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Lecture 5

MGMA01H3 Lecture Notes - Lecture 5: Old Navy, Mattress, Customer Switching

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Sam J Maglio

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Lecture 5
Segmentation, Targeting, Positioning
- Segment: by dividing a market into different segments and what type of
products/services they are looking for
- Targeting: providing these goods/products to the targeted segment
- Positioning: when a company looks at the competitors and try to differentiate from the
competitors and create more customer value
- Segmentation looks at the different segments and see how similar their desires are,
which determines how advertisement may get through to different groups of people
- What akes good segetatio? *it a deped o the opa’s ojeties
o Divide the market into large enough segments
o Needs to identifiable and specific (e.g. spiritual vs people who do yoga 2 to 3
times a week)
o Distinctiveness of a segment (e.g. people with different incomes, it matters for a
real estate company for castles)
o Stable (e.g. income, apple targeting for creative career people)
- Many different ways to segment a market:
1. Personal characteristics:
o Using demographics: easily measurable, basic info (e.g. age, gender, income,
o Psychographics and lifestyle: since 40 years ago, new ways to measure
consumption; using AIO (Activities, Interests, Opinions) (e.g. surveys) or VALS
VALS Dimensions: what are the primary motivations of people? What
kind of resources does people have (innovators vs survivors)?
o Geographic segmentation: where do people live? (regional segmentation) (e.g.
soda vs pop), ZIP clustering (separate according to neighbourhood)
2. Benefits sought
o Focus on benefits that people want in a product/service (e.g. jeans and types of
things people are looking for), this allows firms to target customers that want
certain benefits
3. Product-related behaviours
o Focus on brand loyalty, and how much a customer uses of a certain
product/brand; may do this by looking at purchase frequency and how often
some switches brand; this changes how a brand market itself (e.g. bulk items are
marketed to the brand switching user)
- Targetig eighs eah seget’s attratieess ad reates a riterio for piking the
- Some factors to consider include how competitive the market is for different segments
and if there are existing unserved needs that are not satisfied by current competitors;
also look at how well a product/service fits with the company; also if there are
opportunities for profit by looking at segment size and the growth rate
- E.g. Mobil, a gas retailer conducted a survey to determine cause for low sales; contrary
to popular belief, the customers were not all price conscious, but more focused on quick
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