4. Select one or more segments as target markets (e.g., neophyte photographers, frus-
trated with neccessary adjustments for a 35mm camera, income of $35,000 or more,
family, between 25-45 years of age, male).
5. Develop appropliate action programs to reach target segment(s) (e.g., price at $350;
distribute through discount stores, camera stores, and department stores; promote
through TV and magazine ads). This type of effective action program is demon-
strated in the Newsline that follows.
NEWSLINE: YOUTH SEGMEIV7S
It takes more than j u s t traditional advertising to appeal to the ever-
elUSive teenage market. One company that has discovered the right
formula to reach this group is High Frequency Marketing (HFMJ, a
youth marketing firm founded by Ron Vos. Since its inception in
1995, HFM has grown significantly in terms of cross-industry reach ,
marketing network, and revenue (which has tripled in th e past two
years). Vas attributes the company's success to its unconventional
pfOmotional campaigns.
As a youth marketing start-up, Vas's energies were initially focu s ed
on the music industry. He appealed to his target market of 12- to 26-
year-aids by using grassroots marketing efforts and specializing in
"takin' it to the streets. " Back in 1995, street marketing had not
become the cliche that it is now. Yet. Vas's key to success is the
adaptability of his firm to youth culture and technology. As he likes
t o say, "As soon a s a marketing concept becomes m2instream , it's
history ,"
When asked to pinpoint a breakthrough campaign for his com-
pany, Vos immediately mentions The Wedding Singer. Hired by New
Line Cinema in 1998
promote the film, HFM developed the concept
of a "karaoke jam contest" in the malls of 24 cities The campaign was
immensely successful, opening doors for HFM to the whole entertain -
ment industry.
Another successful campaign took place in 2000, when Food.com
a pproached HFM with the concept of partnering with Second Harvest
(a national food bank) to sponsor a national food drive on college
campuses, using the incentive of awarding the campus that collected
the most food at a big concert. HFM had to go back to the company
and s ay that "you can put a carrot on the end of a stick, but the stick
can't be too lang. " In other words, Food.com needed a more tangible
campaign , something with instant feedback to "show (the students)
that it's real, that it's
Vos and his creative marketing team
came up with a compilation CD entitled "Music 4 Food," whiCh was
distributed free of charge to students who donated food (they also
received a ticket to a nearby concert).
Sources: Debra Goldman . "S&Sr Markets the Tried and True to Teen Boys:
Misogyny," Adweek, May 15, 2000 , p. 24; Jinnefer Gilbert, "New Teen Obses-
sion," Advertising Age, February 14, 2000, p . 38; Chrtstina Merrill, "The Ripple Effect Reaches Gen Y." American Demographics, November 1999, pp. 15- 16 ;
Lauren Goldstein, ''The Alpha Teena ger," Fortune, December 20, 1999, pp.
201-203.
APPROACHING THE MARKET
47
The Concept o f Positioning
Both product diffefentiation and market segmentation result in a perceived position for the
company or organization. From the intelligent marketing organization, there should be an
attempt to create the desired position, rather than wait for it to be created by customers, the
public, or even competitors. Positioning is defined as the act of designing the company's offering and image to occupy a distinctive place in the target market's mind. The end result
of positioning is the successful creation of a market-focused value proposition, a cogent
reason why the target market should buy the product.
Since positioning is a strategy that starts with the product, we expand our discussion
of positioning in the Product Chapter.
The Future of the Marketplace
As the spread of the global marketplace continues , aided by satellites, the World Wide Web,
and univeral problems, it will also become increasingly difficult to effectively assess the
market. In fact, there is solid evidence that the market will often consist of a single person
or company. Customized product design, relationship marketing, and one-on-one market-
ing suggests that mark.eting has gone full circle. Like the first half of the twentieth century, when the comer grocer knew all of his customers personally, marketing in the rest of the
twenty-first century may look very similar.
MARKETING CAPSULE
Bases of segmentation
c. Single-base versus multi-base
a. Ultimate Consumers
d. Qualify people into segments
1. Geographic
1. Clarity of identification
2. Demographics
2. Actual or potential need
3. Usage
3. Effective demand
4. Psychological
4. Economic accessibility
b. Organizations
5. Positive response
1. Type of customer
e. Segmentation process
2. End uses
3. Common buying factors
4. Size and geography
THE WALL STREET JOURNAL.
