... CHAPTER 11 Market segmentation YORAM (JERRY) WIND and DAVID R. BELL All markets are heterogeneous. This is evident from observation and from the proliferation of popular books describing the heterogeneity of local and global markets. Consider, for example, The Nine Nations of North America (Garreau, 1982), Latitudes and Attitudes: An Atlas of American Tastes, Trends, Politics and Passions (Weiss, 1994) and Mastering Global Markets: Strategies for Today’s Trade Globalist (Czinkota et al., 2003). When reflecting on the nature of markets, consumer behaviour and competitive activities, it is obvious that no product or service appeals to all consumers and even those who purchase the same product may do so for diverse reasons. The Coca Cola Company, for example, varies levels of sweetness, effervescence and package size according to local tastes and conditions. Effective marketing and business strategy therefore requires a segmentation of the market into homogeneous segments, an understanding of the needs and wants of these segments, the design of products and services that meet those needs and development of marketing strategies, to effectively reach the target segments. Thus focusing on segments is at the core of organizations’ efforts to become customer driven; it is also the key to effective resource allocation and deployment. The level of segment aggregation is an increasingly important issue. In today’s global economy, the ability to customize products and services often...
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...Introduction The process of marketing involves three key functions viz. market segmentation, targeting, and market positioning. Marketing segmentation concept is closely connected with the marketing mix. Market segmentation involves identifying the basis on which market needs to be segmented. Targeting involves selecting the target for segmentation. Positioning involves developing position to target the segments. Market segmentation is about aggregating prospective buyers into groups that have common needs. The groups that result from market segmentation are called market segments. Meaning / what is marketing segmentation? : Markets consist of buyers, and most often than not, these buyers have heterogeneous preferences. Thus, it is impossible for an organization to serve all these buyers with varied needs. Therefore, the notion of market segmentation is introduced. Market segmentation involves the process of identifying segmentation variables, or bases, and developing profiles of resulting segments. By going after segments instead of the whole market, companies have a better chance to deliver value to consumers and to receive rewards for close attention to consumer needs. Compaq, IBM and IPC are multinational companies that have branches worldwide. This is evident from their websites that cater to people from different countries. Compaq serves over 40 countries including Japan, Korea, Sweden, the United Kingdom, and the United States, just to...
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...An assignment about segmentation * Search using the Internet to answer the following questions: 1. Do you think that there are new basis to segment markets. Yes there are new basis to segment markets Types of Segmentation: (1): Single Segmentation (2): Multiple Segmentation (1): Single Segmentation When an organization has a single type of good or service to sell, it may use market segmentation to find which categories of individuals or organizations are most likely to be interested in the product and to find it superior in some way to any competing product. Niche Marketing:- Tailoring the elements of the marketing mix to attract a single market segment. (2) Multiple Segmentation Many organizations today sell multiple versions of a product, each designed to appeal to a different market segment. Differentiated Marketing:- Selling multiple versions of product to different market segment. Ultimate consumers and industrial users: Ultimate consumers:- These users buy and/or use products or services for their own personal or household use. It is also known as “consumer market”. Industrial users: These are business, industrial, or institutional organizations that buy products or services to use in their own businesses. Alternative approaches to market segmentation Some of the alternative approaches to segmentation found in many marketing textbooks and followed by numerous companies around the world are listed below. A brief comment appears for each...
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...Benefit Segmentation: A Dedsion-oriented Research Tool RUSSELL I. HALEY been center M ARKETassegmentation has passessteadily moving towardresearch stage a topic of discussion in marketing and circles. Hardly a conference without at least one session devoted to it. Moreover, in March the American Management Association held a three-day conference entirely concerned with various aspects of the segmentation problem. According to Wendell Smith. "Segmentation l^ based upon developments on the demand side of the market and represents a rational and more precise adjustment of product and marketing effort to consumer or user requirements."^ The idea that all markets can be profitably segmented has now received almost as widespread acceptance as the marketing concept itself. However, problems remain. In the extreme, a marketer can divide up his market in as many ways as he can describe his prospects. If he wishes, he can define a left-handed segment, or a blue-eyed segment, or a German-speaking segment. Consequently, current discussion revolves largely around which of the virtually limitless alternatives is likely to be most productive. According to this ar+icle, mos+ techniques of market segmentation rely only on DESCRIPTIVE factors pertaining to purchasers and are not efficient predictors of future buyer behavior. The author proposes an approach whereby market segments are delineated first on the basis of factors with a CAUSAL relationship to future purchase behavior. The belief underlying...
