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Canada (161,663)
BUS 343 (122)
Jason Ho (70)
Chapter 3

Marketing: Real People, Real Decision (3rd Edition): Chapter 3

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Department
Business Administration
Course
BUS 343
Professor
Jason Ho
Semester
Summer

Description
Chapter 3: Market Segmentation and Positioning The Concept of Segmentation Market fragmentation creation of many consumer groups due to a diversity of distinct needs and wants in modern society o Same product or service will not appeal to everyone Target marketing strategy dividing the total market into different segments based on customer characteristics, selecting one or more segments, and developing products to meet the needs of those specific segments Five step process o Select Markets Define your market Understand customers: needs and wants, benefits, features, and attributes sought, and purchase and consumption behaviour o Market Segmentation Identify groups: geographic, behavioural, psychographic and demographic segmentation Describe (profile) the groups: who, what, when, where, why o Market Targeting Evaluate segment attractiveness: size, growth, strategic fit, competitive or comparative advantage, level of competition, defendability Decide which ones to target o Market Positioning Decide how you want to compete be differentiated and be known for value creation in the minds of consumers o Create and Execute Marketing Mix Programs Segmentation the process of dividing a larger market into smaller pieces, based on one or more meaningful, shared characteristics Marketers usually identify the key groups in a market, then choose a group to focus on, and decide how they want their brand to compete and be known by these consumers (positioning) and design marketing programs (make marketing mix decisions) Selecting and Segmenting a Market Implications for market segment o Segmentation decisions should be made based on experience, understanding of the consumer, competitive, and technological environments, and understanding of the mission, strategic directions, and competencies of organization www.notesolution.com Criteria for Identifying Market Segments Viable segmentation scheme should satisfy these requirements Similar Enough within the group o Similar in product needs and wants Different enough between the groups o Consumers in each segment should be different in factors such as different product, pricing, distribution and/or communication strategies to create a product offer that appeals to each segment Large enough o Is the market large enough to provide the amount of sales Measurable Market o People in the segment have purchasing power: the authority, willingness, and ability to make a purchase decisions Reachable o Must be able to identify consumers in the segment and communicate the product offer to them in a cost effective manner way The Process of Segmentation Segmentation variables bases for dividing the total market into fairly homogenous groups, each with different needs and preferences Consumers can be divided into segmentations by geographic, demographic, or psychological, and behavioural differences Behavioural Segmentation Behavioural segmentation technique that divides consumers into segments on the basis of how they act toward, fell about, or use a product or service Benefit segmentation a segmentation approach that groups consumers or customers based on the benefits or value they seek in buying and using products o Advantage is that the resulting groups are usually seeking very different product solutions, which makes the segmentation scheme very actionable in terms of designing appropriate marketing programs Product usage segmentation a segmentation approach that groups consumers or business customers based on the amount of a product purchased or how the product is used 80/20 rule 20% of purchasers account for 80% of the products sales 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 items Usage occasion indicator used in one type of market segmentation based on when consumers use a product most o Sales can be almost guaranteed at that time www.notesolution.comSegmentation by Psychographics Psychographic segmentation a segmentation approach that groups people based on their attitudes, beliefs, values, lifestyle or other psychological orientations o Marketers not only seek to understand how consumers behave but also how they think and feel about products, what motivates them, how they learn, and how they make purchase decisions Most well known system is VALS Segmenting by Demographics Demographics variables that describe objective characteristics of a population or group Extremely useful in the development of profiles or descriptions of market segments because demographics variables make people reachable Demographics variable such as age, sex, income, family structure, social class etc. doesnt provide a good starting because they usually dont meet the criterion that the people within each group are similar enough Demograph
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