or wants and the
ability and willingness to buy
− If any one of these four
characteristics is lacking, it is not a
market.
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4
8-1 Markets and Market Segments (2 of 2)
• Market segment – a subgroup of people or organizations sharing one or more
characteristics that cause them to have similar product needs
• Market segmentation – the process of dividing a market into meaningful,
relatively similar, and identifiable segments or groups
Market
Market
Segment
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5
8-2 The Importance of
Market Segmentation
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6
8-2 The Importance of
Market Segmentation
Market segmentation:
• Plays a key role in the marketing strategy of almost all successful organizations
• Helps marketers define customer needs and wants more precisely
• Leads to a deeper understanding of customer lifestyles, values, jobs to be done, need states,
and buying occasions
• Helps decision makers more accurately define marketing objectives and better allocate
resources
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7
8-3 Criteria for Successful
Segmentation
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8
8-3 Criteria for Successful
Segmentation (1 of 2)
Marketers segment markets for three important reasons:
• Enables marketers to identify groups of customers with similar needs and to analyze the
characteristics and buying behavior of these groups
• Provides marketers with information to help them design marketing mixes specifically matched
with the characteristics and desires of one or more segments
• Aligns with the marketing concept of satisfying customer wants and needs while meeting the
organization’s objectives
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9
8-3 Criteria for Successful
Segmentation (2 of 2)
To be useful, a segmentation scheme must produce segments that meet four basic criteria:
• Substantiality: A segment must be large enough to warrant developing and maintaining a special marketing
mix.
• Identifiability and measurability: Data about the population within geographic boundaries, the number of
people in various age categories, and other social and demographic characteristics are often easy to get,
and they provide fairly concrete measures of segment size.
• Accessibility: The firm must be able to reach members of targeted segments with customized marketing
mixes.
• Responsiveness: Markets can be segmented using any criteria that seem logical. Unless one market
segment responds to a marketing mix differently than other segments, that segment need not be treated
separately.
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10
8-4 Bases for Segmenting
Consumer Markets
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11
8-4 Bases for Segmenting
Consumer Markets (1 of 14)
• Marketers use one or more segmentation bases, or variables, to divide a total
market into segments.
− Segmentation bases (variables) – characteristics of individuals, groups, or organizations
• The choice of segmentation bases is crucial, because an inappropriate
segmentation strategy may lead to lost sales and missed profit opportunities.
• The key is to identify bases that will produce substantial, measurable, and
accessible segments that exhibit different response patterns to marketing mixes.
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12
8-4 Bases for Segmenting
Consumer Markets (2 of 14)
• The current trend is toward using more rather than fewer variables to segment
most markets, because multiple-variable segmentation is clearly more precise
than single-variable segmentation.
• The disadvantages of multiple-variable segmentation are:
− It is often harder to use than single-variable segmentation.
− Usable secondary data are less likely to be available.
− As the number of segmentation bases increases, the size of individual segments decreases.
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13
8-4 Bases for Segmenting
Consumer Markets (3 of 14)
Geographic Segmentation
• Geographic segmentation – segmenting markets by region of a country or the
world, market size, market density, or climate
− Market density refers to the number of people within a unit of land, such as a census tract.
− Climate is commonly used for geographic segmentation because of its dramatic impact on
residents’ needs and purchasing behavior.
• A geographic approach to segmentation allows firms to find ways to grow.
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14
8-4 Bases for Segmenting
Consumer Markets 4 of 14)
Demographic Segmentation
• Demographic segmentation –
segmenting markets by age, gender,
income, ethnic background, and
family life cycle
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15
8-4 Bases for Segmenting
Consumer Markets (5 of 14)
AGE SEGMENTATION
Marketers use a variety of terms to refer to different age groups:
• Parents of babies and young children
• Generation Z
− Born from 1995 to 2015
− Want to work for their success
− Believe that brands need to be real
− Have their own rules and etiquette for social media
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16
8-4 Bases for Segmenting
Consumer Markets (6 of 14)
• Millennials
− 75.4 million people born between 1980 and 1994
− Idealistic and pragmatic
− The most technology-proficient generation ever, so social media and online shopping are
important
− Value trustworthiness, creativity, intelligence, authenticity, and confidence
− Want “experiences”
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17
8-4 Bases for Segmenting
Consumer Markets (7 of 14)
• Generation Xers
− Born between 1965 and 1979
− Often stuck between supporting their aging parents and young children
− Best-educated generation
− Tend to be disloyal to brands and skeptical of big business
− Look for products that give them value for the money and good performance
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18
8-4 Bases for Segmenting
Consumer Markets (8 of 14)
• Baby Boomers
− Born between 1946 and 1964
− Outspend the average consumer in nearly every product category
− Living longer, healthier, and more active and connected lives
− Spend time and money doing whatever is necessary to maintain vitality as they age
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19
8-4 Bases for Segmenting
Consumer Markets (9 of 14)
• Silent Generation
− Born before 1946
− Tend to be cautious, hardworking, and disciplined
− Place significant value on economic resources
− May require some modifications in the products they purchase
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20
8-4 Bases for Segmenting
Consumer Markets (10 of 14)
GENDER SEGMENTATION
• In the United States, women drive 70 to 80 percent of purchases of consumer
goods each year.