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... determination of the target market. E. establishment of marketing objectives. 2. A(n) _____ is a document that evolves from an organization's overall corporate strategy and serves as a guide for specific marketing programs and policies. A. strategic marketing plan B. integrated marketing communications plan C. situation analysis D. opportunity analysis E. competitive plan 3. _____ is a detailed assessment of the current marketing conditions facing the company, its product lines, or its individual brands. A. Strategic marketing plan B. Integrated marketing communications plan C. Situation analysis D. Opportunity analysis E. Competitive plan 4. _____ are defined as external areas where there are favorable demand trends, customer needs and wants are not being satisfied, and where a company thinks it can compete effectively. A. Market opportunities B. Market segments C. Competitive advantages D. Market strengths E. Market plans 5. To reach tweens (8-12 year olds), Jell-O brand gelatin marketers introduced X-treme Jell-O in wild berry, green apple, and watermelon flavors. The ads describe the gelatin flavors as "Jell-O with an attitude" because these fruit flavors "will bite you back." Jell-O has defined tweens as: A. part of an undifferentiated market. B. aggregated market. C. a response-stimulus market. D. the mass market for gelatin. E. a market segment. 6. China is the world's second-largest beer market after the U.S. It is...
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...Questions 1. (p. 39-40) Under Armour developed dynamic advertising, sponsorships of sports leagues, a creative Web site and celebrity spokespeople to promote their sports and clothing products. Under Armour is engaged in: A. integrated marketing communications B. a centralized market strategy C. a concentrated market strategy D. an undifferentiated market strategy E. lifestyle segmentation based on sports See opening vignette. 2. (p. 41) According to the marketing and promotions process model, which of the following is NOT a stage in the target marketing process? A. market identification B. promotional decisions C. market segmentation D. positioning through marketing strategies E. target market selection 3. (p. 41) The marketing promotion model includes all of the following major components EXCEPT: A. the organization's marketing strategy and analysis B. the marketing planning program development C. the target marketing process D. the marketing management hierarchy plan E. the target market 4. (p. 41) According to the marketing and promotions process model, the marketing process begins with the: A. development of the marketing mix B. development of a marketing strategy and analysis C. development of the promotional mix D. determination of the target market E. establishment of marketing objectives 5. (p. 42) A(n) _____ is a document that evolves from an organization's overall corporate strategy and serves as a guide for specific marketing...
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... 1 DUE DATE 23/O4/2015 COURSE CODE CUIM 137 INTRODUCTION According to Bruce R Jewel, 2000, he defines marketing as disaggregating the market into discreet groups or segments of customers. There are many different reasons for a business to segment their market. In its simplest form, the needs of individual customers differ, so it makes sense that a business creates separate offers for each segment of the market. This gives customers a better solution (whether it’s a product or a service), and helps raise profitability in the entire business. Market segmentation is also a very effective means of discovering how to reach your customers. If you break down the large market into smaller groups, specific sets of customers – you can target the exact strategies needed to reach each group of customers. This can give you a competitive edge, as you are focused on customer needs, while allowing you to stay on top of the latest trends and opportunities in the market. There are several basis we can use to segment a market. These are the use of geographic segmentation, demographics, psychographics, and...
