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MKT 304 Study Guide - Spring 2019, Comprehensive Midterm Notes - Marketing Mix, United States Postal Service, United States Dollar


Department
Marketing
Course Code
MKT 304
Professor
Matthew Wilson
Study Guide
Midterm

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MKT 304

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Segmentation and Targeting
Designing a Customer-Driven Marketing Strategy
Marketing Segmentation
Segmentation:
o Dividing a market into groups with distinct needs, characteristics or behaviors.
Key consumer variables: Geographic*, Demographic, Psychographic, Behavioral.
Why do we segment?
o Different segments require separate marketing strategies or mixes
What is the best way to segment?
o There is no single best way, but often combining variable is useful.
Geographic:
o Global regions
o Countries
o Region of country
o States
o Cities
o Neighborhoods
Demographic Segmentation:
o Age, gender, family size, family life cycle, income, occupation, education, ethnic
or cultural group and generation
o The most popular base for segmenting customer groups as needs, wants and usage
often vary by demographics
o Easier to measure than most other types of variables
o Age and life cycle stage addresses the fact that consumer needs and wants change
with age
o Gender: cosmetics, clothing, magazines. Neglected gender segments can offer
new opportunities.
o Household income refers to total family income, whether one or both parents
work. Useful for targeting the affluent for luxury goods. People with low annual
incomes can be lucrative market.
o Ethnic or cultural segmentation is based on race, ethnicity and language. Products
related to dietary preferences, music and art, traditions, education.
Psychographic segmentation:
o Dividing a market into different groups based on lifestyle, mental state or
psychology. Athletic, outdoors type, creative, artistic, adventurous.
Behavioral
o Dividing buyers into groups based on consumer knowledge, attitudes, uses or
responses to a product.
o Occasions: segmentation according to occasions when people buy or consumer
products
o What are some products that may use occasion segmentation? Whole turkey at
Thanksgiving (rare occasion), Cereal upon the “occasion” of waking up, Hallmark
cards.
o Benefits sought: different segments desire different benefits from products. Value
seekers vs. status seekers.
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o User status: non-users, ex-users, potential users, first time users, regular users
o Usage rate: light, medium, heavy
Loyalty status: divide into groups by degree of loyalty
o Who uses loyalty segmentation? Services (hotels/restaurants) give their best
service (best tables/rooms etc) to their most loyal customers.
Use multiple segmentation bases to identify smaller, better-defined target groups.
o Start with a single base and then expand to other bases.
Segmentation
What makes a segment useful?
Measurable
Accessible
Substantial
Differentiable
Actionable
Effective Segmentation
To be useful, market segments must be:
Measurable
o Need to measure market size, purchasing power.
o You need to know how big the market segment is so that you can plan how to
serve that segment
Accessible
o Needs to be reachable by marketers
o If the segment exists, but you cant communicate with them or you cant distribute
your product to them, the segment is not useful.
To be useful, market segments must be:
o Substantial: needs to be large enough to be profitable. Even if the segments exist,
if it has only a few people in it may be impossible to profitably serve the segment
o Differentiable: must be different from each other.
o Actionable: marketers must have the necessary resources to develop programs for
different segments. Serving a market segment costs money.
Segmentation Conclusions
Segmentation reveals the firm’s market segment opportunities
Once markets have been segmented, firms need to evaluate and target certain segments.
Designing a Customer-Driven Marketing Strategy
Market Targeting
Market targeting involves:
o Evaluating marketing segments
o Selecting target market segments
o Being socially responsible
Evaluating marketing segments involves looking at 3 things..
o Segment size and growth
o Structural attractiveness
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o Company objectives and resources
1. Segment size and growth
a. The biggest and fastest growing segment is now always the right one to target
i. Not all firms have the resources to take on the large/fast growing segments
ii. Too much competition
2. Structural attractiveness:
a. Think porters five forces
i. Threat of new entrants
ii. Buyer power
iii. Substitute products
iv. Competitors
v. Supplier power
3. Company objectives and resources
a. Targeting some segments may not mesh with company objectives or be possible
with company resources
b. Should a luxery brand enter a large and fast growing segment for budget
products?
Selecting target market segments
-alternatives range from undifferentiated marketing to micromarketing.
The four major targeting strategies include:
1. Undifferentiated (mass) marketing
2. Differentiated (segmented) marketing
3. Concentrated (niche) marketing
4. Micromarketing (customized, local or individual marketing)
Targeting strategies include:
Undifferentiated (mass) marketing:
Ignores segments, targets everyone
Provide products/services that appeal to everyone
Get your message out on TV, radio etc., however you can reach the most people
Focus on common needs, not differences
As a marketer you would be one of many trying to serve a common need.
Differentiated (segmented) marketing
Targets several segments
Designs separate offers for each, based on what different segments want.
Concentrated (niche)
A niche market is very specific, and usually fairly small
Targets one or a couple small segments
As a marketer, you would be one of the only players serving the niche market’s need
Micromarketing (customized/ individual or local marketing)
Involved tailoring products to suit the specific tastes of individuals or locations; can be
small as individual marketing
o Local marketing: tailoring brands and promotions to local customer groups in the
same city, neighborhood or store.
o Individual/ customized marketing: tailoring or customizing products and
marketing programs to individual customers
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