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Lecture Marketing (11/e): Chapter 9 – Kerin, Hartley, Rudelius

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Chapter 9 - Market segmentation, targeting, and positioning. This chapter explain what market segmentation is and when to use it; identify the five steps involved in segmenting and targeting markets; recognize the bases used to segment consumer and organizational markets; develop a market-product grid to identify a target market and recommend resulting marketing actions.

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McGraw­Hill/Irwin      Copyright  © 2013 by The McGraw­Hill Companies, Inc.  All rights reserved.

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Explain what market segmentation is and when to use it.

LEARNING OBJECTIVES (LO)

AFTER READING CHAPTER 9, YOU SHOULD BE ABLE TO:

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Develop a market-product grid

to identify a target market and recommend resulting actions.

Explain how marketing managers position products in the marketplace.

LO4

LO5

LEARNING OBJECTIVES (LO)

AFTER READING CHAPTER 9, YOU SHOULD BE ABLE TO:

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ZAPPOS.COM’S “WOW” =

SEGMENTS + SERVICE

A Clear Market Segmentation Strategy

Delivering WOW Customer Service

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WHY SEGMENT MARKETS?

WHAT MARKET SEGMENTATION MEANS

LO1

Segmentation: Linking Needs to Actions

The Zappos Segmentation Strategy

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FIGURE 9-1 Market segmentation links

market needs to an organization’s marketing

program through marketing mix actions

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WHY SEGMENT MARKETS?

WHAT MARKET SEGMENTATION MEANS

LO1

Using Market-Product Grids

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FIGURE 9-2 A market-product grid shows

the kind of sleeper that is targeted for each

of the bed pillows with a different firmness

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WHY SEGMENT MARKETS?

WHEN AND HOW TO SEGMENT MARKETS

LO1

One-Size-Fits-All Mass Markets

No Longer Exist

One Product and

Multiple Market Segments

Multiple Products and

Multiple Market Segments

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Sporting News Baseball Yearbook

What market segmentation strategy is used?

LO1

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WHY SEGMENT MARKETS?

WHEN AND HOW TO SEGMENT MARKETS

LO1

Segments of One: Mass Customization

Mass Customization

Build-to-Order (BTO)

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WHY SEGMENT MARKETS?

WHEN AND HOW TO SEGMENT MARKETS

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FIGURE 9-3 The five key steps in

segmenting and targeting markets that link

market needs to a firm’s marketing program

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STEPS IN SEGMENTING AND TARGETING MARKETS

STEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTS

LO2

Criteria to Use in Forming the Segments

Simplicity and Cost-Effectiveness of Assigning Potential Buyers to Segments

Potential for Increased Profit

Similarity of Needs of Potential Buyers Within a Segment

Potential of a Marketing Action to Reach

a Segment

Difference of Needs of Buyers Among Segments

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Ways to Segment Consumer Markets

Geographic Segmentation

Demographic Segmentation

STEPS IN SEGMENTING AND TARGETING MARKETS

STEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTS

LO3

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Ways to Segment Consumer Markets

Psychographic Segmentation

Behavioral Segmentation

Product Features

Usage Rate or Frequency Marketing

80/20 Rule

STEPS IN SEGMENTING AND TARGETING MARKETS

STEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTS

LO3

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MARKETING MATTERS

To Which “Flock” Do You Belong?

LO3

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FIGURE 9-4 Segmentation bases, variables,

and breakdowns for U.S consumer markets

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FIGURE 9-5 Patronage of fast-food

restaurants by adults 18 years and older

Source: Experian Simmons Spring 2011 Full Year NCS/NHCS Choices 3 System Crosstabulation Report:

Based on Visits within the Past 30 Days

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FIGURE 9-6 Comparison of various kinds of

users and nonusers for Wendy’s, Burger

King, and McDonald’s fast-food restaurants

Source: Experian Simmons Spring 2011 Full Year NCS/NHCS Choices 3 System Crosstabulation Report:

Based on Visits within the Past 30 Days

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Faculty & Staff

STEPS IN SEGMENTING AND TARGETING MARKETS

STEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTS

LO3

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STEPS IN SEGMENTING AND TARGETING MARKETS

STEP 1: GROUP POTENTIAL BUYERS INTO SEGMENTS

LO3

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FIGURE 9-7 Segmentation bases, variables,

and breakdowns for U.S organizational

markets

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FIGURE 9-8 Wendy’s new products and

innovations target specific market segments

based on a customer’s gender, needs, or

university affiliation Wendy’s Ad

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STEPS IN SEGMENTING AND TARGETING MARKETS

STEP 2: GROUP PRODUCTS INTO CATEGORIES

Dinner

After Dinner Snack

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STEPS IN SEGMENTING AND TARGETING MARKETS

STEP 3: DEVELOP A MARKET-PRODUCT GRID AND

ESTIMATE THE SIZE OF MARKETS

LO4

Forming a Market-Product Grid

Estimating Market Sizes

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FIGURE 9-9 Selecting a target market for

your Wendy’s fast-food restaurant next to an

urban university (target market is shaded)

