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Chapter 8.docx

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Department
Business
Course
BUSI 2208
Professor
Irfan Butt
Semester
Winter

Description
Marketing Chapter 8 Segmentation, Targeting and Positioning Step 1: Establish overall strategy or Objectives  First step is to articulate the vision or the objectives of the company’s marketing strategy clearly.  Segmentation strategy must be consistent and derived from the firm’s mission and objectives as well as the firms SWOT Step 2: Profile Segments: Describe the different segments (needs, wants, and characteristics), which help firms better understand the profile of the customers in each segment as well as the customers similarities within a segment and dissimilarities across segments  Geographic Segmentation- The grouping of consumers on the basis of where they live o Grouped by country, city, urban, rural, climate and topography. o Good for companies with products that satisfy needs that vary by region  Demographic Segmentation – The grouping of consumers according to easily measured, objective characteristics such as age, gender, income, and education o Represent most common means to define segments because they are easy to identify  Psychographics – Used in segmentation; delves into how consumers describe themselves; allows people to describe themselves using those characteristics that help them chose how they occupy their time (behaviour) and what underlying psychological reasons determine those choices o Self values: Goals for life, not just the goals one wants to accomplish in a day; refers to overriding desires that drive how a person lives. (Status etc.) o Self-concept: The image a person has of him or herself; a component of psychographics  How the underlying goals affects the individual  A person who has a goal to belong, may see themselves as a fun-loving type that people with to be around o Life styles: Refers to the way a person lives his or her life to achieve goals.  Strong sense of belonging might want to live in a highly populated area  Wants to keep in shape, and in style etc. o VALS: A Psychographic tool developed by SRI consulting Business Intelligence;  Classifies consumers into eight segments  Innovators: successful, emerging business leaders , cultivated taste for finer things  Thinkers: Mature, satisfied like durability and clear value  Believers: Conservative, conventionalists; choose familiar products and established brands  Achievers: Goal-oriented lifestyles, deep commitment to career and family; favour prestige products that demonstrate their success, time saving products  Strivers: Trendy and fun loving, money defines success, favour stylish products, spend as much money as they can  Experiencer’s: Seek variety and excitement. Active socially and in sports, spend high proportion of income on fashion  Makers: Practical people with constructive skills, value self-sufficiency, suspicious of new ideas, prefer value over luxury  Survivors: Believe world is changing quickly, concerned with safety and security, cautious consumers, loyal to favourite brands, love a good deal  Behavioural segmentation: group consumers based on the benefits they derive from products or services, their usage rate, their user status and their loyalty, o Benefit Segmentation: Grouping of consumers on basis of the benefits the derived from products or services- value or benefit customer receives for using product o Loyalty Segmentation: Strategy of investing in loyalty initiatives to retain the firms most profitable customers  Customers who feel so strongly that the firm can meet their needs best that any competitors are virtually excluded from their considerations  Most profitable long term  High cost of finding new customers o Usage Rate/ User Status: Heavy users or light users / current users or ex-users  Using Multiple Segmentation Methods: Companies use a combination of geographic, demographic and lifestyle characteristics called... o Geodemographic Segmentation: The grouping of consumers on the basis of a combination of geographic, demographic, and lifestyle characteristics.  PSYTE Cluster – system groups all neighbourhoods in Canada into 60 different lifestyle clusters with specific locations (page 212)  Geodemographic segmentation can be used particularly be retailers because customers typically patronize stores close to their neighbourhood  Tailor each stores assortment to the preferences of local community Step 3: Evaluate Segment Attractiveness  Identifiable:Firms must determine who is within their market to be able to design products or services to meet their needs o Equally important to ensure that the segments are distinct from one another because too much over-lap between segments means that distinct marketing strategies aren’t necessary to meet segment members needs  Reachable: The best product or service cannot have any impact if the market cannot be reached or accessed through persuasive communications and product distribution o The consumer must know the product exists, understand what it can do for them, and recognize how to buy it  Responsive: The customers must react similarly and positively to the firms offering. o If through the firms distinctive competencies, it cannot provide products to that segment, it should not target it  Substantial and Profitable: Need to measure their size and growth potential o If market is too small or its buying power is insignificant, it won’t generate sufficient profits or be able to support the marketing mix activities Segment Profitability = (Segment size) x (Segment adoption percentage) x (Purchase
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