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...by Russell I. Haley Benefit Segmentation: A Decision-Oriented Research Tool Marketing insight is limited only by the imagination. M arket segmentation has been steadily moving toward center stage as a topic of discussion in marketing and research circles. The idea that all markets can be profitably segmented has now received almost as widespread acceptance as the marketing concept itself. However, problems remain. In the extreme, a marketer can divide up his market in as many ways as he can describe his prospects. If he wishes, he can define a left-handed segment or a blue-eyed segment or a German-speaking segment. Consequently, current discussion revolves largely around which of the virtually limitless alternatives is likely to be most productive. Several varieties of market segmentation have been popular in the recent past. At least three kinds have achieved some degree of prominence: geographic, demographic, and volume segmentation. Perhaps the first type to exist was geographic segmentation. Small manufacturers who wished to limit their investments, or whose distribution channels were not large enough to cover the entire country, segmented the U.S, market, in effect, by selling their products only in certain areas. However, as more and more brands became national, the second major system of segmentation—demographic segmentation—became popular. Under this philosophy, targets were defined as younger people, men, or families with children. Unfortunately, a number of...
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...by Russell I. Haley Benefit Segmentation: A Decision-Oriented Research Tool Marketing insight is limited only by the imagination. M arket segmentation has been steadily moving toward center stage as a topic of discussion in marketing and research circles. The idea that all markets can be profitably segmented has now received almost as widespread acceptance as the marketing concept itself. However, problems remain. In the extreme, a marketer can divide up his market in as many ways as he can describe his prospects. If he wishes, he can define a left-handed segment or a blue-eyed segment or a German-speaking segment. Consequently, current discussion revolves largely around which of the virtually limitless alternatives is likely to be most productive. Several varieties of market segmentation have been popular in the recent past. At least three kinds have achieved some degree of prominence: geographic, demographic, and volume segmentation. Perhaps the first type to exist was geographic segmentation. Small manufacturers who wished to limit their investments, or whose distribution channels were not large enough to cover the entire country, segmented the U.S, market, in effect, by selling their products only in certain areas. However, as more and more brands became national, the second major system of segmentation—demographic segmentation—became popular. Under this philosophy, targets were defined as younger people, men, or families with children. Unfortunately, a number of...
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...Confirming Proofs Chapter 3 Strategic Market Segmentation Segmenting markets is a foundation for superior performance. Understanding how buyers’ needs and wants vary is essential to designing effective marketing strategies. Effective approaches to segmenting markets may be one of the most critical factors in developing and implementing market-driven strategy. The need to improve an organization’s understanding of buyers is escalating because of buyers’ demands for uniqueness and the growing array of technology available to generate products to satisfy these demands. Companies are responding to the opportunities to provide unique customer value with products ranging from customized phone pagers for business users to self-designed, individualized greeting cards for consumers. Indeed, McKinsey research underlines the weakness of thinking about markets only in general terms—talking of market trends, growth markets, mass markets, declining markets, and so on—and collecting information that describes only broad trends, where differences within markets are averaged-out. They point to the identification of opportunities from a deeper understanding of markets at a “granular” level. Market fragmentation and increasing granularity characterize a growing number of markets. The compelling logic of market granularity is that effective strategy can emerge only from a much finer understanding of market segments, their needs, and the capabilities required to serve them.1 Best Buy provides an interesting...
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...Market Segmentation By Jerry W. Thomas W hen the term “market segmentation” is used, most of us immediately think of psycho- A brand could be sold only in one market, one state, or one region of the United States. Many restaurant chains focus on a limited geographic area to achieve concentration of force. Regional differences in consumer preferences exist, and this often provides a basis for geographic specialization. For example, a company might choose to market its redeye gravy only in the southeastern U.S. Likewise, a picante sauce might concentrate its distribution and advertising in the southwest. A chain saw company might only market its products in areas with forests. Geographic segmentation can take many forms (urban versus rural, north versus south, seacoasts versus interior, warm areas versus cold, high-humidity areas versus dry areas, high-elevation versus low-elevation areas, and so on). These examples also reveal that geographic segmentation is sometimes a surrogate for (or a means to) other types of segmentation. The purpose of segmentation is the concentration of marketing energy and force on the subdivision (or the market segment) to gain a competitive advantage within the segment. graphics, lifestyles, values, behaviors, and multivar- iate cluster analysis routines. Market segmentation is a much broader concept, however, and pervades the practice of business throughout the world. What is market segmentation? At its most basic level, the term “market...
