Marketing Management
After reviewing Chapter 5 from the textbook, post a 500-word synopsis of your understanding of the marketing concepts. In your posting, include questions about any marketing concepts that are unclear.
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Chapter 5
Market Segmentation
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Chapter Outline
Delineate firm’s current situation
Determine consumer needs and wants
Divide markets on relevant dimensions
Develop product positioning
Decide segmentation strategy
Design marketing mix strategy
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Market Segmentation
Process of dividing a market into groups of similar consumers and selecting the most appropriate group or groups for the firm to serve
Target market: Group or segment a company selects to serve
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Figure 5.1: A Model of the Market
Segmentation Process
Jump to
Figure 5.1: A Model of the Market
Segmentation Process, Appendix
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4
Delineate the Firm’s Current Situation
Firms must do a complete situational analysis when embarking on a new or modified marketing program
Aids in determining objectives, opportunities, and constraints to be considered when selecting target markets and developing marketing mixes
Intended to be a reminder of tasks to be performed prior to marketing planning
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Determine Consumer Needs and Wants
Successful marketing strategies depend on discovering and satisfying consumer needs and wants
Consumer needs and wants are translated into operational concepts at a strategic level
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Divide Markets on Relevant Dimensions:
A Priori versus Post Hoc Segmentation
Marketing manager decides on the appropriate basis for segmentation in advance of doing any research on a market
A priori segmentation
People are grouped into segments on the basis of research findings
Post hoc segmentation
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Divide Markets on Relevant Dimensions:
A
Priori versus Post Hoc Segmentation, Appendix
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7
Divide Markets on Relevant Dimensions:
Relevance of Segmentation Dimensions
Managerial expertise and experience are required for selecting the appropriate dimensions or bases on which to segment particular markets
Initial dimensions can be determined from:
Previous research
Purchase trends
Managerial judgment
Consideration and research of sought benefits are a strongly recommended approach in the marketing literature
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Divide Markets on Relevant Dimensions:
Approaches for Segmenting Markets, 1
Benefit segmentation: Focuses on satisfying needs and wants by grouping consumers on the basis of the benefits they are seeking in a product
Psychographic segmentation: Focuses on consumer lifestyles as the basis for segmentation
V A L S: Best-known psychographic segmentation
Explains and predicts consumer behavior
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Divide Markets on Relevant Dimensions:
Approaches for Segmenting Markets, 2
Geodemographic segmentation: Identifies specific households in a market by focusing on local neighborhood geography
Creates classifications of actual, addressable, mappable neighborhoods where consumers live and shop
Example: Nielsen PRIZM
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The United States V A L ST M Framework
Has eight psychographic groups based on two dimensions
Vertical dimension segments people based on the degree to which they are innovative and have resources
Horizontal dimension represents primary motivations for buying
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Figure 5.4: V A L S T M Framework and Segments
Source: Strategic Business Insights; www.strateglcbuslnesslnslghts.comNALS.
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Figure 5.4: V A L S
T M
Framework
and Segments, Appendix
© McGraw-Hill Education
12
Develop Product Positioning, 1
Positioning strategies used
Focusing on the superiority to competitive products
Positioning based on use or application
Targeting particular types of product users
Positioning relative to a product class
Pitching directly against particular competitors
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Develop Product Positioning, 2
Positioning map: Visual depiction of consumer perceptions of competitive products, brands, or models
Used to investigate how to position a product
Constructed by:
Surveying customers about various product attributes
Developing dimensions and a graph indicating the relative position of competitors
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Figure 5.5: Positioning Map for Automobiles
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Figure 5.5: Positioning Map for Automobiles, Appendix
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15
Decide Segmentation Strategy: Alternatives
Deciding not to enter the market
Deciding to be a mass marketer
Deciding to market to one segment
Deciding to market to more than one segment and design a separate marketing mix for each
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Decide Segmentation Strategy: Alternatives, Appendix
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16
Criteria for Segmentation
Viable segments must be:
Measurable: Firms must be capable of measuring their size and characteristics
Meaningful: Segment should have sufficient sales and growth potential to offer long-run profits
Marketable: Segment can be reached and served by the firm in an efficient manner
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Design Marketing Mix Strategy
Selection of target market and designing the marketing mix should go hand in hand
Marketing mix decisions are made in conjunction with target market selection
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APPENDIces
Figure 5.1: A Model of the Market
Segmentation Process, Appendix
The figure contains 6 rectangular boxes placed one below the other. To denote a process, downward pointing arrows are placed at the bottom of each of the boxes, except for the last one. The content in the first box reads delineate firm’s current situation. The content in the second box reads determine consumer needs and wants. The content in the third box reads divide markets on relevant dimensions. The content in the fourth box reads develop product positioning. The content in the fifth box reads decide segmentation strategy. The content in the sixth box reads design marketing mix strategy.
