COMM 296 Chapter Notes - Chapter 8: Geodemographic Segmentation, Psychographic, Profit Margin

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Published on 15 Jul 2016
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SEGMENTATION, TARGETING, AND POSITIONING
COMM 296: Introduction to Marketing Jenny Tao
Strategy or
objective
Segmentation
methods
Evaluate
segment
attractiveness
Select target
market
Identify and
develop
positioning
strategy
(1) Identify the five steps in the STP process
- STEP 1: Establish overall strategy or objective: segmentation strategy should be
consistent with and derived from firm’s mission and objectives, and current
situation (SWOT)
(2) Outline the different methods of segmenting a market
- STEP 2: Segmentation Methods: use method(s) to segment the market
o Geographic segmentation: grouping of consumers based on where they live
o Demographic segmentation: grouping consumers based on easily measure,
objective characteristics (age, gender, income, education)
o Psychographic segmentation: how consumers describe themselves;
characteristics that help them make decisions (self-vales; self-concept/self-
image; lifestyles) psychographic tool (VALS) see textbook
More useful in predicting consumer behavior than demographics
Cons: expensive means to identify potential customers
o Geodemographic segmentation: grouping based on a combination of
geographic, demographic, and lifestyle characteristics
(Tamar believes it’s just a subsection; not substantial on its own)
o Benefit segmentation: grouping based on the benefits consumers derive
from products or services satisfying similar wants/needs
o Behavioral segmentation: divide customers into groups based on how they
use the product/service
Occasion segmentation: behavioral segmentation based on when a
product or service is purchased or consumed
Loyalty segmentation: strategy of investing in loyalty initiatives to
retain the firm’s most profitable customers (i.e. airlines)
(3) Describe how firms determine whether a segment is attractive and therefore worth
pursuing
- STEP 3: Evaluate Segment Attractiveness: whether segment is worth pursing
depending on several descriptive criteria
o Identifiable: who is in the segment; is segment distinct
o Substantial: measure size of potential target if it’s worth pursuing
o Reachable: how reachable will information be for the market
o Responsive: will segment react similarly and positively to firm’s product
o Profitable: potential profitability for both current and future
Segment profitability = (size * adoption percentage * purchase
behavior * profit margin percentage) fixed cost
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Document Summary

Segmentation, targeting, and positioning (1) identify the five steps in the stp process. Step 1: establish overall strategy or objective: segmentation strategy should be consistent with and derived from firm"s mission and objectives, and current situation (swot) (2) outline the different methods of segmenting a market. More useful in predicting consumer behavior than demographics. Loyalty segmentation: strategy of investing in loyalty initiatives to. Occasion segmentation: behavioral segmentation based on when a: behavioral segmentation: divide customers into groups based on how they (3) describe how firms determine whether a segment is attractive and therefore worth pursuing. Segment profitability = (size * adoption percentage * purchase: reachable: how reachable will information be for the market, profitable: potential profitability for both current and future behavior * profit margin percentage) fixed cost. Adoption percentage = % of customer in segment who are likely to use product/service buy the product/service in a year. Purchase behavior = purchase price * # of times customer will.

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