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...Segmentation, Targeting and Positioning LEARNING OBJECTIVES After reading, studying and analyzing this chapter, students should be able to understand: 2.1 The interrelationship among market segmentation, targeting, and positioning, and how to select the best target markets. 2.2 The bases used to segment consumers, including demographics, psychographics, product benefits sought and product usage-related factors. 2.3 Behavioral targeting and its key role in today’s marketing. 2.4 How to position, differentiate and reposition products. CHAPTER SUMMARY Learning Objective 2.1: To understand the interrelationship among market segmentation, targeting and positioning and how to select the best target markets. Segmentation is defined as the process of dividing a potential market into distinct subsets of consumers with a common need or characteristic and selecting one or more segments to target with a specially designed marketing mix. Besides aiding in the development of new products, segmentation studies assist in the redesign and repositioning of existing products, in the creation of promotional appeals, and the selection of advertising media. In order to be a viable target market, a segment must be identifiable (by some criteria such as demographics, lifestyles, or others), sizeable (i.e., large enough to be profitable), stable or growing, accessible (i.e., can be reached economically), and congruent with the marketer’s objectives and resources...
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...Without it, the organizations are challenged to achieve market penetration, high growth rate or brand recognition. What we find however, is that in times of economic downturn or slowdown, organizations commonly will sacrifice this line item first with trimming or cut-backs. Many professionals have historically had a hard time seeing the alignment between marketing and continued profitability- viewing this discipline and its related practices as ‘discretionary’. The article ‘rediscovering market segmentation’ focuses on understanding and assessing various aspects of consumer behavior as one of the key factors to effective marketing, sales and customer satisfaction. Once you know your customer segmentation by personality type, you can create personality type. This knowledge of individual preferences related to a respondent’s personality can be leveraged to create more effective marketing campaigns and increase sales. Market segmentation is a marketing strategy that involves dividing a broad target market into subsets of consumers, who have common needs, and then designing and implementing strategies to target their needs and desires using media channels and other touch-points that best allow to reach them. Market segmentation involves dividing up the potential market for a product into groups of people who have similar needs, and then addressing these needs in a focused way. Market segments allow companies to create product differentiation strategies to target them. The concept...
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...menu to attract new target markets while still catering to their existing customer. New promotion will be attract a lot of people and T.G.I Fridays will continue working to create an atmosphere friendly to every race, gender, age and others. Market Segmentation Market segmentation is the process of defining and divide a large heterogeneous market into clearly identifiable segments having similar needs, wants, or demand characteristics. Its objective is to design a marketing mix that just matches the expectations of customers in the targeted segment. Few companies are big enough to supply the need of an whole market, most of them must break down the total demand into segments and choose those that the company is best fit out to handle. Clear identification of the segment, measurability of its valid size, its accessibility through promotional efforts and appropriateness to the policies and resources of the company are the four basic factors that affect market segmentation. In this section, it has four important segmentation topics, it is segmentation consumer markets, segmentation business markets, segmentation international markets, and the requirements for affective segmentation. (Philip Kolter,2010) Segmentation Consumer Markets The segmentation of consumer markets requires the founding of sub-groups from a larger population to more specifically target for them. There is no single way to segment the market. There are essentially dozens of ways that market might be segmented...
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...MARKET SEGMENTATION, TARGETING AND POSITIONING MARKET SEGMENTATION INTRODUCTION: - The market for any product is normally made up of several segments. A ‘market’ after all is the aggregate of consumers of a given product. And, consumer (the end user), who makes a market, are of varying characteristics user and buying behavior. There are different factors contributing for varying mind set of consumers. It is thus natural that many differing segments occur within a market. In order to capture this heterogeneous market for any product, marketers usually divide or disintegrate the market into a number of sub-markets/segments and the process is known as market segmentation. segmentation Thus we can say that market segmentation is the segmentation of markets into homogenous groups of customers, each of them reacting differently to promotion, communication, pricing and other variables of the marketing mix. Market segments should be formed in that way that difference between buyers within each segment is as small as possible. Thus, every segment can be addressed with an individually targeted marketing mix. The importance of market segmentation results from the fact that the buyers of a product or a service are no homogenous group. Actually, every buyer has individual needs, preferences, resources and behaviors. Since it is virtually impossible to cater for every customer’s individual characteristics, marketers group customers to market segments by variables they have in common. These...
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