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Chapter 7

COMM 131 Chapter Notes - Chapter 7: Marketing Mix, Mass Customization, Micromarketing

Course Code
COMM 131
Ethan Pancer

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Chapter 7: Segmentation, Targeting, Positioning
Market Segmentation
Segmentation involves dividing the market into smaller groups of buyers with distinct
needs, characteristics, or behaviours that might require separate marketing strategies
Four important topics: segmenting consumer markets, segmenting business markets,
segmenting international markets, and the requirements for effective segmentation
Segmenting Consumer Markets
The major variables that might be used to segment a market are geographic,
demographic, psychographic, and behavioural
Geographic Segmentation
Dividing a market into different units, such a global regions, countries, provinces, cities...
A company may decide to only operate in one area, or multiple ones
Many companies are localizing their products, advertising, promotion, and sales efforts to
fit the needs of individual regions, cities, and even neighbourhoods
Demographic Segmentation
Dividing the market into segments based on variables such as age, gender, income level,
family size, life cycle, occupation, education, ethic or cultural group, generation, etc.
Demographic variables are easy to measure which is why they are widely used
Needs to know these variables to assess the size of the target market & reach it efficiently
Age and Life-Cycle Segmentation
Consists of dividing the market into different age and life-cycle groups
Consumers needs and wants change with age 65 year olds don’t eat Lunchables
Dividing the market into different segments based on gender
One gender may be better suited to your product and/or may be more profitabale
It is also important to note that a neglected gender segment by competition could offer a
new opportunity for a new market
Household Income (HHI)
Dividing the market inter different segments based on their level of income
Household income means the entire house income from both husband and wife
Some firms with luxury goods do not target people who can’t afford it
There are many discount store that market to those less affluent
Ethnic or Cultural Group
Marketers often segment markets based on easy to define criteria such as race, language...
With StatsCan’s census info, it is easy to locate markets with a high number of Chinese
speaking Canadians

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Psychographic Segmentation
Dividing the market into different segments based on social class, lifestyle, personality...
Targeting people looking for an adventure, looking to relax, who are outgoing, etc.
Behavioural Segmentation
Dividing the market into different segments based on consumer knowledge, attitudes,
uses, or responses from products many believe that this is the best starting point
Dividing the market into segments according to occasions when buyers get the idea to
buy, actually make their purchase, or use the purchased item
o Can help firms build up product usage drink OJ any time, not just morning
Benefits Sought
Dividing the market into segments according to the different benefits that consumers seek
from the product Do you want value? Do you seek performance? Durability?
User Status
Markets can be segmented into non-users, ex-users, potential users, first-time users, and
regular users of the product
Marketers want to reinforce and retain regular users, attract non-users, and reinvigorate
relationships with ex-users
Usage Rate
Markets can also be into light, medium, and heavy product users
Heavy users are often a small percentage of the market but account for a high percentage
of consumption
Loyalty Status
Segmenting based on their degree of customer loyalty to a brand, store, and company
Some consumers are completely loyal they only buy one brand all the time
Some are somewhat loyal loyal to two or three brands of a given product or favour one
brand why sometimes buying others
Some show no loyalty to a brand something different each time or buy what’s on sale
Studying loyal customers: Can pinpoint the target market and develop marketing appeals
By studying less-loyal customers, a company can detect which brands are most
competitive with its own and learn about the company’s own marketing weakness
Using Multiple Segmentation Bases
Marketers often use multiple segmentation bases in an effort to identify smaller, better-
defined groups ex. 18-24 year old men, adventurous, looking for performance, reg users
Allows a company to really focus its marketing effort on a specific group or groups with
similar characteristics
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