MKTG 2030 Lecture Notes - Lecture 3: Dental Floss, Psychographic

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29 Jul 2016
Chapter 3
Understanding which customers to serve (Segmentation)
Market Segmentation
Opposite from mass marketing (ford did this by giving everyone the model T). Doesn't
work now.
Business success depends on segmenting the market differently than competitors, then
targeting the best segment to serve
Example: Gore-tex: 'Glide' targeted dental floss users. But found it hard to get into
stores due to listing fees. So they targeted dentists, who were important to promoting
dental floss.
Not using segmentation: the dangers
Ignores the fact that customers have different needs. Ends up satisfying no one. Allows
competitors to come in and satisfy unmet needs.
Business wastes resources: it will either under satisfy or over-satisfy customer need
levels. (Prenatal counselling example: one on one service will benefit new couples, but
suffocate older couples. No one on one will dissatisfy new couples and serve old
o In those 2 cases, one party was always dissatisfied
Business tries to be all things to all people
Business does not give the sales force any direction
o Sales people will not know what to offer and who to offer to
Ritz-Carlton value: catering to every guest individually based on what they like
o Specifically upper class people
Brand Positioning
Describing the brand identity that you want to be perceived by in the market place
Used to differentiate from competitors
How to segment your customers
Basic Principles
A business exists to be profitable:
o Most of profs clients see their business's goal is to become big and just consume
their customers. They want to increase market share at the expense of
o It takes 1-2 yrs for new products to become profitable
Customers are not equal: They differ on:
o Needs
o Your cost to serve them
o Their appreciation for your value creation
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