IBM 301 Lecture Notes - Lecture 8: Marketing Mix, Millennials, Identifiability

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Chapter 8:Segmenting, Targeting, and Positioning Markets
Characteristics of a Market
All markets share several characteristics:
They are composed of people or organizations
These people or organizations have wants and needs that can be satisfied by
particular product categories
They have the ability to buy the products they seek
They are willing to exchange their resources, usually money or credit, for desired
products
A group of people that lacks any one of these characteristics is NOT a market
Market Segmentation
Market: people or organizations with needs or wants and the ability and willingness to
buy
Market segment: a subgroup of people or organizations sharing one or more
characteristics that cause them to have similar product needs
Market segmentation: the process of dividing a market into meaningful, relatively
similar, identifiable segments or groups
The Importance of Market Segmentation
Markets have a variety of product needs and preferences
Marketers can better define customer needs
Decision makers can define objectives and allocate resources more accurately
Criteria for Segmentation
Sustainability - segment must be large enough to warrant a special marketing mix
Identifiability and Measurability - segments must be identifiable and their size
measurable
Accessibility - members of targeted segments must be reachable with marketing mix
Responsiveness - unless segment responds to a marketing mix differently, no separate
treatment is needed
Bases for Segmentation
Geography
Region of the country or world
Market _____
Market _____
Demographics
Age
Marketers can segment markets by age using cohorts:
Tweens
Teens
Generation Y
Generation X
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Baby Boomers
The War Generation
The Great Depression Generation
Gender
Women make 85 percent of consumers goods purchases annually
Marketers of products such as clothing and cosmetics still segment
markets by gender, and many of these marketers are going after the less-
traditional male market
Income
Income level influences consumers’ wants and determines their buying
power
Retailers can appeal to:
Low-income
High-income
Both
Ethnic background
The three largest ethnic groups in the United States are:
Hispanic Americans
African Americans
Asian Americans
To meet the needs and wants of expanding ethnic populations, some
companies make products geared toward specific ethnic groups
Family life cycle
Psychographics
Market segmentation on the basis of personality, motives, lifestyles, and
geodemographics
Benefits Sought
The process of grouping customers into market segments according to the benefits
they seek from the product
Usage Rate
Usage-rate segmentation: dividing a market by the amount of product bought or
consumed
80 / 20 principle: a principle holding that 20 percent of all customers generate 80
percent of the demand
Benefits of Regional Segmentation
New ways to generate sales in sluggish and competitive markets
Scanner data allow assessment of best selling brands in region
Regional brands appeal to local preferences
Quicker reaction to competition
Personality and Motive Segmentation
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