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BUS 343 (120)
Chapter 3

bus343 ch3

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Simon Fraser University
Business Administration
BUS 343

Chapter 3 Market Segmentation and PositioningPART 1 The Concept of SegmentationMarket Fragmentationcreation of many consumer groups to due a diversity of distinct needs and wants in modern society thus the sameproductservice will not appeal to everyone Eg Athlete market segmented into shoes designed for jogging soccer baseball etc compared to before it wasathlete vs non athlete Target marketing strategy dividing the total market into different segments based on consumer characteristics selecting one or moresegments and developing products to meet the needs of those specific segmentsSegmentationis the process of dividing a larger market into smaller pieces based on one or more meaningful sharedcharacteristics where people have homogenous needs and wants Steps in the Target Marketing Process1Select Target Markets2Market Segmentation3Market Targeting4Market Positioning5Create and Execute Marketing Mix Programs1 Selecting and Segmenting a MarketCriteria for Identifying Market Segments no right or wrong way to segment a market but some schemes better than others1Similar enough within the group products offered would be appealing to most people in the group2Different enough between the groups segment differences need to be actionable in that they require different products prices distribution and communication strategies to create a product offer that appeals to each segmentaEg Waste of time to develop 2 separate lines of skincare for working and non working women both segments have same wants and needs WRT to skin care3Large enough now and in the future to warrant targeting4Measurable Market people in the segment have purchasing power the authority willingness and ability to make a purchase Eg children dont have authority to make a purchase or religious beliefsbeef burgers in India5Reachable must be able to identity consumers in the segment and communicate the product to them in a cost effective manner 2 The Process of SegmentationSegmentation variables Bases for dividing the total market into fairly homogenous groups each with different needs and preferencesEx geographic demographic psychological and behavioral differencesSegmenting on Behavior Behavioral Segmentation technique that divides consumers into segments on the basis of how they act toward feel about or use a product ofservice3 common approaches to behavioral segmentationi Benefit segmentationconsumers are based on the benefits or values they seek in a productservice Eg restaurant industry segmentsfine dining fast food health orientedii Product Usage segm groups are based on how they use a products and how much they use a productEg baking soda used for fridges baking teeth brushingiii 8020 Rule a marketing rule of thumb that 20 of purchasers account for 80 of the products sales thus focus on the smallerof people who are heavy users particularly B2B marketsEg business people who frequently fly
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