Jump back to
Figure 5.1: A Model of the Market Segmentation Process
© McGraw-Hill Education
Divide Markets on Relevant Dimensions:
A Priori versus Post Hoc Segmentation, Appendix
There are two small rectangular boxes partially overlapping two large rectangular boxes. Each pair of small and large boxes is placed one below the other. The content in the large box explains the term provided in the small box. In the first pair of boxes, the small box is labeled a priori segmentation. The content in the large box reads marketing manager decides on the appropriate basis for segmentation in advance of doing any research on a market. In the second pair of boxes, the small box is labeled post hoc segmentation. The content in the large box reads people are grouped into segments on the basis of research findings.
Jump back to
Divide Markets on Relevant Dimensions:
A
Priori Versus Post Hoc Segmentation
© McGraw-Hill Education
Figure 5.4: V A L ST M Framework
and Segments, Appendix
The figure presents a rectangular box. Two diamond-shaped boxes are superimposed at the center of the top and bottom of the rectangular box. The diamond-shaped box at the top is labeled innovators, and the diamond-shaped box at the bottom is labeled survivors. There are two labels at the top-right corner of the box. The first label reads high resources, and the second label reads high innovation. There are two labels at the bottom-right corner of the box. The first label reads low resources, and the second label reads low innovation. Three vertically elongated rectangles are placed at the center of the rectangular box. Each of the rectangles have two diamond-shaped boxes placed one below the other. The label above the boxes reads primary motivation. Starting from the left, the first rectangle is labeled ideals. The two diamond-shaped boxes in this rectangle are labeled thinkers and believers. The second rectangle is labeled achievement. The two diamond-shaped boxes in this rectangle are labeled achievers and strivers. The third rectangle is labeled self-expression. The two diamond-shaped boxes in this rectangle are labeled experiencers and makers.
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Figure 5.4: V A L S
T M
Framework
and Segments
© McGraw-Hill Education
Figure 5.5: Positioning Map for Automobiles, Appendix
There are two boxes in the image, one small and one large. The small box overlaps the large box. A vertical line and a horizontal line intersect to form a cross within the small box. The lines divide the box into four quadrants. The top of the vertical line is labeled luxurious. The bottom of the vertical line is labeled functional. The left side of the horizontal line is labeled traditional, and the right side of the horizontal line is labeled sporty. There are five points in the top-left quadrant. Starting from the top, the points are labeled Mercedes, Cadillac, Lincoln, Chrysler, and Buick. There are five points in the top-right quadrant. Starting from the top, the points are labeled Lexus, Porsche, B M W, Acura, and Infiniti. There are six points in the bottom-right quadrant. Starting from the top, the points are labeled Chevrolet, Nissan, Toyota, Saturn, V W, and Kia. There are three points in the bottom-left quadrant. The first two points are placed beside each other. They are labeled Mercury and Ford. The third point placed below the point labeled Ford is labeled Dodge.
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Figure 5.5: Positioning Map for Automobiles
© McGraw-Hill Education
Decide Segmentation Strategy:
Alternatives, Appendix
There is a curved line on the left side of the slide. Four circles are placed one below the other over this line. The circles do not contain any text. Each circle is attached to a rectangular box. Starting from the top, the content in the first box reads deciding not to enter the market. The content in the second box reads deciding to be a mass marketer. The content in the third box reads deciding to market to one segment. The content in the fourth box reads deciding to market to more than one segment and design a separate marketing mix for each.
Jump back to
Decide Segmentation Strategy: Alternatives
© McGraw-Hill Education