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MRKT 354 (34)
Lecture

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Department
Marketing
Course
MRKT 354
Professor
Greg Libitz
Semester
Fall

Description
why segment markets? a. what market segmentation means market segmentation involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action. this results in groups of people, called market segments, which are a relatively homogeneous collection of prospective buyers. the existence of different market segments causes firms to use a marketing strategy of product differentiation: the firm uses different marketing mix activities to help consumers percieve the product as being different from and better than competing products. 1. segmentation: linking needs to actions a. the definition of market segmentation stresses two things: (1) the importance of aggregating —or grouping — people or organizations in a market according to the similarity of their needs and the benefits they are looking for in making a purchase. (2) the need to relate such needs and benefits to specific tangible marketing actions the firm can take, such as using one or more of the marketing mix factors. b. market segmentation is only a means to an end: marketing actions to satisfy customer needs. 2. using market-product grids a market-product grid is a framework to relate the market segments of potential buyers to products offered or potential marketing actions by the firm. thus, the cells in the grid reveal the approximate size of the market by market segments and product lines. b. when to segment markets a business firm will go to the trouble and expense of segmenting its markets when this action will increase its profit and return on investment. therefore, when its expenses more than offset the potentially increased revenues from segmentation, it should not attempt to segment its markets. the specific situations that illustrate this key point are: one product and multiple market segments — when a firm produces only a single product or service and attempts to sell it to two or more market segments, it avoids the extra cost of developing and producing additional versions of the product. when to segment markets a business firm will go to the trouble and expense of segmenting its markets when this action will increase its profit and return on investment. therefore, when its expenses more than offset the potentially increased revenues from segmentation, it should not attempt to segment its markets. the specific situations that illustrate this key point are: 1. one product and multiple market segments — when a firm produces only a single product or service and attempts to sell it to two or more market segments, it avoids the extra cost of developing and producing additional versions of the product. step 1: group potential buyers into segments. 1. criteria to use in forming the segments. a marketing manager should develop segments that meet five key criteria: a. potential for increased profit and return on invest
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