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Chapter 6

BUS 343 Chapter 6: Chapter 6 BUS343

Business Administration
Course Code
BUS 343
Karen Robson

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CHAPTER 6: Target Marketing Strategies and Customer Relationship Management
1. Target Marketing Strategy: Process Overview
The goal of the marketer is to create value, build customer relationship and satisfy needs
Market Fragmentation The creation of many consumer groups due to a diversity of distinct
needs and wants in moderns society.
divide people’s diverse interest, and backgrounds into numerous groups
Target Marketing Strategy Dividing the total market into different segments on the basis of
customer characteristics, selecting one or more segments and developing products to meet the
needs of those specific segments.
I. Identify and Select Markets
define the market - strategic planing
II. Criteria for Identifying Market Segment
A. Similar enough within the Group
B. Different enough between the Groups -
need to be actionable - require different products, price, distribution or
C. Large Enough
D. Measurable Market
people in the market have the purchasing power: willingness, authority and ability to
make the purchase decision
E. Reachable
able to identify consumers
2. Step 1: Segmentation
Segmentation The process of dividing a larger market into smaller pieces based on one or more
meaningful shared characteristics.

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Doing a good job in segmentation is the first step in the target marketing process
I. Segment Consumer Markets
Segmentation variables Dimensions that divide the total market into fairly homogeneous
groups, each with different needs and preferences.
demographic segmentation
These segmentation variables are used to identify the groups. then we create detailed descriptions
of it
II. Segment by Behaviour
More actionable segments
Behavioural segmentation A technique that divides consumers into segments on the basis of
how they act toward, feel about, or use a good or service.
A powerful behavioural segmentation is the benefit customer seek in the products
Benefit segmentation A segmentation approach that groups consumers and customers based on
the benefits or value they seek in buying and using products.
Another common approach to behavioural segmentation is
Usage segmentation A segmentation approach that groups consumers or business customers
based on the amount of a product purchased or consumed or how the product is used.
80/20 rule A marketing rule of thumb that 20 percent of the purchases typically account for 80
percent of a product’s sale.
makes more sense to focus on the smaller number of people who are heavy users of a
product rather than on the larger number who are casual users
A new approach
Long tail A new approach to segmentation based on the idea that companies can make money by
selling small amounts of items that only a few people want, provided they sell enough different
Another way to segment a market
Usage occasions Indicator used in one type of market segmentation based on when consumers
uses a product most.

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III. Segment by Psychographics
Psychographic Segmentation A segmentation approach that groups people based on their
attitudes, beliefs, values, lifestyles, or other psychological orientations.
related with consumers motivation to buy products
Lifestyle segment
capture behavioural, psychographic and demographic
Yuppies - young urban professionals
Dinks - dual income, no kids
Shredders - boarders
Granolas - earthy, environmental
VALS (Values and Lifestyles) A psychological system that divides people into 8 segments
ideals - knowledge and principles
achievement - looks for goods and services that demonstrate success
self-expression - desire social or physical activity, variety and risk
IV. Segment by Demographics
Demographics Variables that describe objectives characteristics of a population or group
Identify the best potential customers because these characteristics are easy to identify
Useful to develop profiles or description of market segments
It should not be the starting point because it does not meet the first criteria that the people within
the group are similar enough
A. Segment by Demographic: Sex
B. Segment by Demographic: Age
members of the same generation tend to share the same outlook and spending priorities
Tweens Boys and girls age 9-12 who are in between stages in their development, when they are
considered too old for toys but too young for dating
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