Segmentation is taking the entire market and breaking it down into smaller groups that share similar characteristics. This is discussed in more depth

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5 Segmentation is taking the entire market and breaking it down into smaller groups that share similar characteristics. This is discussed in more depth on the next slide. 5

6 Homogeneous Members of a particular segment must be similar in their attitudes, behaviors, financial, etc. Heterogeneous Groups must be different from other groups. Substantial Groups must be of sufficient size to warrant special marketing efforts. This does not mean that there has to be a large number of consumers, as a small group in sheer numbers can be profitable (there are relatively few buyers of Rolls- Royce automobiles, but at an average price of $300,000 selling a limited number still generates good profits for the company. Identifiable Marketers must be able to identify group members and non-group members. Marketers must also be able to measure how many members of a group there are. Responsive React in a similar manner to market offerings. 6

7 Manufacturers, such as Proctor and Gamble, would prefer to market a single product (such as Tide) to the entire market. While this is the most efficient method, not all buyers will have the same desires and needs. 7

8 To be more effective with their marketing, manufacturers use segmentation to determine the different needs and develop products that address those needs. Here P&G markets multiple formulations of laundry detergents, each appealing to different market segment. 8

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10 There are various ways to segment a market including those listed here. Family life cycle is discussed on the next slide. 10

11 Automobiles are excellent examples of life-cycle segmentation as students can relate to some degree. When young adults get their first cars, they are usually older models in need to constant repair. After graduation one of the first purchases they wish to make is a new vehicle (car manufacturers are well aware of this and offer discounts to new graduates). Then they get married and have children, which requires more space (a mini-van). Then the children have set out on their own they move up to a luxury automobile. 11

12 Marketers also use psychographic variables to segment the population. Consumers who share similar lifestyles and/or interests often have the same wants/needs in the products they buy. Not only does psychographic segmentation help in product development, but is also used in determining which advertising media to use. For example, hobby magazines provide a very specialized audience. 12

13 Consumers who exhibit similar behaviors will also have similar needs and wants. As mentioned earlier on, family life cycle, new graduates, newly married, new parents, etc. all have similar needs. Understanding how the events in life shape behavior allows marketers to address consumer needs. Heavy users of a product have different perceptions on a product category than do light users. Companies may respond to the needs of heavy users by providing bulk purchasing options (168 oz packages instead of 64 oz packages). 13

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16 A marketer may not select the largest audience, but rather seek to find the most profitable segment to enter. 16

17 Segments can be targeted in one of four ways: Undifferentiated, where the market is treated as a whole; Differentiated, where segments are separated and a unique product is tailored to each segment; Niche, where a small, but well-defined segment is the focus of a company s marketing efforts; Micro, where each individual is offered a customized solution, or product. 17

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20 In positioning, companies seek to develop a unique selling proposition, which is the distinct aspects that set the brand apart from competitors. 20

21 Functional positional is based on the attributes and benefits that set one product apart from another. For example, Domino s took over the pizza delivery market by positioning themselves on attributes that resonated with consumers: Fresh, Hot, and Fast (delivered in 30 minutes or less). Symbolic positioning relates to how a brand can enhance a customer s self-esteem, ego, and social belonging. Many personal care products use this type of positioning. Experiential positioning Involves connecting with customers through emotional and sensory stimulation. Personal experiences allow consumers to connect with a brand in ways stronger than merely informing consumer about the features of a product. Making connections with consumers becomes more difficult as advertising messages proliferate. Experiential marketing helps company s cut through the clutter by connecting in new and unique ways. 21

22 Perceptual Maps help managers understand the market by identifying the beliefs and attitudes consumers have about brands in a product category. By undertaking the task of creating a perceptual map, managers may find an opening for a new product, or allow for a current product to be repositioned. 22

23 There are various ways a brand can be positioned into the minds of the target market. No matter what the positioning strategy, it must conform to the above elements. 23

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