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Chapter

Module 5 Notes

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Department
Marketing
Course
MKT 100
Professor
Paul Finlayson
Semester
Winter

Description
Module 5: Segmentation, Targeting, and Positioning (STP) Section 1: Customer Focus and Positioning • Customer focus: How you focus your efforts to attract, serve, and retain customers, and which customers you focus these efforts • Targeting/ Product or Service Positioning: How you focus to serve customers • Focus on profitable customers, also analyze these customer’s needs • Changing customer preferences changes demand, which changes supply, which changes customer demand and preference • Simplifying thinking, make clusters, where consumer preference varies little, but between clusters, varies a lot • Best way to segment markets using: o Sustainability (segment size) o Accessibility (segment can be reach efficiently) o Fit (with company capabilities) Segmentation Variables for Consumer Markets • Geographic o World region, climate, country, city, province • Demographic o Body type, weight, age, wealth, income, language, family size, education, nationality, ethnicity, occupation • Psychographic o Lifestyle, hobbies, interests, social class, values • Behavioural o Product consumption, channel loyalty, benefits sought, brand loyalty, early adaptor Focusing on Customer Profitability www.notesolution.com • Common conclusion: a small group of customers that want free benefits such as credit terms, and service and order small volumes or low margin products are unprofitable • ‘hidden loss’ customers subsidize ‘hidden profit’ customers • To find customer focus, identify direct determinants (drivers) o Customer purchases of high margin products and services o Quantity made by year o Low selling costs to customer, low delivery costs, low after sales service costs • Less direct way, but important driver is when the satisfied customers, refers others • Second step positioning • Segmenting market and customers necessary to separate good customers from bad • Customer management metric, used to see how good the company manages their customers, 10 being the highest Section 2: Benefit-Feature Segmentation • Simple goal directed theory of consumer behaviour, benefits from the features in a product or a service • Behaviour is motivated by a desire (sometimes called a need or a want) to move from our current perceived situation to a new physical/ intellectual/emotional/spiritual state • Some motivation is conscious, some is not. • Product and service with their benefits help us move from a current state to a desired state • How we choose values, goals, priorities, instruments (products and services we use to achieve them) complicated • First, seek to have our survival needs met • Second, seek emotional and sexual goals (some put spiritual goals before all) • Others put the pursuit of learning and knowledge before their spiritual and emotional goals www.notesolution.com • Maslow: Priority of needs theory: o Physical needs o Love and affection o State of self-actualization • Must find what different customers want, and how to cater to those needs • Consumer preferences always changing Section 3: Positioning: Fitting Features to Benefits Desired • Buyers will choose a product base don quality when they perceive a product’s quality to be higher than a competitors quality in product benefits provided and on quality dimensions important to them • Customer focus means a product positioning and design focus on product quality/benefits desired by the target segment • Juran’s Quality Planning Road Map, identify customer needs, what qualities the product or service must have to meet and exceed customer needs, then deliver such quality • Quality Function Deployment(QFD): deployment of quality, technology, and the resources of the firm to ensure a product or service is competitively positioned to target and deliver the desired customer function, benefits and satisfaction Section 4: Channel/ Contact Segmentation • Customer focus and segmentation around the customer’s distribution/communication channel usage is very common • Segments are almost always further sub segmented into different product benefit/feature usage segments to which various products or models in the product line are targeted • Sub-segments tracked for profitability • Channel segmentation very important today because a lot of innovation in communication and distribution to customers is occurring around the global marketplace www.notesolution.com • Internet offers consumers channel access to a vast selection of supply tha
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