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BUS 446 (6)
Lecture 6

BUS 446 - Lecture 6

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Business Administration
BUS 446
Lindsay Meredith

Why Segmentation 1) Segmentation determines whether a market exists & is accessible 2) It determines the controllable variables comprising the marketing mix:  Product  Price  Place (Distribution)  Promotion (Advertising, Personal Selling)  Bad on that versus brand a + b  what am I good at? o Switch the orientation that might work for you o Don’t throw in the towel  London Metals Exchange o They have to be the same quality in order to sell o If the quality is the same, then you compete on Price  If not on Price, maybe on Technology  Diversify in roder to reduce your risk o Horizontal integration o Don’t’ put everything in one sector (Pulp and paper)  Do Pulp + Paper Plastics, Oil refinery, etc Consumers and Organizational Buyer Behaviour Don’t fall into the trap of supply side definitions for market segments based on the company’s definition  Ie. Products “A” and “B” are similar, so they serve the same market and act as substitutes for each other. Go for a demand oriented approach. This is based on the customers’ definition of the products and their usage. Consider two customer oriented approaches for identifying product markets. 1) Purchase or Usage Behaviour  Provides a good indication of what purchasers do or have done with regard to (WRT) with product and its marketing  *Note: In B2B, make sure you visit customers to see how they use your product o Can be frightening if they aren’t using it as intended b/c that means your market could be dying, or it is a new market to go into  *Note: This is one of the biggest things to take a look at. Don’t be fooled by the primary use! Measure by: A) Cross Price Elasticity of Demand (CPE of D)  The price sensitivity of one brand WRT to changes in the prices of competing brands o E.g. What happens to the sales of brand “A” as decreases occur in the prices (or other marketing mix expenditures) of
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