• Companies that have traditionally targeted women are now targeting men, and
vice versa.
INCOME SEGMENTATION
• Income level influences consumers’ wants and determines their buying power.
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21
8-4 Bases for Segmenting
Consumer Markets (11 of 14)
ETHNIC SEGMENTATION
• To meet the needs and wants of expanding ethnic populations, some
companies make products geared toward specific ethnic groups.
FAMILY LIFE-CYCLE SEGMENTATION
• Consumption patterns among people of the same age and gender may differ
because they are in different stages of the family life cycle.
− Family life cycle (FLC) – a series of stages determined by a combination of age, marital
status, and the presence or absence of children
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22
8-4 Bases for Segmenting
Consumer Markets (12 of 14)
PSYCHOGRAPHIC SEGMENTATION
• Age, gender, income, ethnicity, FLC stage, and other demographic variables do
not always paint the entire picture.
• Variables can be used individually to segment markets or can be combined with
other variables to provide more detailed descriptions of market segments.
• Psychographic segmentation – segmenting markets on the basis of
personality, motives, lifestyles, and geodemographics
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23
8-4 Bases for Segmenting
Consumer Markets (13 of 14)
• Psychographic variables:
− Personality – a person’s traits, attitudes, and habits
− Motives – emotions and desires that can drive purchasing decisions
− Lifestyles – the way people spend their time, the importance of the things
around them, their beliefs, and socioeconomic characteristics
− Geodemographics – categories based on a combination of neighborhood,
lifestyle, and other demographic variables
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24
8-4 Bases for Segmenting
Consumer Markets (14 of 14)
BENEFIT SEGMENTATION
• Benefit segmentation – the process of grouping customers into market
segments according to the benefits they seek from the product
USAGE-RATE SEGMENTATION
• Usage-rate segmentation – dividing a market by the amount of product bought
or consumed
− This enables marketers to focus their efforts on heavy users.
− 80/20 principle – a principle holding that 20 percent of all customers generate 80 percent of
the demand
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25
8-5 Bases for Segmenting
Business Markets
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26
8-5 Bases for Segmenting
Business Markets (1 of 2)
Market segmentation offers just as many benefits to business marketers as it
does to consumer product marketers.
Company Characteristics
• Examples include geographic location, type of company, company size, and
product use.
• Segmenting by company type allows business marketers to tailor marketing
mixes to the customers’ unique needs.
• Volume of purchase (heavy, moderate, light) is a commonly used basis for
business segmentation.
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27
8-5 Bases for Segmenting
Business Markets (2 of 2)
Buying Processes
• Companies can segment some business markets by ranking key purchasing
criteria, such as price, quality, technical support, and service.
• Business marketers may segment based on two purchasing profiles:
− Satisficers – business customers who place an order with the first familiar supplier to
satisfy product and delivery requirements
− Optimizers – business customers who consider numerous suppliers (both familiar and
unfamiliar), solicit bids, and study all proposals carefully before selecting one
• Marketers may also segment based on buyers’ personal characteristics.
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28
8-6 Steps in Segmenting a
Market
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29
8-6 Steps in Segmenting
A Market (1 of 2)
• The purpose of market segmentation is to identify and adapt to dynamic
marketing opportunities.
• Select a market or product category for study. Define the overall market or
product category to be studied, whether related or totally new.
• Choose a basis or bases for segmenting the market. A successful
segmentation scheme must produce segments that meet the four basic criteria:
people or organizations with needs or wants and the ability and willingness to
buy.
• Select segmentation descriptors. Descriptors identify the specific
segmentation variables to use.