IN PRACTICE
Journal using key words, company
What is the market? It depends on
names, and industry type. Articles
your product but, generally, all
meeting the criteria you specify will
markets possess similar, basic char-
be listed automatically on a daily
acteristics. The market is people,
basis. Set up your own News folder
either individuals or groups, busi-
now.
nesses or institutions. The market is
In the Favorites section, you
also a place, as in marketplace,
can track regularly running
where transactions take place.
columns and features in the major
Fi nally, the mark et is an economic
sections such as Marketplace and
entity, influenced by financial pres-
Tech Center. Create your own
sures and government regulations.
Favorites folder now.
In order to sell a product, mar-
In the Portfolio section, you
keters must know their market and
can track your
and sales
know it well. Four primary markets
of specific stocks.
exist, but they are not mutually
exclusive. Consumer, industria l,
DELIVERABLE
institutiona l, and reseller markets
Identify three to Lve companies
all have chara cterist ics specific to
with segmented markets. Visit their
thei r consumers, but they also over-
websites for specific information
lap in many instances. As a resull,
about the companies and their
most successful companies segment
products. Also search th e !nterac-
their markets. By segmenting mar-
tive Journal for more in'ormation
kets, a company can match the
about the companies you have
needs and wants of consumers to
identified. For each company, iden-
its produ ct.
tify the segmented market and list
Prin t magazines and their
specific characteristics about that
online counterparts are excellent
market.
examples of market segmenting.
The Interactive Journal targets the
DISCUSSION QUESTIONS
business community, while Outside
1. What are the advantages of
Magazine (www.outsidemag.com).
identifying and selling to seg-
clea rly targets outdoor enthusiasts.
mented markets versus
You are able to customize the
broader, general markets?
Interactive Journal to your per-
2. H ow do companies identify the
sonal preferences. On the Front
market most likely to buy their
Section, click on Personal Journal
products?
on the main menu. From here you
3. Describe why market segment-
will be directed to the Setup
ing helps the companies yOll
Center. H ere, you can create fold-
identified in your Deliverable
ers in three separate areas:
sell their products.
1. News
4. H ow can you use the Tnterac-
2. Favori tes
ti ve JO'lrnal to learn more
3. Portfolio
about markets?
In the News section, you can search
for news items in the Interactive
48
MARKETER'S VOCABULARY
49
SUMMARY
The concept of a market was examined in this chapter. It was defined from three perspectives: people, place, and economic activity. In addition, the four types of markets were discussed. The bulk of this chapter dealt with the two general marketing approaches toward the market: undifferentiated (aggregated) and segmental. The former was defined as the assumption that the market is homogeneous
and developing separate strategies is unnecessary. The latter was defined as the acknowledgement that markets contain sub markets known as segments, which must be evaluated as potential target markets. The remainder of the chapter highlighted various bases for segmenting markets and delineating the criteria emp loyed in assessing the value of a segment.
MARKETER'S VOCABULARY
Market aggregation (undifferentiated marketing)
Treating an entire market uniformly, making
little or no attempt to differentiate marketing effort.
Product differentiation
A marketing strategy that emphasizes distinctive product features with-
out recogn izing diversity of consumer needs.
Market segmentation
Dividing a total market into several submarkets or segments, each of
which is homogeneous in all significant aspects, for the purpose of selecting one or more target markets on which to concentrate marketing effort.
Concentration strategy
Used by an organization that chooses to focus its marketing efforts on
only one market segment.
Multisegment strategy
Used by an organization that chooses to focus its marketing effort on
two or more distinct segments.
Ultimate user
An individual or organization that buys and/or uses products or services for their
own personal consumption.
Industrial user
An organization that buys products or services for use in their own businesses,
or to make other products.
Demographic characteristics
Statistical characteristics of a population often used to segment
markets, such as age, sex, family lifecycle, income, or education.
Usage rate
A segmentation base that identifies customers on the basis of the frequency of use of
a product.
Purchase occasion
A segmen tation base that identifies when they use the product.
User status
A segmentation base that identifies customers on the basis of patterns of use, such as
one-time or regular use.
Loyalty
A segmentation base that identifies customers on the basis of purchase patterns of par-
ticular brands.
Stage of readiness
A segmentation base that identifies customers on the basis of how ready a
customer is to buy.
Psychological segmentation
The use of attitudes, personality, motives, and lifestyle to identify
customers.
Attitude
A predisposition to behave in a certain way to a given stimuli.
Personality
All the traits of a person that make himlher unique.
50