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Chapter 9.docx

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Department
Commerce
Course
COMMERCE 2MA3
Professor
Peter Johnson
Semester
Winter

Description
Chapter 9: Market Segmentation, Targeting, and Positioning Figure 9-2: Market-product grid showing the types of bed pillow segments & relative sizes  Target group: people using sleeping aids; more specifically, people who have problems sleeping  Analysis states: Make pillow more comfortably (understand how people sleep and whether they have different sleeping patterns) o Heart of successful marketing – segmented down  Why segment?? – Because people are different; different people have different needs which require different products due to their needs  Try to cluster potential buyers according to common needs & their responses to marketing programs o Note: You may have ground with common needs but not necessarily the same media or purchasing habits o Thus, not just enough to cluster/segment according to common needs; but also needs to be applied to marketing program  Two basic strategies: Price or product differentiation Why Segment Markets?  Markets segments: groups that result from process of market segmentation; ideally have common needs and respond similarly to a marketing action  Product differentiation: strategy with two different but related meanings. o Broadest meaning involves firm’s using different marketing mix activities to help consumers perceive the product as being different and better than competing products. o Narrower meaning involves a firm’s selling two or more products with different features targeted to different market segments.  Segmentation: Linking Needs to Actions  Using Market-Product Grids o Market-Product Grids: framework to relate segment of a market to products offered or potential marketing actions by the firm 1 Figure 9-1: Market Segmentation links market needs to an org’s marketing program  Identify Market Needs  Process of segmenting and targeting markets  Execute marketing program  Generate awareness, generate trial, and generate re-trial (aim it to build superiority and long- term brand loyalty) When to Segment Markets  One Product and Multiple Market Segments o Example: Johnson & Johnson – repositioned baby products towards adults (cater to diff. segments)  Multiple Products and Multiple Market Segments o Example: Automobiles do this  Segments of One: Mass Customization [difficult to do] o Offer customized products to large scale markets o Extension of the Build-to-Order concept that Dell uses  Alternative segmentation: one product for one company?  Multiple products and different marketing program – needs are too diverse to just cater with one product Figure 9-3: 5 Key Steps in segmenting and targeting markets link market needs of customers to org’s marketing program Before going through these steps, ask:  Is the profit potential significant enough for the cost the company will undertake? (Cost-benefit analysis)  Is it possible to effectively segment? Are their similar segments that exist with similar buyer needs? 2  Is it possible to reach these segments through marketing? [If you can’t, company cannot proceed] Step 1: Group Potential Buyers into Segments  Criteria to Use in Forming the Segments o Potential for increased profit and ROI o Similarity of needs of potential buyers within a segment o Difference of needs of buyers among segments o Feasibility of a marketing action to reach a segment o Simplicity and cost of assigning potential buyers to segments Figure 9-4: Segmentation variables & Breakdowns for Canadian Consumer Markets  Geographic, Demographic, Psychographic & Behavioral  One of the most important variables is usage [falls under behavioral dimensions]  Behavioral – benefits sought and usage rate is very important 3 Figure 9-5: Dimensions used to Segment Canadian Organizational Markets Step 2: Group Products to be sold into Groups Step 3: Develop a Market-Product Grid & Estimate Size of Markets Figure 9-6: Selecting a target market for fast-food restaurant next to an
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