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STEPS IN SEGMENTING AND TARGETING MARKETS

STEP 4: SELECT TARGET MARKETS

LO4

Criteria to Use in Selecting

Target Markets

Those That Divide a Market into Segments

Two Types of Criteria

Those That Actually Pick the Target Segments

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STEPS IN SEGMENTING AND TARGETING MARKETS

STEP 4: SELECT TARGET MARKETS

Cost of Reaching the Segment

Compatibility with Organizational Objectives and Resources

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STEPS IN SEGMENTING AND TARGETING MARKETS

STEP 4: SELECT TARGET MARKETS

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STEPS IN SEGMENTING AND TARGETING MARKETS

STEP 5: TAKE MARKETING ACTIONS TO

REACH TARGET MARKETS

LO4

Immediate Wendy’s Segmentation Strategy

Day Commuters

Between-Meal Snacks

Dinners to Night Commuters

Future Strategies for Wendy’s

Keeping an Eye on Competition

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FIGURE 9-10 Advertising actions to market

various meals to a range of possible market

segments of students

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STEPS IN SEGMENTING AND TARGETING MARKETS

STEP 5: TAKE MARKETING ACTIONS TO

REACH TARGET MARKETS

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MARKETING MATTERS

Apple’s Segmentation Strategy—

Camp Runamok No Longer

LO4

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POSITIONING THE PRODUCT

LO5

Identify Important Attributes for a Product or Brand Class

Product Positioning w/ Perceptual Maps

Customers’ Ratings of Competing Products or Brands on These Attributes

Customer’s Ratings of the Company’s Products or Brands on These Attributes

Reposition the Company’s Products or Brands in the Minds of Consumers

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FIGURE 9-A A perceptual map of the

location of beverages in the minds of

American adults

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POSITIONING THE PRODUCT

LO5

A Perceptual Map to Reposition

Chocolate Milk for Adults

Identify Important Attributes for Adult Drinks

Discover How Customers See Chocolate Milk

Reposition Chocolate Milk to Make It More Appealing to Adults

Discover How Adults See Competing Drinks

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FIGURE 9-11 The strategy American dairies

are using to reposition chocolate milk to

reach adults

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PRINCE SPORTS, INC.: TENNIS

RACQUETS FOR EVERY SEGMENT

VIDEO CASE 9

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FIGURE 1 Prince Sports targets racquets at

specific market segments

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VIDEO CASE 9

PRINCE SPORTS

in the environmental forces

(social, economic, technological,

competitive, and regulatory)

(a) work for and (b) work against

success for Prince Sports in the

tennis industry?

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depends heavily on growth of the

tennis industry, what marketing

activities might it use in the U.S

to promote tennis playing?

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VIDEO CASE 9

PRINCE SPORTS

might Prince use to reach

(a) recreational players and

(b) junior players?

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VIDEO CASE 9

PRINCE SPORTS

it gain distribution and sales

in (a) mass merchandisers like

Target and Walmart and

(b) specialty tennis shops?

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VIDEO CASE 9

PRINCE SPORTS

the U.S., (a) what are some criteria

that Prince should use to select

countries in which to market

aggressively, (b) what three or four

countries meet these criteria best,

and (c) what are some marketing

actions Prince might use to reach

these markets?

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Market Segmentation

Market segmentation involves

aggregating prospective buyers

into groups that (1) have common

needs and (2) will respond

similarly to a marketing action.

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Market Segments

Market segments are the

relatively homogeneous groups

of prospective buyers that result

from the market segmentation

process.

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Product Differentiation

Product differentiation is a

marketing strategy that involves

a firm using different marketing

mix activities to help consumers

perceive the product as being

different and better than

competing products.

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Market-Product Grid

A market-product grid is a

framework to relate the market

segments of potential buyers

to products offered or potential

marketing actions by an

organization.

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Usage Rate

Usage rate is the quantity

consumed or patronage (store

visits) during a specific period

Also called frequency marketing.

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80/20 Rule

The 80/20 rule is a concept

that suggests 80 percent of a

firm’s sales are obtained from

20 percent of its customers.

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Product Positioning

Product positioning is the

place an offering occupies in a

consumer’s mind on important

attributes relative to competitive

products.

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Product Repositioning

Product repositioning involves

changing the place an offering

occupies in a consumer’s mind

relative to competitive products.

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Perceptual Map

A perceptual map is a means of

displaying or graphing in two

dimensions the location of products or brands in the minds of consumers to

enable a manager to see how

consumers perceive competing

products or brands, as well as the

firm’s own product or brand.

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