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Chapter 7

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Queen's University
COMM 131
Jacob Brower

 Companies know that they cannot appeal to all buyers – or at least not in the same way  Buyers are too many, too widely scattered and too varied in their needs and buying practices  The companies also vary widely in their abilities to serve different segments of the market  Companies need to build right relationships with the right customers  Companies are choosier with who they want as their customers  This shows the four major steps of designing a customer driven marketing strategy o First 2 stops, the company selects the customer they will serve  Market segmentation – dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviours that might require separate marketing strategies o They identify different ways to segment  Market targeting – evaluating each market segment’s attractiveness and selecting one or more market segments to enter  Next, the company decides on a value proposition – on how it will create value for target customers, and how it can stand out from competition, or differentiate itself  THEN, the company positions its brand, or product, in the market  Positioning – arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of consumers MARKET SEGMENTING  Companies divide, large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively to meet their needs  Consumer markets, business markets, international markets, and requirements for effective marketing 1. CONSUMER MARKETS  Variables that must be used in segmenting consumer markets:  GEOGRAPHIC: diving a market into different geographical units o Such as: global regions, countries, regions with a country, population size, type of region o Many companies localize their products, ads, promotions and sales to fit the needs of individual regions and cities (think cartoons that change for each country)  DEMOGRAPHIC: divides markets based on variables such as age, gender, etc. o EX: age, gender, family size, life cycle, income, occupation, education o More popular approach because customers’ needs are affected by these variables AND because it is easy to measure this data o The segments are usually neglected are sometimes better to choose (ex: motorcycle company targeting woman)  PSYCHOGRAPHIC: divides based on social class, lifestyle, personality characteristics o EX: social class, lifestyle, personality o People in the same demographic, can have very different psychographic  BEHAVIOURAL SEGMENTATION: according to their knowledge, attitudes, uses and responses to product o EX: occasions, benefits, user status, user rates, loyalty status, readiness stage, attitude o Occasion segmentation - occasions when they get the idea to buy, actually buy, or use the purchase  Can help firms build up product usage  EX: people drink orange juice in the morning, but marketers have made it into something that is cool, healthy and refreshing at other times of the day as well  OR, Coca-Cola promotes drinking its diet coke in the morning even though people usually don’t drink pop until later on in the day o
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