Marketing Segmentation

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Market Segmentation, Targeting, and Positioning

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

Today’s Topics
After reading this chapter, you should be able to:

1.Explain what market segmentation is and when to use it. 2.Identify the five steps involved in segmenting and targeting markets.

3.Recognize the different factors used to segment consumer and organizational (business) markets. 4.Know how to develop a market-product grid to identify a target market and recommend resulting actions. 5.Explain how marketing managers position products in the marketplace. 6.Describe three approaches to developing a sales forecast for a company.

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

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Market Segmentation, Targeting, and Positioning
‣ Had a good night sleep lately?
‣ 73 percent of people sleep on their side ‣ 22 percent sleep on their back ‣ 5 percent sleep on their stomach ‣ For a simple product like bed pillows, there is not a “one size/one type fits all”

Canadians spend hundreds of millions of dollars yearly on bedding

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

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WHY SEGMENT MARKETS?
‣ What Market Segmentation Means
‣ Market segments ‣ Product differentiation ‣ Segmentation: Linking Needs to Actions ‣ Using Market-Product Grids

Market segmentation involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action. A market-product grid is a framework to relate the market segments of potential buyers to products offered or potential mar-keting actions by the firm.

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

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FIGURE 9-1 Market segmentation - linking market need to an organization’s marketing program

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

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WHY SEGMENT MARKETS?
‣ When to Segment Markets
‣ One Product and Multiple Market Segments ‣ Multiple Products and Multiple Market Segments ‣ Segments of One: Mass Customization

A business firm will go to the trouble and expense of segmenting its markets when this action will increase its profit and return on investment.

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

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Learning Review
Market segmentation involves aggregating prospective buyers into groups that have two key characteristics. What are they? Answer: Market segmentation is the process of aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action.

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

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Learning Review
When should a firm segment its markets?

Answer: When the firm’s expectation is that it will increase its sales, profit, and return on investment, it is normally worthwhile to segment markets.

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

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FIGURE 9-3 The five key steps in segmenting and targeting markets link market needs of customers to the organization’s marketing program.

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

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STEPS IN SEGMENTING AND TARGETING MARKETS
‣ Step 1: Group Potential Buyers into Segments
‣ Criteria to Use in Forming the Segments
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Potential for increased profit Similarity of needs of potential buyers within a segment Difference of needs of buyers among segments Potential of a marketing action to reach a segment Simplicity and cost of assigning potential buyers to segments

A marketing manager should develop segments that meet five key criteria listed here.

© 2011 McGraw-Hill Ryerson Ltd. All rights reserved.

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STEPS IN SEGMENTING AND TARGETING MARKETS
‣ Step 1: Group Potential Buyers into Segments (cont.)
‣ Ways to Segment Consumer Markets
‣ ‣ ‣ ‣
Geographic Segmentation Demographic Segmentation Psychographic Segmentation Behavioural...
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