Presentation prepared by Robin Roberts, Griffith University and
Mike Spark, Swinburne University
Technology
Copyright Johnof
Wiley
& Sons 2007
Chapter 5
Target markets: segmentation
and evaluation
Copyright John Wiley & Sons 2007
Chapter Objectives
1. Know what a market is
2. Recognise the major segmentation
variables
3. Know what segment profiles are and how
they are used
4. Understand the differences among
general targeting strategies
5. Understand how to evaluate market
segments
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Chapter Objectives
6. Identify the factors that influence the
selection of specific market segments as
target markets
7. Appreciate the importance of market
positioning for both target marketing and
competitive strategy
8. Understand how current positioning is
measured and interpreted, and the range of
possibilities for re-positioning a company,
product or brand
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What is a market?
A group of people who, as individuals or
organisations, have needs for products in
a product class and have the ability,
willingness and authority to purchase such
products
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Key components for a market?
– Must be a need or desire a particular
product
– Must have the ability to purchase the
product
– Must be willing to use their buying
power to purchase the product
– Must have the authority to buy the
product
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Types of markets
Consumer Markets (B2C)
– Purchasers and household members
– Purchases are for personal consumption
or benefit, not to make a profit
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Types of markets
Business Markets (B2B)
– Individuals and groups that purchase
products for resale, direct use to
produce other products, or use in daily
business operations
– Purchasers can be categorised as
producers, resellers, government and
institutional markets
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The target market selection process
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Describe your target market
Dial-Up
Broadband
Neil Paterson, Director of Sales and Marketing,
Sofitel Hotel, Gold Coast
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Describe your target market
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Bruce White, Director of Marketing, Story Bridge Adventure Climb
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Market segmentation definitions
Market segmentation
is the process of dividing a total
market into groups, or market
segments, consisting of people or
organisations with relatively similar
product needs
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Market segmentation definitions
A market segment
consists of individuals, groups, or
organisations with one or more
similar characteristics that cause
them to have relatively similar
product needs
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Market segmentation at Virgin Blue
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Darren Wright - National Marketing Manager – Virgin Blue
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Market segmentation
Step 1 – Identify segmentation variables
the characteristics of individuals, groups or
organisations used to divide a market into
segments
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Segmentation variables
for consumer markets
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Market segmentation by gender
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Fernwood Women’s Health Club
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Demographic
variables —
Family Life
Cycle
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Variables for segmenting
business markets
• Geographic location
• Type of organisation
• Customer size
• Product use
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Market segmentation
Step 2 – Develop market segment profiles
describe the similarities among
potential customers within a segment,
and explain the differences among
people and organisations in different
segments
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Roy Morgan Value Segments™
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Market targeting
Step 3 – Identify the appropriate targeting
strategy
A target market is a group of people
or organisations for which a business
creates and maintains a marketing
mix specifically designed to satisfy
the needs of group members
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Targeting
strategies
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Market targeting
Step 4 – Evaluate relevant marketing
segments
– Sales estimates,
– Competitive assessment and
– Cost estimates
involved with each segment
are analysed
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Market targeting
Step 5 – Select specific target markets
Are customer needs different enough to
warrant the use of segmentation?
– If not, use the undifferentiated approach
Select target markets that are in line with
corporate objectives, have long-term
potential and match the firm’s resources
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Will Toyota reach the Australian youth
market?
Toyota Camry Sportivo
Dial-Up
Broadband
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Sales forecasts
Sales forecasts are:
The amount of a product a company
expects to sell during a specific period at a
specified level of marketing activities
Developing Sales forecasts –
Categories:
– Executive judgment
– Surveys
– Time Series analysis
– Regression analysis
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– Market tests
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Market positioning
Market positioning
– describes how target market
segments perceive the company’s
offer in relation to competing products
or brands
Company positioning
– reflects how the company as a whole
is perceived — the company’s offer in
relation to other companies
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Market positioning cont’d
Brand positioning
– Describes how individual brands are
perceived by target customers
Competitive positioning
– focuses on the differences between
brands or companies
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Brand positioning
for airlines
(the ‘holidaymaker’
segment)
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Market positioning
•
•
•
Step 6 – Determine the positioning for
each target segment
understand your current positioning, by
conducting market research
perceptual mapping is a common
technique to portray customer
perceptions of how products compete
based on mutual attributes
re-positioning is not an overnight job!
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Market positioning
•
•
Step 7 – Develop a marketing mix for
each target segment
your desired positioning must force your
marketing mix
positioning is determined by your
promise and your performance! It is a
long-term process, requiring lots of
resources
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Chapter 5
Copyright John Wiley & Sons 2007