Industry Segmentation and Competitive Advantage
August 24, 2022 | Author: Anonymous | Category: N/A
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Market Segmentation, Targeting for Competitive Advantage
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What is Market Segmentation?
Market segmentation: The act of dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviors who might require separate products and/or marketing mixes. How does market segmentation differ form product differentiation?
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The Steps in Segmenting a Market
Goal: Identify marketing opportunities
6 steps
Choose a basis or bases for segmenting the market Develop Segment Profiles
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Steps in Segmentation cont’d
Step 3: Develop measure of segment attractiveness
Size, growth, purchase frequency, current brand usage, loyalty and long-term sales/profit potential
Step 4: Select a target segment
Review definition (most likely to buy…) buy…)
Major decision that determines the marketing mix
Step 5: Develop positioning for target segment Step 6: Design, implement, and maintain appropriate marketing mix 4
Levels of Market Segmentation Through Market Segmentation, Companies Divide Large, Heterogeneous Markets Markets into Smaller Segments that Can be Reached More Efficiently And Effectively With Products and Services That Match Their Unique Needs.
Mass Marketing Same product to all (no segmentation, i.econsumers Coca-Cola)
Segment Marketing Different products to one or more segments (some segmentation, i.e. Marriott) 5
Levels of Market Segmentation
Niche Marketing Different products products to subgroups within segments (more segmentation, i.e. Standard or Luxury SUV’s) SUV’s)
Micromarketing Products to suit the tastes of individuals and locations (complete segmentation) Local Marketing
Individual Marketing
Tailoring brands/ promotions to
Tailoring products and programs to
local customer groups, i.e Sears
the needs of individual i.e. Dell customers, 6
Basic Market-Preference Patterns (a) Homogeneous preferences
s s e n i m a e r C
Sweetness
(b) Diffused preferences
(c) Clustered preferences
s s e n i
s s e n i
m a e r C
m a e r C
Sweetness
Sweetness 7
The Segmentation Variables
Geographic Segmentation
Define – – Market Market is divided into geographical units like nations, counties, states, cities, regions etc. Four good reasons to use region: Adapt better to sluggish sluggish or competitive competitive mark markets ets Data (via scanners, etc.) tells us what sells in a region Regional brand preference data Faster to react to competition in a given region
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Demographic Segmentation
Define – – Market Market is divided into groups on the basis of variables such as age, gender, income, ethnic background, education, occupation, religion,race etc.
Age segmentation (know key characteristics)
Importance of 38 million children < 9
Teens- have allowances, allowances, specific preferences Young adults
Baby Boomers
Seniors 9
Demographic Segmentation cont’d
Gender segmentation
Clothing, cosmetics, personal care items, magazines and footwear make heavy use of gender segmentation
Income segmentation
Housing, clothing, cars, and food
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Psychographic Segmentation
Buyers are divided into groups based on the following
variables
Personality – Personality – habits, habits, traits and attitudes
Motives- economy, reliability, dependability – – status-related vs. rational motives Lifestyles- how do you spend your time and what things do you have (i.e. H-D segments)
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Behavioral Segmentation
Dividing the market into groups based on variables such as: Occasions Benefits User status Usage rate Loyalty status Readiness stage
Attitude toward product 12
Usage Rate
Dividing the market by the amount of product bought or consumed
Heavy users, former, potential, first-time, light or irregular, or medium Heavy users account for large % of product sales, so the marketing mix… mix… 80/20 principle – – 20 20 % of all customers generate 80% of the demand
Goal: create a heavy user (frequency/loyalty programs) Reward and retain heavy users
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Effective Segmentation Measurable
Substantial Accessible
Differential
Actionable
• Size, purchasing power, profiles of segments can be measured. • Segments must be large or profitable enough to serve. • Segments can be effectively effective ly reached and served. • Segments must respond differently to different marketing mix elements & & actions. • Must be able to attract and serve the segments. 14
Segmenting Business Markets
Demographics BusinessUse Marketers Many of the Same Consumer Variables, V ariables, Plus:
Operating Variables
Purchasing Approaches Situational Factors Personal Person al Characteristics 15
Table 10-3: Major Segmentation Variables ffor or Business Markets
Demographic 1. Industry: Which industries should we serve? 2. Company size: What size companies should we serve? 3. Location: What geographical areas should we serve? Operating Variables 4. Technology: What customer technologies should we focus on? 5. User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers? 6. Customer capabilities: Should we serve customers needing many or few services? Purchasing Approaches Purchasing-function organization: Should we serve companies with highly centralized or decentralized purchasing organizations? 8. Power structure: Should we serve companies that are engineering dominated, financially dominated, and so on?
7.
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Segmenting Consumer and Business Markets Business buyers seek different benefit bundles based on their stage in the purchase decision process.
1.
First-time prospects
2.
Novices
3.
Sophisticates
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Segmenting Consumer and Business Markets Rackman and Vincentis proposed a
segmentation scheme that classifies business buyers into three groups
Price-oriented customers (transactional selling) Solution-oriented customers (consultative selling) Strategic-value customers (enterprise selling)
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Segmenting International Markets Geographic Location
Cultural Factors
Factors Used to Segment International Markets
Political and Legal Factors
Economic Factors
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Target Market:
Target market: the group of people for whom your company is designing, implementing implementing and a marketing in is order meetmaintaining the needs of that group mix (who mostto likely to buy your product)
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Five Patterns of Target Market Selection Single-segment concentration
Product specialization
Selective specialization
M1 M2 M3
M1 M2 M3 M3
M1 M2 M3
P1
P1
P1
P2
P2
P2
P3
P3
P3 Market specialization
Full market coverage
M1 M2 M3
M1 M2 M3 P = Product M = = Market
P1
P1
P2
P2
P3
P3
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Segment-by-Segment Invasion Plan s Large e computers i t e i r a V Mid-size tcomputers c u d o r Personal Pcomputers
Customer Groups
Airlines
Railroads
Truckers
Company A
Company B
22 C Company
Evaluating Market Segments
Segment Size and Growth
Segment Structural Attractiveness
Analyze current sales, growth growth rates and expected profitability for various segments. Consider effects of: competitors, availability of substitute products and, the power of buyers & suppliers.
Company Objectives and Resources
Company skills & resources needed to succeed in that segment(s). Look for Competitive Advantages.
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Socially Responsible Target Marketing
Smart targeting helps companies and consumers alike. Target marketing sometimes generates controversy and concern.
Disadvantaged and vulnerable can be targeted. Cigarette, beer, and fast-food marketers have received criticism in the past. Internet has come under attack because of the loose boundaries and lack of control in marketing practices.
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