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30
8-6 Steps in Segmenting
A Market (2 of 2)
• Profile and analyze segments. The profile should include the segments’ size,
expected growth, purchase frequency, current brand usage, brand loyalty, and
long-term sales and profit potential.
− This information can then be used to rank potential market segments by profit opportunity,
risk, consistency with organizational mission and objectives, and other factors important to
the firm.
• Select markets. This is a major decision that influences and often directly
determines the firm’s marketing mix.
• Design, implement, and maintain appropriate marketing mixes. (This will be
explored in more detail in Chapters 10 to 19.)
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31
8-7 Strategies for Selecting
Target Markets
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32
8-7 Strategies for Selecting
Target Markets (1 of 7)
• The market segmentation process is only the first step in deciding whom to
approach about buying a product.
• The next task is to choose one or more target markets.
− Target market – a group of people or organizations for which an organization designs,
implements, and maintains a marketing mix intended to meet the needs of that group,
resulting in mutually satisfying exchanges
• If a marketer wishes to appeal to more than one segment of the market, it must
develop different marketing mixes.
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33
8-7 Strategies for Selecting
Target Markets (2 of 7)
Undifferentiated Targeting
• Undifferentiated targeting strategy – a marketing approach that views the
market as one big market with no individual segments and thus uses a single
marketing mix
• A firm that adopts an undifferentiated targeting strategy assumes that individual
customers have similar needs that can be met with a common marketing mix.
• The first firm in an industry sometimes uses an undifferentiated strategy.
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34
8-7 Strategies for Selecting
Target Markets (3 of 7)
• Advantages of Undifferentiated Targeting:
− Potential for saving on production and marketing because only one item is produced
− Marketing costs may be lower
• Disadvantages of Undifferentiated Targeting:
− Potentially sterile, unimaginative product offerings that have little appeal to anyone
− Makes the company more susceptible to competition
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35
8-7 Strategies for Selecting
Target Markets (4 of 7)
Concentrated Targeting
• Concentrated targeting strategy – a strategy used to select one segment of a
market for targeting marketing efforts
− Niche – one segment of a market
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36
8-7 Strategies for Selecting
Target Markets (5 of 7)
• Advantages of Concentrated Targeting:
− Allows a firm to concentrate on understanding the needs, motives, and satisfaction of that
segment’s members
− Can be more profitable than spreading resources over several different segments
− Allows some small firms to better compete with larger firms
• Disadvantages of Concentrated Targeting:
− If chosen segment is too small or if it shrinks or changes, the firm may suffer negative
consequences.
− Large competitors may more effectively market to a niche segment.
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37
8-7 Strategies for Selecting
Target Markets (6 of 7)
Multisegment Targeting
• Multisegment targeting strategy – a strategy that chooses two or more welldefined market segments and develops a distinct marketing mix for each
• Before deciding to use this strategy, firms should compare the benefits and
costs of multisegment targeting to those of undifferentiated and concentrated
targeting.
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38
8-7 Strategies for Selecting
Target Markets (7 of 7)
• Advantages of Multisegment Targeting:
− May lead to greater sales volume, higher profits, larger market share, and economies of
scale in manufacturing and marketing
• Disadvantages of Multisegment Targeting:
− May involve higher costs for product design, production, promotion, inventory, marketing
research, and management
− Potential for cannibalization, which occurs when sales of a new product cut into sales of a
firm’s existing products
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39
8-8 CRM as a Targeting Tool
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40
8-8 CRM as a Targeting Tool (1 of 2)
• Companies that successfully implement CRM tend to customize the goods and
services offered to their customers based on data generated through
interactions between carefully defined groups of customers and the company.
• CRM can allow marketers to target customers with extremely relevant offerings.
• CRM is a huge commitment and often requires a 180-degree turnaround for
marketers who are accustomed to implementing mass-marketing efforts.
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41
8-8 CRM as a Targeting Tool (2 of 2)
There are at least four trends that will lead to the continued growth of CRM:
• Personalization: Consumers want to be treated as the individuals they are,
with their own unique sets of needs and wants.
• Time savings: Consumers want to spend less time making purchase decisions
and more time doing the things that are important to them.
• Loyalty: CRM techniques focus on finding a firm’s best customers, rewarding
them for their loyalty, and thanking them for their business.
• Technology: New technology offers marketers a more cost-effective way to
reach customers and enables businesses to personalize their messages.
