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MARKETING MANAGEMENT 12 th edition 8 Identifying Market Segments and Targets Kotler Keller MARKETING MANAGEMENT 12 th edition 8 Identifying Market Segments and Targets Kotler Keller

Chapter Questions • What are the different levels of market segmentation? • How can Chapter Questions • What are the different levels of market segmentation? • How can a company divide a market into segments? • How should a company choose the most attractive target markets? • What are the requirements for effective segmentation? 2

Mature consumers are a rapidly growing market 3 Mature consumers are a rapidly growing market 3

Effective Targeting Requires… • Identify and profile distinct groups of buyers who differ in Effective Targeting Requires… • Identify and profile distinct groups of buyers who differ in their needs and preferences. • Select one or more market segments to enter. • Establish and communicate the distinctive benefits of the market offering. 4

Ford’s Model T Followed a Mass Market Approach 5 Ford’s Model T Followed a Mass Market Approach 5

Four levels of Micromarketing Segments Niches Local areas Individuals 6 Four levels of Micromarketing Segments Niches Local areas Individuals 6

Segment Marketing Targeting a group of customers who share a similar set of needs Segment Marketing Targeting a group of customers who share a similar set of needs and wants. 7

Flexible Marketing Offerings • Naked solution – Product and service elements that all segment Flexible Marketing Offerings • Naked solution – Product and service elements that all segment members value • Discretionary options – Some segment members value – Options may carry additional charges 8

Figure 8. 1 Basic Market Preference Patterns 9 Figure 8. 1 Basic Market Preference Patterns 9

Niche Marketers Enterprise Rent-a-Car targets the insurancereplacement market 10 Niche Marketers Enterprise Rent-a-Car targets the insurancereplacement market 10

Niche Marketers: Tom’s 11 Niche Marketers: Tom’s 11

The Experience Economy Experience Services Goods Commodity 12 The Experience Economy Experience Services Goods Commodity 12

Customerization Combines operationally driven mass customization with customized marketing in a way that empowers Customerization Combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice. 13

Figure 8. 2 Examples of Market Customization 14 Figure 8. 2 Examples of Market Customization 14

Segmenting Consumer Markets Geographic Demographic Psychographic Behavioral 15 Segmenting Consumer Markets Geographic Demographic Psychographic Behavioral 15

Claritas’ Prizm 16 Claritas’ Prizm 16

Demographic Segmentation Age and Life Cycle Life Stage Gender Income Generation Social Class 17 Demographic Segmentation Age and Life Cycle Life Stage Gender Income Generation Social Class 17

Toyota Scion targets Gen Y consumers 18 Toyota Scion targets Gen Y consumers 18

Figure 8. 3 Profiling American Generations • GI Generation – 1901 -1924 • Silent Figure 8. 3 Profiling American Generations • GI Generation – 1901 -1924 • Silent Generation – 1925 -1945 • Baby Boomers – 1946 -1964 • Generation X – 1965 -1977 • Generation Y – 1978 -1994 • Millenials – 1995 -2002 19

Figure 8. 4 The VALS Segmentation System 20 Figure 8. 4 The VALS Segmentation System 20

Behavioral Segmentation Decision Roles • Initiator • Influencer • Decider • Buyer • User Behavioral Segmentation Decision Roles • Initiator • Influencer • Decider • Buyer • User Behavioral Variables • Occasions • Benefits • User Status • Usage Rate • Buyer-Readiness • Loyalty Status • Attitude 21

Mobil’s 5 Customer Segments 22 Mobil’s 5 Customer Segments 22

Loyalty Status Hard-core Split loyals Shifting loyals Switchers 23 Loyalty Status Hard-core Split loyals Shifting loyals Switchers 23

The Conversion Model Convertible Shallow Users Strongly unavailable Weakly unavailable Average Entrenched Nonusers Ambivalent The Conversion Model Convertible Shallow Users Strongly unavailable Weakly unavailable Average Entrenched Nonusers Ambivalent Available 24

Figure 8. 5 Behavioral Segmentation Breakdown 25 Figure 8. 5 Behavioral Segmentation Breakdown 25

Segmenting for Business Markets Demographic Operating Variable Purchasing Approaches Situational Factors Personal Characteristics 26 Segmenting for Business Markets Demographic Operating Variable Purchasing Approaches Situational Factors Personal Characteristics 26

BB&T Bank’s B-to-B advertising 27 BB&T Bank’s B-to-B advertising 27

Nextel 28 Nextel 28

Models of Sequential Segmentation Stage of decision • First-time prospects • Novices • Sophisticates Models of Sequential Segmentation Stage of decision • First-time prospects • Novices • Sophisticates Orientation • Price-oriented • Solution-oriented • Strategic-value 29

Steps in Segmentation Process Needs-based segmentation Segment identification Segment attractiveness Marketing-Mix Strategy Segment profitability Steps in Segmentation Process Needs-based segmentation Segment identification Segment attractiveness Marketing-Mix Strategy Segment profitability Segment positioning Segment acid test 30

Figure 8. 6 Patterns of Target Market Selection 31 Figure 8. 6 Patterns of Target Market Selection 31

Figure 8. 6 Patterns of Target Market Selection 32 Figure 8. 6 Patterns of Target Market Selection 32

Figure 8. 6 Patterns of Target Market Selection 33 Figure 8. 6 Patterns of Target Market Selection 33

Effective Segmentation Criteria Measurable Substantial Accessible Differentiable Actionable 34 Effective Segmentation Criteria Measurable Substantial Accessible Differentiable Actionable 34

Figure 8. 7 Segment-by-Segment Invasion Plan 35 Figure 8. 7 Segment-by-Segment Invasion Plan 35

Pepsi used megamarketing in India 36 Pepsi used megamarketing in India 36

Marketing Debate ü Is mass marketing dead? Take a position: 1. Mass marketing is Marketing Debate ü Is mass marketing dead? Take a position: 1. Mass marketing is dead. 2. 2. Mass marketing is still a viable way 3. to build a profitable brand. 37

Marketing Discussion ü How would you classify yourself in terms of the various segmentation Marketing Discussion ü How would you classify yourself in terms of the various segmentation schemes? 38