Chapter 6 Market Segmentation and the Marketing Mix: Determinants of Advertising Strategy William F. Arens McGraw-Hill/Irwin Michael F. Weigold Christian Arens Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Charles Finney (1792-1875) Chapter Overview How marketers use behavioral characteristics to cluster perspective customers into market segments 6-3 Chapter Objectives Define market segmentation and describe its purposes Explain the target marketing process Show how IMC is used with the product element in marketing Illustrate how IMC is used with the price element in marketing Review how IMC is used with the place element in marketing Discuss how IMC is used with the communication element in marketing 6-4 Old Spice/W+K Isaiah Mustafa – Shower Isaiah Mustafa – Scent New Old Spice Guy Fabio Terry Crews 6-5 The Market Segmentation Process 1. Identify people with shared needs and characteristics 6-6 The Market Segmentation Process 1. Identify people with shared needs and characteristics 2. Aggregate these groups into market segments according to their mutual interest in the product’s utility 6-7 Q. 1. Define Market Segmentation. The Market Segmentation Process 1. The division of the market into homogenous groups 2. Aggregate these groups into market segments according to their mutual interest in the product’s utility Shared Characteristics Categories Behavioristic Demographic Geographic Psychographic 6-9 Segmenting Consumer Markets 6-10 Q. 2. What are the four bases for segmenting markets? Behavioristic Segmentation User-Status Purchase-Occasion Sole Users Semi-Sole Users Discount Users Aware Non-triers Trial/Rejectors Repertoire Users Usage-Rate Volume Segmentation Benefits-Sought Benefit Segmentation 6-12 Market Segmentation User status: Mammut ad targets its repertoire users who are concerned with quality Insert photo 6.4, p. 171 Mammut ad Position = 2.9“ horizontal, 1.5“ vertical Size = 5.7” WIDE Resolution = 300 dpi 6-13 Market Segmentation Purchase occasion: Columbia seasonal gear ad Insert photo 6.5, p. 172 Columbia sportswear ad Position = 2.9“ horizontal, 1.5“ vertical Size = 5.7” WIDE Resolution = 300 dpi 6-14 Geographic Segmentation Sales are analyzed by: Region Country size City size Zip code Types of stores 6-15 Demographic Segmentation 6-16 Demographic Segmentation 6-17 Psychographic Segmentation Feelings Values Lifestyles Personality Attitudes 6-18 Market Segmentation Adidas captures attitude and lifestyle 6-19 Target Market Selection HarleyDavidson ad appeals to likely customers who want to stand out in the ordinary 6-20 Insert photo 6.10, p. 186 Harley-Davidson ad Position = 2.9” horizontal, 1.5” vertical Size =5.7” WIDE Resolution = 300 dpi 6-20 Psychographic Segmentation 6-21 Psychographic Segmentation 10 values shared by people around the world 6-22 Psychographic Segmentation MindBase finds shared patterns of behavior 6-23 Segmentation Profile Our customer is: Male who lives in the East In an urban city of 1 million people Young, married (ages 35-49) with a child Annual income between $50,000 - $100,000 Is a college graduate who is a professional Is white, upper lower class, ambitious Sports minded and brand conscious 6-24 Business, Government, & Industry Professional buyers Differences from Consumer Markets Many purchase decision factors Concentrated geographically Small number of buyers Categorized by NAICS code 6-25 Business, Government, & Industry 6-26 Market Concentration Note the importance of the Midwest and California to manufacturing marketing 6-27 Aggregating Market Segments Select Groups Interested in Public Utility Whole market Specific market Combine Groups to Build Target Market Segments Homogeneous Profit Potential 6-28 Defining the Target Market 6-29 The Target Marketing Process 1. Select a target market from the market segments identified 2. Use the 4Ps of the marketing mix to shape a product concept for the market Product Price Place Promotion 6-30 Target Market Segments New Empty Nest Young Influentials Park Bench Seniors New Beginnings Movers & Shakers Bohemian Mix Home Sweet Home 6-31 Q. 3. Define Product Concept. Product Concept Consumer’s perception of a product as a bundle of utilitarian and symbolic values that satisfy functional, social, psychological, and other wants and needs. 6-33 Q. 4. Explain the relationship between advertising and the Product element of the marketing mix. Product Life Cycles 6-35 The Product Element Classification by… Positioning Market Own a word Consumption rate Benefits offered Tangibility Market segment appeal Buying habits Classification Physical description Differentiation 6-36 The Product Element Volvo positions itself as owning safety 6-37 The Product Element Differentiation Perceptible Hidden Induced 6-38 Product Branding Goal is brand loyalty Product Name Words Design Symbols Individual Family National Private Licensed 6-39 The Product Element World’s most valuable brands http://www. businesswe ek.com/ma gazine/toc/ 06_32/B39 9606global brands.htm Insert ex. 6.14, p. 193 World’s most valuable brands Position = 2.9” horizontal, 1.5” vertical Size = 5.7” WIDE Resolution = 300 dpi 6-40 The Most Valuable Brands 6-41 Product Packaging Identification Consumer appeal Containment, protection, convenience Economy These functions may become copy points 6-42 Q. 5. Explain the relationship between advertising and the Price element of the marketing mix. The Price Element Price Factors: Demand Production & distribution costs Competition Corporate goals & strategies Variable influences 6-44 Q. 6. Explain the relationship between advertising and the Place element of the marketing mix. The Place (Distribution) Element Direct Indirect Vertical Network Intensive Franchises Buyer Club Selective Exclusive 6-46 Q. 7. Explain the relationship between advertising and the Promotion element of the marketing mix. The Promotion Element Personal Selling Direct Marketing Public Relations Product Advertising Communication Mix Sales Promotion Collateral Materials 6-48 Hardees Commercial