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Bus 343 - Classnote 4.docx

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Business Administration
Course Code
BUS 343
Todd Green

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BUS 343 October 4, 2010 Lecture 4 Chapter 3 Todd Green Concept of  Market Fragmentation: The creation of different consumer groups due to a diversity of needs and Segmentation wants in society  Target Marketing Strategy: Dividing the total market into different segments and then selecting one or more segments then developing products for it  1. Select Market: Define market, understand customers  2. Market Segmentation: Identify groups, profile/describe groups  3. Market Targeting: Evaluate segments, decide which ones to target  4. Market Positioning: Decide how you want to be known and differentiated for consumers  5. Create and Execute Marketing Mix Programs  Segmentation: Process of dividing a larger market into smaller groups based on characteristics  How to Identify a Viable Market Segments:  1. Members of segment must be similar to each other  2. Members of the segment are different from other consumers (segments)  3. Large enough  4. Segment must have purchasing power  5. Reachable – possible to communicate advertisement to Segmenting  Segmentation Variables: Factors which divide the whole market into groups Consumer Markets  80/20 Rule: 20% of purchasers account for 80% of a product’s sales  Long Tail: New selling approach where companies make money by selling small amounts of items that only a few people want, but needs a lot of different items  Behavioural Segmentation: Segmentation approach which divides consumers based on behaviour about products  Benefit Segmentation: Segmentation approach which divides consumers based on the benefits or value they seek in buying/using products  Product Usage Segmentation: Segmentation approach which divides consumers based on the amount purchased or how product is used  Usage Occasions: Indicator based on when consumers use a product most  Psychographic Segmentation: Groups consumers into an individual’s mental state or psychology and is concerned with the motivation for consumers to buy products  Demographic Segmentation: Segmentation by grouping of population characteristics (sex, age, etc)  Usually limited to be the primary basis only  Sex: Male and Female  Age  Baby Boomers: Largest age segment in Canada, comprises of people who are born 1947- 1966  Family Structure: Family life cycle: teens, young adults, married with children, empty nesters  Income and Social Structure  Ethnicity  Geography: Region and location  Geodemography: Segments market by combining techniques of geography and demography Segmenting Business  Operating Variables: Factors of dividing business organizations Markets  Industrial Psychographics: Application of psychographics (values, goals, missions) to the business context  Production Technology Used  Type of purchases made  Degree of technical expertise  Degree of financial expertise  Degree of operations expertise  How they make purchase decisions Profiles  Who makes the purchase decisions  A current or non-current user of the product  Segment Profile: A description of the typical customer in a segment  Who are they  What do they want and why  When do they buy and use it  Where d
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