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42
8-9 Positioning
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43
8-9 Positioning (1 of 6)
• Positioning – developing a specific marketing mix to influence potential
customers’ overall perception of a brand, product line, or organization in general
− Position – the place a product, brand, or group of products occupies in consumers’ minds
relative to competing offerings
• Positioning:
− Assumes that consumers compare products on the basis of important features
− Requires assessing the positions occupied by competing products, determining the
important dimensions underlying these positions, and choosing a position that will have the
greatest impact
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44
8-9 Positioning (2 of 6)
• Positioning strategies
− Product differentiation – a positioning strategy that some firms use to distinguish their
products from those of competitors
▪
Distinctions between products can be either real or perceived
− Highlighting the similarities to competing products
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45
8-9 Positioning (3 of 6)
Perceptual Mapping
• Perceptual mapping – a means of displaying or graphing, in two or more
dimensions, the location of products, brands, or groups of products in
customers’ minds
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46
Exhibit 8.3 Perceptual Map and Positioning
Strategy for Saks Department Stores
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47
8-9 Positioning (4 of 6)
Positioning Bases
• Firms use a variety of bases for positioning, including the following:
− Attribute: A product is associated with an attribute, product feature, or customer benefit.
− Price and quality: This positioning base may stress high price as a signal of quality or
emphasize low price as an indication of value.
− Use or application: Stressing uses or applications for the product can be an effective
means of positioning it with buyers.
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48
8-9 Positioning (5 of 6)
− Product user: This positioning base focuses on a personality or type of
user.
− Product class: This associates the product with a particular category of
products.
− Competitor: Positioning against competitors is part of any positioning
strategy.
− Emotion: Positioning using emotion focuses on how the product makes
customers feel.
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49
8-9 Positioning (6 of 6)
Repositioning
• Repositioning – changing consumers’ perceptions of a brand in relation to
competing brands
− Products or companies are repositioned in order to sustain growth in slow markets or to
correct positioning mistakes.
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DescriptionSAMG 1200 Principles of Marketing Online – Ch 08 Assignment TT Your Name: ©Rebecca Shand, Instructor 21f MKTG Ch 08 Assignment Purpose of this Assignment: To study and apply the concepts of Segmenting and Targeting Markets Assignment Instructions: 1) READ and STUDY the Chapter to prepare for this assignment. 2) READ the Case Study associated for this assignment. 3) YOU are required to type your responses using THIS WORD Typing Template – Do Not delete anything from the template. 4) TYPE your Name at the TOP of the assignment. 5) After you read and study the chapter, type up detailed quality answers to the following questions. College level writing is expected and required. 6) Make sure the Line Spacing is at least 1.5 before you save it. 7) TURN in by the DUE DATE and Time. Questions: 1. Segmenting Consumer Markets is a KEY to Marketing, and you need to understand it. Using your TEXT and the following “Woltersworld” Video do the following: • Read your Text ’Bases for Segmenting consumer Markets’ • Watch the following Video: VIDEO: How to Segment Your Customers, 10:46 min. (Kind of goofy, but memorable) • LIST and DESCRIBE the bases or variables commonly used to segment consumer markets. i. You should have 5 from the text ii. You should have 6 from the video (Wolter gives you 1 additional). You should list all 6). Number them 1-6. • List an example with each category. 1) a) EX: 2) a) EX: 3) a) EX: 1|Page SAMG 1200 Principles of Marketing Online – Ch 08 Assignment TT ©Rebecca Shand, Instructor 21f 4) a) EX: 5) a) EX: 6) a) EX: FROM THE TEXT: 2. Describe the 4 characteristics of a market. Number them 1-4. 1) . 2) . 3) . 4) . 3. Define a market segment? • 4. What are the 3 important reasons marketers segment markets? Number them 1-3. 1) . 2) . 3) . 5. List and define each of the 4 criteria for successful market segmentation. Number them 1-4. 1) . 2) . 3) . 4) . 6. List and Describe the 2 bases for segmenting business markets and there importance. Number them 1-2. 1) . 2|Page SAMG 1200 Principles of Marketing Online – Ch 08 Assignment TT ©Rebecca Shand, Instructor 21f 2) . 7. List the 6 steps involved in segmenting markets and briefly define each step. Number them 1-6. 1) . 2) . 3) . 4) . 5) . 6) . 8. Define Target Market. WHY is it important to know this? Define – WHY – 9. List and Define the 3 alternative strategies for selecting target markets. Number them 1-3. 1) . 2) . 3) . 10. What is a ‘niche’ market? List an example. 11. How is CRM used as a Targeting Tool? What are the 4 trends in CRM – Number them 1-4? 1) . 2) . 3) . 4) . 12. Define Positioning and Position. First – watch this 1 min. helpful video! What is positioning in marketing, 1.29 min. Of the Sea, LCC, 2015 3|Page SAMG 1200 Principles of Marketing Online – Ch 08 Assignment TT ©Rebecca Shand, Instructor 21f 1) . 2) . 