January 25, 2012
Chapter 6: Segmentation and Targeting
How are market segments identified from the data?
- Finding best way to describe the market from the data
- Statistical approaches
- i.e. Harley-Davidson – female buyers now account for 13% of new Harley-
Davidson purchases, new market could be emerging
Where is the product image located?
- In the mind of the consumer
- Issue of objective and subjective properties of the product (Chapter 7)
Why is repositioning relatively rare?
- Gives up brand image that has been carefully cultivated over time
- i.e. McDonalds trying to reposition themselves as a classy restaurant
- Consumers have diverse needs
- Companies need to concentrate their resources and money efficiently
- Involves aggregating prospective buyers into groups that have common
needs and respond similarly to marketing programs
2 main market segments:
1. A consumer market consists of products, ideas and services that a person can
purchase for personal use
2. A business market consists of products that are purchased either to run a
business or to be used as a component in another g/s
Product differentiation – positioning a product apart from the competition in the
eyes of consumers (like adding a unique feature o minimizing all costs to provide a
Forms of Marketing Segmentation
- Marketing to the entire market with no differentiation
- Ignoring differences with a one-size-fits-all offer
- i.e. refined white sugar, propane
- Designing different g/s to meet the needs of different target groups
- Caters to the specific product needs of individual target markets but also has
its own marketing programs to nsure that each target groups’ needs are
- Followed by companies in the business-to-business market
- i.e. Kellogg’s cereal, Toyota (Yaris, Corolla, RAV4) January 25, 2012
- Focusing on a limited segment in the market
- i.e. Kashi cereal, Sabian (Medictic, NB)
- Use of technology to allow marketers to use database technology to track and
predict future purchases
- To offer customized offers and products
- i.e. amazon.ca, Starbucks app for smartphones, store locator feature
The key to successful product differentiation and market segmentation strategies is
finding a balance between satisfying a customer’s individual wants and being able to
do this profitably.
Steps in Market Segmentation:
1. Review company objectives
2. Identify consumer needs and common characteristics in the market
a. What drives the category?
b. What future trends are evolving?
3. Cluster consumer variables to create meaningful market segments