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Lecture

Chapter 7 Mark.docx

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Department
Marketing
Course
MKT 100
Professor
benbarry
Semester
Winter

Description
Chapter 7 The Segmentation-Targeting-Positioning Process Step 1: Establish Overall Strategy or Objectives - articulate the mission and the objectives of the company's marketing strategy clearly - must then be consistent with and derived from the firm's mission and objectives, as well as its current situation—SWOT Step 2: Segmentation Base - this step develops descriptions of the different segments, their needs, wants, and characteristics, which helps firms better understand the profile of the customers in each segment - with this they can distinguish the customer similarities within a segment and dissimilarities across segments - Marketers use various segmentation bases, including geographic, demographic, psychographic, and behavioural, or a combination Geographic Segmentation - organizes customers into groups on the basis of where they live - could be grouped by country, region, areas within a region – province, city, neighbourhoods, area codes, or by climate - firms can provide the same basic goods or services to all segments even if they market globally or nationally; but, better marketers make adjustments to meet the needs of smaller geographic groups Demographic Segmentation - groups consumers according to easily measured, objective characteristics such as age, gender, income, education, race, occupation, religion, marital status, family size, family life cycle, and home ownership - most common means to define segments because they are easy to identify - not all firms can segment using demographics – eg activewear – all ages, incomes, etc wear it, even inactive people – stereotyping could lead to poor STP strategies - marketers may find it more advantageous to combine demographic segmentation with other segmentation bases Psychographic Segmentation - This segmentation base investigates into how consumers describe themselves; allows people to describe themselves by using those characteristics that help them choose how they occupy their time (behaviour) and what underlying psychological reasons determine those choices. - involves knowing and understanding three components: self-values, self- concept, and lifestyles - Self Values: life goals, not just the goals one wants to accomplish in a day - they refer to overriding desires that drive how a person lives his or her life; e.g. self-respect, self-fulfillment, or a sense of belonging - Self-Concept: The image a person has of himself or herself - Lifestyles: the way a person lives his or her life to achieve goals; eg lululemon built around a lifestyle - VALS: A psychographical tool offered by Strategic Business Insights that classifies consumers into eight segments: innovators, thinkers, believers, achievers, strivers, experiencers, makers, or survivors – most widely used psychographic system - The upper segments have more resources and are more innovative; those on the bottom have fewer resources and are less innovative. Behavioral Segmentation - Groups consumers based on the benefits they derive from products or services, their usage rate, their user status, and their loyalty. - Benefit segmentation: Groups consumers based on the benefits they derive from products or services; eg. Firefly Mobile: tweens get the benefit of a cool phone, and their parents enjoy the benefits of providing a cool product while still limiting cost and protecting their children; Hollywood: film producers know that people visit the theatre or rent films to get a variety of benefits and so they market them accordingly – laugh, warm and fuzzy etc - Loyalty Segmentation: Strategy of investing in retention and loyalty initiatives to retain the firm's most profitable customers; eg loyalty cards – retail and transportation Using Multiple Segmentation Methods - all segmentation methods are useful, each has its unique advantages and disadvantages - Because “birds of a feather flock together,” companies use a combination of geographic, demographic, and lifestyle characteristics, called geodemographic segmentation, to classify consumers – good for retail stores - PSYTE clusters: The grouping of all neighbourhoods in Canada into 60 different lifestyles clusters; the most popular tool for geodemographic segmentation - Step 3: Evaluate Segment Attractiveness - Is the segment identifiable, reachable, responsive, and substantial and profitable? Identifiable: - too much overlap between segments means that distinct marketing strategies aren't necessary to meet segment members' needs Reachable: - Consumers must know the product or service exists, understand what it can do for them, and recognize how to buy it. Responsive: - the segment must react similarly and positively to the firm's offering - eg if La Senza created a new line of formal dresses, although the formal dress wear segment meets all the other criteria for a successful segment, La Senza should not pursue it because the market probably will not be responsive to it. Substantial and Profitable: - If a market is too small or its buying power insignificant, it won't generate
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