Market Segmentation and Definition of a Target Market

Slide1Market Segmentation

Slide2Market SegmentationDefinition of a Target Market : A sub-group of a larger market chosen as the focal point for a marketing or advertising campaign.

Slide3Market SegmentationThe identification of specific portions of a market and targeting them with specific advertising messages is called  market segmentation. Market segmentation divides the pool of potential customers into segments.

Slide4The STP Marketing Process(Segmenting, Targeting, Positioning) 1. Break the market into smaller, more homogenous segments 2. Specifically target the discrete market segments 3. Position the product or service to appeal to the targeted segments

Slide5Identifying Target Segments:Market Segmentation Demographics Geography Psychographics Lifestyles Benefits Commitment Levels Usage Patterns

Slide6Demographic Segmentation1. Age 2. Gender 3. Race 4. Marital Status 5. Income 6. Education 7. Occupation

Slide7 How would youdescribe the demographic segment targeted by this advertising campaign?  How would you describe the demographic segment targeted by this advertising campaign?

Slide8How about this ad?What is the target demographic for this ad campaign? How about this ad? What is the target demographic for this ad campaign?

Slide9Geographic Segmentation

Slide10Psychographics and LifestyleSegmentation Activities Interests Opinions Lifestyle Lifestyle segmentation provides insight into consumer’s motivations

Slide11One PsychographicSegmentation System

Slide12self orientation--what gives shape, substance, character to consumers’ identitiesResources--Physical, psychological, material, social means at consumers’ disposal

Slide13MAKERS• practical; self-sufficient; like to work with their hands; value things with a functional purpose such as tools and utility vehicles; tend to hunt and fish more than the general population.

Slide14ACHIEVERS• conventional; politically conservative; social lives revolve around family, church and career; work provides status, material success and sense of duty; tend to own swimming pools.

Slide15EXPERIENCERS• young, enthusiastic, seek variety and excitement; into sports and social activities; spend money on fast food, clothes, movies, music; likely to have attended rock concert in past year.

Slide16STRIVERS• money defines success; concerned about opinions of others; trying to find their place in life but may feel unsure of themselves; want to be stylish and own high-status possessions.

Slide17ACTUALIZERS• successful, affluent, active, high self- esteem, interested in expressing themselves in different ways; often leaders yet seek new challenges; tendency for foreign travel, dinner parties and the arts.

Slide18STRUGGLERS• poor, elderly, low education, concerned about health, cautious; may feel resigned and passive about life; worried about security and safety; may not buy much but are loyal to their favorite brands.

Slide19BELIEVERS• conventional, conservative, predictable; strong, fixed beliefs and rules of conduct about church, family, community and nation; modest incomes and education but sufficient to meet their needs.

Slide20FULFILLED• mature, reflective; well educated, well informed and value knowledge; professional occupations; while respecting order, also open to new ideas and change in society; want durability and functionality in what they buy.

Slide21Segmenting by Usage andCommitment • Advertising targeted to: – Heavy users – Nonusers – Brand-loyal users – Switchers/Variety seekers – Emergent Consumers

Slide22Benefit SegmentationPassenger Safety? Prestige? Fuel Economy?

Slide23What psychographicgrouping do you think this ad is aimed at? What psychographic grouping do you think this ad is aimed at?

Slide24TARGET MARKET?

Slide25TARGET MARKET?

Slide26TARGET MARKET?

Slide27TARGET MARKET?

Slide28PART 2:CONSUMER BEHAVIOR WE NOW KNOW WHO THEY ARE. BUT WHAT MOTIVATES THEM?

Slide29CONSUMER BEHAVIORTO INFLUENCE CONSUMERS, WE NEED TO KNOW  WHAT MOTIVATES THEM -PSYCHOLOGICAL FACTORS • NEEDS AND WANTS • PERCEPTIONS • ATTITUDES, VALUES -SOCIAL FACTORS •  CULTURE •  SUB-CULTURE •  FAMILY, PEERS

Slide30Different Views of WhatCauses Motivation Expectancy Theory (degree of pull) Expectancy Theory (degree of pull) Drive Theory  (degree of push)   Drive Theory  (degree of push)   Biological Vs. Learned Needs Biological Vs. Learned Needs Focuses on Biological Needs that Produce Unpleasant States of Arousal, i.e. Hunger. Homeostasis:    Behavior Which Tries to Reduce or Eliminate This Unpleasant State and Return to Balance. Behavior is Largely Pulled by Expectations of Achieving Desirable Outcomes (a Positive Outcome or Absence of Negative) - Pulled Toward the Outcome

Slide31Two Dimensions of Motivation• Motivational Intensity or Strength: – The  amount of push or pull  that motivation exerts on an individual  (e.g., amount of tension, consequences, immediacy).  The Degree to Which a Person is Willing to Expend Energy to Reach One Goal as Opposed to Another. • Motivational Direction: – Particular way  a consumer attempts to reduce motivational tension (eg. how to become wealthy)

Slide32Motivational Direction:Goal Directed Behavior • Positive – Approach e.g., Work out to look and feel healthy • Negative – Avoidance e.g., Work out to avoid being stigmatized socially

Slide33Motivational Direction: Needs vs.Wants Wants The specific  Way a Need is  Satisfied, depends on Individual’s  Unique History ,  Learning Experiences and  Cultural Environment . Needs •   Needs are more fundamental than wants • e.g., How to satisfy hunger?  How to relieve boredom?  How to get interest of sexually attractive person?

Slide34Motivational DirectionUtilitarian Utilitarian Four Types of Needs Four Types of Needs Biogenic Biogenic Psychogenic Psychogenic Hedonic Hedonic

Slide35Marketers Tend to Focus on PsychogenicNeeds • Need for Achievement – Value personal accomplishment • Need for Affiliation – Desire being in the company of other people • Need for Power – Control one’s environment • Need for Uniqueness – Desire to assert one’s individual identity – Examples of products focused on these needs?

Slide36Another Model of Needs:Maslow’s Hierarchy - Holds that Needs Evolve as Society or a Consumer Develops Physiological Safety Social Esteem Self Actualization

Slide37Values--Identify What is Good andDesirable • Values are  higher level motives  that tell us  how desirable a given goal   is  (e.g., beautify the world, comfortable life, self respect). • Cultural values  – values common to one’s culture (e.g., achievement, autonomy, interdependence) • Consumption-specific values  – values related to the process of buying (e.g., convenience, friendly service) • Product-specific values  – values related to a particular product (e.g., flexibility, speed, natural materials, creative)

Slide38POSITIONING• Where is product positioned in the minds of target market with respect to other products? • Head-on (Duracell vs. Energizer) • Brand Dominance (Coke: the real thing) • Product Differentiation (Jolt Cola) • Technical Innovation (Gillette Mach 3) • Lifestyle (any beer, soft drink aimed at you)

Slide39Types of Involvement• Rational  and  emotional  involvement • Rational involvement would be devoid of any affect e.g. Choice of steam iron , the consumer would try to optimise a cost-benefit ration with no emotion or interest toward product category - pleasure is absent • Emotional involvement might include hedonic pleasure eg. Choice of restaurant (Hirschman and Holbrook, 1982)