MKT 337 Lecture Notes - Lecture 9: Market Segmentation, Mass Customization, Product Differentiation

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4 Jan 2017
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Chapter 9: Marketing Segmentation, Targeting, and Positioning
Why segment Markets
A business firm segments its markets so it can respond more effectively to the wants
of groups of potential buyers and thus increasing its sales and profiles.
What Market Segmentation Means
Market Segmentation- aggregating prospective buyers into groups that (1) have
common needs and (2) will respond similarly to a marketing action.
Market Segments- relatively homogenous groups of prospective buyers that
result from the market segmentation process.
Product differentiation- existence of different market segments has caused firms
to use a strategy called product differentiation. This strategy involves a firm
using different marketing mix activities, to help consumer perceive the product
as being different and better than competing products.
Segmentation: Linking Needs to Actions
Effective market segmentation does two key things: (1) forms meaningful groups
and (2) develops specific marketing mix actions.
Identify market needs Link needs to actions Execute marketing program
actions.
When and How to Segment Markets
There are three specific segmentation strategies
One product and multiple market segmentation
Multiple products and multiple market segments
Segments of one or mass customization
- One product and multiple market segmentation: When an organization
produces only a single product or service and attempts to sell it to two or
more market segments, it avoids the extra cost of developing and producing
additional versions of the product
- Multiple products and multiple market segments: the strategy is very
effective if it meets customers needs better
- Segments of One: Mass Customization- Each customer has unique needs and
want, and desires special tender loving care. Mass customization means
tailoring goods or services to the teats of individual customers on a high
volume scale. Mass communication is the next step beyond build-to-order
(BTO), manufacturing a product only when there is an order for a customer
- The Segmentation Trade-Off: Synergies versus Cannibalization: The key to
successful product differentiation and market segmentation strategies is
finding the ideal balance between satisfying a customers individual wants
and achieving organizational synergy, the increased customer value achieved
through performing organizational functions. When the increased custmer
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