13. What is Perceptual Mapping? List the 7 bases of positioning a company may use. Number them 1-7. 1) . 2) . 3) . 4) . 5) . 6) . 7) . 14. What is Repositioning? Can you give an example of a product/company that has recently ‘Repositioned’ itself – be detailed and support your example. Refer to the TEXT, Chapter Case, and Videos to complete the following questions: Read the Chapter Case found on D2L. 1) Chuck E Cheese’s Commercial 2017 Moms, 1.11 min. 2) About Chuck E. Cheese’s TV Commercial, ‘Out on a School Night’, 30 sec. https://www.ispot.tv/ad/Av7x/chuck-e-cheeses-out-on-a-school-night 3) Super Bowl ads & Commercials – Chuck E Cheeses Commercial 2016, 1 min. 15. What are the 2 Market Segments Chuck E. Cheese is targeting? 1) . 2) . 16. Which bases or variables of market segmentation is Chuck E. Cheese’s using in its new commercials? Explain your response. 4|Page SAMG 1200 Principles of Marketing Online – Ch 08 Assignment TT ©Rebecca Shand, Instructor 21f 17. What type of Alternative Targeting Strategy is Chuck E. Cheese’s new commercial using? Explain your response. 18. Chuck E. Cheese’s is doing which of the following to compete with pizza chains popular among adults. Explain your response. a. positioning b. targeting c. differentiating d. concentrating 19. What have you personally learned and taken away from studying the concepts in this unit of study? 8) How do you turn in assignments? Face2Face Course: Print and turn in by the due date. Note: Please do not email assignments to instructor or ask your instructor to print them or try to print them 5 minutes before class. Thank you. Online Course: DEPOSIT the document into the ASSIGNMENTS under ASSESSMENTS by the DUE DATE and Time. NOTE: Deposit them at least 10-15 minutes EARLY – D2L will shut down EXACTLY at the CLOSE time. Computers need TIME to upload and process files. Manage your time; do not let time manage you. 5|Page MKTG, 13e Chapter 8: Segmenting and Targeting Markets ©2021 Cengage Learning. All Rights Reserved. Maybe notscanned, be scanned, copied duplicated,or orposted posted to website, in whole or inor part. ©2021 Cengage Learning. All Rights Reserved. May not copied or or duplicated, to aa publicly publiclyaccessible accessible website, in whole in part. 1 Learning Objectives By the end of this chapter you should be able to: 1. Describe the characteristics of markets and market segments 2. Explain the importance of market segmentation 3. Discuss the criteria for successful market segmentation 4. Describe the bases commonly used to segment consumer markets 5. Describe the bases for segmenting business markets 6. List the steps involved in segmenting markets 7. Discuss alternative strategies for selecting target markets 8. Explain how CRM can be used as a targeting tool 9. Explain how and why firms implement positioning strategies and how product differentiation plays a role ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2 8-1Markets and Market Segments ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3 8-1 Markets and Market Segments (1 of 2) • Market – people or organizations with needs or wants and the ability and willingness to buy − If any one of these four characteristics is lacking, it is not a market. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 8-1 Markets and Market Segments (2 of 2) • Market segment – a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs • Market segmentation – the process of dividing a market into meaningful, relatively similar, and identifiable segments or groups Market Market Segment ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5 8-2 The Importance of Market Segmentation ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6 8-2 The Importance of Market Segmentation Market segmentation: • Plays a key role in the marketing strategy of almost all successful organizations • Helps marketers define customer needs and wants more precisely • Leads to a deeper understanding of customer lifestyles, values, jobs to be done, need states, and buying occasions • Helps decision makers more accurately define marketing objectives and better allocate resources ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7 8-3 Criteria for Successful Segmentation ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8 8-3 Criteria for Successful Segmentation (1 of 2) Marketers segment markets for three important reasons: • Enables marketers to identify groups of customers with similar needs and to analyze the characteristics and buying behavior of these groups • Provides marketers with information to help them design marketing mixes specifically matched with the characteristics and desires of one or more segments • Aligns with the marketing concept of satisfying customer wants and needs while meeting the organization’s objectives ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9 8-3 Criteria for Successful Segmentation (2 of 2) To be useful, a segmentation scheme must produce segments that meet four basic criteria: • Substantiality: A segment must be large enough to warrant developing and maintaining a special marketing mix. • Identifiability and measurability: Data about the population within geographic boundaries, the number of people in various age categories, and other social and demographic characteristics are often easy to get, and they provide fairly concrete measures of segment size. • Accessibility: The firm must be able to reach members of targeted segments with customized marketing mixes. • Responsiveness: Markets can be segmented using any criteria that seem logical. Unless one market segment responds to a marketing mix differently than other segments, that segment need not be treated separately. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10 8-4 Bases for Segmenting Consumer Markets ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11 8-4 Bases for Segmenting Consumer Markets (1 of 14) • Marketers use one or more segmentation bases, or variables, to divide a total market into segments. − Segmentation bases (variables) – characteristics of individuals, groups, or organizations • The choice of segmentation bases is crucial, because an inappropriate segmentation strategy may lead to lost sales and missed profit opportunities. • The key is to identify bases that will produce substantial, measurable, and accessible segments that exhibit different response patterns to marketing mixes. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12 8-4 Bases for Segmenting Consumer Markets (2 of 14) • The current trend is toward using more rather than fewer variables to segment most markets, because multiple-variable segmentation is clearly more precise than single-variable segmentation. • The disadvantages of multiple-variable segmentation are: − It is often harder to use than single-variable segmentation. − Usable secondary data are less likely to be available. − As the number of segmentation bases increases, the size of individual segments decreases. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13 8-4 Bases for Segmenting Consumer Markets (3 of 14) Geographic Segmentation • Geographic segmentation – segmenting markets by region of a country or the world, market size, market density, or climate − Market density refers to the number of people within a unit of land, such as a census tract. − Climate is commonly used for geographic segmentation because of its dramatic impact on residents’ needs and purchasing behavior. • A geographic approach to segmentation allows firms to find ways to grow. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14 8-4 Bases for Segmenting Consumer Markets 4 of 14) Demographic Segmentation • Demographic segmentation – segmenting markets by age, gender, income, ethnic background, and family life cycle ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15 8-4 Bases for Segmenting Consumer Markets (5 of 14) AGE SEGMENTATION Marketers use a variety of terms to refer to different age groups: • Parents of babies and young children • Generation Z − Born from 1995 to 2015 − Want to work for their success − Believe that brands need to be real − Have their own rules and etiquette for social media ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16 8-4 Bases for Segmenting Consumer Markets (6 of 14) • Millennials − 75.4 million people born between 1980 and 1994 − Idealistic and pragmatic − The most technology-proficient generation ever, so social media and online shopping are important − Value trustworthiness, creativity, intelligence, authenticity, and confidence − Want “experiences” ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17 8-4 Bases for Segmenting Consumer Markets (7 of 14) • Generation Xers − Born between 1965 and 1979 − Often stuck between supporting their aging parents and young children − Best-educated generation − Tend to be disloyal to brands and skeptical of big business − Look for products that give them value for the money and good performance ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18 8-4 Bases for Segmenting Consumer Markets (8 of 14) • Baby Boomers − Born between 1946 and 1964 − Outspend the average consumer in nearly every product category − Living longer, healthier, and more active and connected lives − Spend time and money doing whatever is necessary to maintain vitality as they age ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 19 8-4 Bases for Segmenting Consumer Markets (9 of 14) • Silent Generation − Born before 1946 − Tend to be cautious, hardworking, and disciplined − Place significant value on economic resources − May require some modifications in the products they purchase ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20 8-4 Bases for Segmenting Consumer Markets (10 of 14) GENDER SEGMENTATION • In the United States, women drive 70 to 80 percent of purchases of consumer goods each year. • Companies that have traditionally targeted women are now targeting men, and vice versa. INCOME SEGMENTATION • Income level influences consumers’ wants and determines their buying power. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 21 8-4 Bases for Segmenting Consumer Markets (11 of 14) ETHNIC SEGMENTATION • To meet the needs and wants of expanding ethnic populations, some companies make products geared toward specific ethnic groups. FAMILY LIFE-CYCLE SEGMENTATION • Consumption patterns among people of the same age and gender may differ because they are in different stages of the family life cycle. − Family life cycle (FLC) – a series of stages determined by a combination of age, marital status, and the presence or absence of children ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 22 8-4 Bases for Segmenting Consumer Markets (12 of 14) PSYCHOGRAPHIC SEGMENTATION • Age, gender, income, ethnicity, FLC stage, and other demographic variables do not always paint the entire picture. • Variables can be used individually to segment markets or can be combined with other variables to provide more detailed descriptions of market segments. • Psychographic segmentation – segmenting markets on the basis of personality, motives, lifestyles, and geodemographics ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 23 8-4 Bases for Segmenting Consumer Markets (13 of 14) • Psychographic variables: − Personality – a person’s traits, attitudes, and habits − Motives – emotions and desires that can drive purchasing decisions − Lifestyles – the way people spend their time, the importance of the things around them, their beliefs, and socioeconomic characteristics − Geodemographics – categories based on a combination of neighborhood, lifestyle, and other demographic variables ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 24 8-4 Bases for Segmenting Consumer Markets (14 of 14) BENEFIT SEGMENTATION • Benefit segmentation – the process of grouping customers into market segments according to the benefits they seek from the product USAGE-RATE SEGMENTATION • Usage-rate segmentation – dividing a market by the amount of product bought or consumed − This enables marketers to focus their efforts on heavy users. − 80/20 principle – a principle holding that 20 percent of all customers generate 80 percent of the demand ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25 8-5 Bases for Segmenting Business Markets ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 26 8-5 Bases for Segmenting Business Markets (1 of 2) Market segmentation offers just as many benefits to business marketers as it does to consumer product marketers. Company Characteristics • Examples include geographic location, type of company, company size, and product use. • Segmenting by company type allows business marketers to tailor marketing mixes to the customers’ unique needs. • Volume of purchase (heavy, moderate, light) is a commonly used basis for business segmentation. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 27 8-5 Bases for Segmenting Business Markets (2 of 2) Buying Processes • Companies can segment some business markets by ranking key purchasing criteria, such as price, quality, technical support, and service. • Business marketers may segment based on two purchasing profiles: − Satisficers – business customers who place an order with the first familiar supplier to satisfy product and delivery requirements − Optimizers – business customers who consider numerous suppliers (both familiar and unfamiliar), solicit bids, and study all proposals carefully before selecting one • Marketers may also segment based on buyers’ personal characteristics. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 28 8-6 Steps in Segmenting a Market ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 29 8-6 Steps in Segmenting A Market (1 of 2) • The purpose of market segmentation is to identify and adapt to dynamic marketing opportunities. • Select a market or product category for study. Define the overall market or product category to be studied, whether related or totally new. • Choose a basis or bases for segmenting the market. A successful segmentation scheme must produce segments that meet the four basic criteria: people or organizations with needs or wants and the ability and willingness to buy. • Select segmentation descriptors. Descriptors identify the specific segmentation variables to use. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 30 8-6 Steps in Segmenting A Market (2 of 2) • Profile and analyze segments. The profile should include the segments’ size, expected growth, purchase frequency, current brand usage, brand loyalty, and long-term sales and profit potential. − This information can then be used to rank potential market segments by profit opportunity, risk, consistency with organizational mission and objectives, and other factors important to the firm. • Select markets. This is a major decision that influences and often directly determines the firm’s marketing mix. • Design, implement, and maintain appropriate marketing mixes. (This will be explored in more detail in Chapters 10 to 19.) ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 31 8-7 Strategies for Selecting Target Markets ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 32 8-7 Strategies for Selecting Target Markets (1 of 7) • The market segmentation process is only the first step in deciding whom to approach about buying a product. • The next task is to choose one or more target markets. − Target market – a group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges • If a marketer wishes to appeal to more than one segment of the market, it must develop different marketing mixes. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 33 8-7 Strategies for Selecting Target Markets (2 of 7) Undifferentiated Targeting • Undifferentiated targeting strategy – a marketing approach that views the market as one big market with no individual segments and thus uses a single marketing mix • A firm that adopts an undifferentiated targeting strategy assumes that individual customers have similar needs that can be met with a common marketing mix. • The first firm in an industry sometimes uses an undifferentiated strategy. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 34 8-7 Strategies for Selecting Target Markets (3 of 7) • Advantages of Undifferentiated Targeting: − Potential for saving on production and marketing because only one item is produced − Marketing costs may be lower • Disadvantages of Undifferentiated Targeting: − Potentially sterile, unimaginative product offerings that have little appeal to anyone − Makes the company more susceptible to competition ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 35 8-7 Strategies for Selecting Target Markets (4 of 7) Concentrated Targeting • Concentrated targeting strategy – a strategy used to select one segment of a market for targeting marketing efforts − Niche – one segment of a market ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 36 8-7 Strategies for Selecting Target Markets (5 of 7) • Advantages of Concentrated Targeting: − Allows a firm to concentrate on understanding the needs, motives, and satisfaction of that segment’s members − Can be more profitable than spreading resources over several different segments − Allows some small firms to better compete with larger firms • Disadvantages of Concentrated Targeting: − If chosen segment is too small or if it shrinks or changes, the firm may suffer negative consequences. − Large competitors may more effectively market to a niche segment. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 37 8-7 Strategies for Selecting Target Markets (6 of 7) Multisegment Targeting • Multisegment targeting strategy – a strategy that chooses two or more welldefined market segments and develops a distinct marketing mix for each • Before deciding to use this strategy, firms should compare the benefits and costs of multisegment targeting to those of undifferentiated and concentrated targeting. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 38 8-7 Strategies for Selecting Target Markets (7 of 7) • Advantages of Multisegment Targeting: − May lead to greater sales volume, higher profits, larger market share, and economies of scale in manufacturing and marketing • Disadvantages of Multisegment Targeting: − May involve higher costs for product design, production, promotion, inventory, marketing research, and management − Potential for cannibalization, which occurs when sales of a new product cut into sales of a firm’s existing products ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 39 8-8 CRM as a Targeting Tool ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 40 8-8 CRM as a Targeting Tool (1 of 2) • Companies that successfully implement CRM tend to customize the goods and services offered to their customers based on data generated through interactions between carefully defined groups of customers and the company. • CRM can allow marketers to target customers with extremely relevant offerings. • CRM is a huge commitment and often requires a 180-degree turnaround for marketers who are accustomed to implementing mass-marketing efforts. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 41 8-8 CRM as a Targeting Tool (2 of 2) There are at least four trends that will lead to the continued growth of CRM: • Personalization: Consumers want to be treated as the individuals they are, with their own unique sets of needs and wants. • Time savings: Consumers want to spend less time making purchase decisions and more time doing the things that are important to them. • Loyalty: CRM techniques focus on finding a firm’s best customers, rewarding them for their loyalty, and thanking them for their business. • Technology: New technology offers marketers a more cost-effective way to reach customers and enables businesses to personalize their messages. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 42 8-9 Positioning ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 43 8-9 Positioning (1 of 6) • Positioning – developing a specific marketing mix to influence potential customers’ overall perception of a brand, product line, or organization in general − Position – the place a product, brand, or group of products occupies in consumers’ minds relative to competing offerings • Positioning: − Assumes that consumers compare products on the basis of important features − Requires assessing the positions occupied by competing products, determining the important dimensions underlying these positions, and choosing a position that will have the greatest impact ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 44 8-9 Positioning (2 of 6) • Positioning strategies − Product differentiation – a positioning strategy that some firms use to distinguish their products from those of competitors ▪ Distinctions between products can be either real or perceived − Highlighting the similarities to competing products ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 45 8-9 Positioning (3 of 6) Perceptual Mapping • Perceptual mapping – a means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers’ minds ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 46 Exhibit 8.3 Perceptual Map and Positioning Strategy for Saks Department Stores ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 47 8-9 Positioning (4 of 6) Positioning Bases • Firms use a variety of bases for positioning, including the following: − Attribute: A product is associated with an attribute, product feature, or customer benefit. − Price and quality: This positioning base may stress high price as a signal of quality or emphasize low price as an indication of value. − Use or application: Stressing uses or applications for the product can be an effective means of positioning it with buyers. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 48 8-9 Positioning (5 of 6) − Product user: This positioning base focuses on a personality or type of user. − Product class: This associates the product with a particular category of products. − Competitor: Positioning against competitors is part of any positioning strategy. − Emotion: Positioning using emotion focuses on how the product makes customers feel. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 49 8-9 Positioning (6 of 6) Repositioning • Repositioning – changing consumers’ perceptions of a brand in relation to competing brands − Products or companies are repositioned in order to sustain growth in slow markets or to correct positioning mistakes. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 50 Purchase answer to see full attachment

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