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Chapter 7

Marketing Chapter 7 Notes.docx

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Ryerson University
MKT 100
Laila Rohani

Marketing: MKT100 Chapter 7 Notes Ch. 7: Segmentation, Targeting & Positioning The Segmentation-Targeting-Positioning Process Step 1: Establish Overall Strategy or Objectives • Articulate mission and the objectives of the company’s marketing strategy • Segmentation strategy must be consistent with objectives as wells as current situation – SWOT Analysis Step 2: Segmentation Bases • Formal approach to segment the market Geographic Segmentation • Organizes consumers into groups of where they live, either by country, region, areas within a region, climate or topography, etc. • Marketers sometimes make adjustments to meet needs of smaller geographic groups Demographic segmentation • Grouping of consumers by easily measured, objective characteristics such as age, gender, income, education, race, occupation, religion, marital status, family size, family life cycle, and home ownership. Psychographic Segmentation • Delves into how consumers describe themselves; allows people to describe themselves by using those characteristics that help them choose how they occupy their time and what underlying psychological reasons determine these choices. • Marketers determine (through demographics, buying patterns and usage) into which segment an individual consumer falls • For example, a person might have a strong need for inclusion or belonging, which motivates them to seek activities that involve others, which influences the products they buy • Determining psychographics involves knowing and understanding 3 components: self-values self-concept, and lifestyles. • Self-values are life goals, not just goals one wants to accomplish in a day. • Refers to overriding desires that drive how a person lives his or her life • Self-concept is the image people have of themselves • A person who has a goal to belong may see, or want to see themselves as fun- loving, gregarious type whom people wish to be around. • Lifestyles are the ways people live to achieve their goals • Someone with a strong sense of belonging will probably live in a well-populated area that allows for many activities • The most widely used psychographic system is the VALS, owned and operated by Strategic Business Insights (SBI) • VALS is a tool that classifies consumers into 8 segments: Innovators, Thinkers, Believers, Achievers, Strivers, Experiencers, Makers or Survivors. Behavioural Segmentation • Groups consumers on the basis of benefits they derive from products or services, their usage rates, their user status, and their loyalty. • Benefit segmentation looks at the benefits consumers derive from a product or service • Loyalty segmentation is a strategy of investing in retention to retain most profitable customers • Usage rates: heavy users, regular users, light users, occasional users • User Status: Current users, ex-users, potential users Using Multiple Segmentation Methods • A combination of geographic, demographic and lifestyle characteristics is called geodemographic segmentation • PSYTE cluster is the grouping of all neighbourhoods in Canada into 60 different lifestyle clusters Step 3: Evaluate Segment Attractiveness Identifiable • Firms must determine who is within their market to be able to design products or service to meet their needs. • It’s also important to ensure that the segments are distinct from one another because overlap can cause distinct marketing strategies to become unnecessary. Reachable • The best product or service cannot have any impact if that market cannot be reached or accessed through persuasive communications and distribution • Consumers must know the product or service exists, understand what it can do for them and recognize how to buy it Responsive • For segmentation strategies to be successful, the consumers in the segment must react similarly and positively to the firm’s offering. • If through the firm’s competencies cannot provide the product or service to a segment, it should not target it Substantial and Profitable • After target markets are identified, it needs to measure its size and growth potential • If a market is too small, it won’t generate significant profits. • Market growth, (current and expected gr
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