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Chapter 7

ADM2320 Chapter 7

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University of Ottawa
Marzena Cedzynski

Chapter 7 Segmentation, Targeting, and Positioning The Segmentation-Targeting-Positioning-Process Step 1: Establish Overall Strategy or Objectives  The first step is to articulate the mission and the objectives of the company’s marketing strategy clearly.  The segmentation strategy must then be consistent with and derived from the firm’s mission and objectives. Step 2: Segmentation Bases  The second step in the segmentation process is to use a formal approach to segment the market.  This step develops descriptions of the different situations of the different segments, their needs, wants, and characteristics. Four various ways of segmentation:  Geographic Segmentation: the grouping of consumers on the basis of where they live.  Demographic Segmentation: the grouping of consumers according to easily measured, objective characteristics such as age, gender, income, and education.  Psychographic Segmentation: this segmentation base delves into how consumers describe themselves; allows people to describe themselves by using those characteristics that help them choose how they occupy their time (behaviour) and what underlying psychological reasons determine those choices. o Self-Values: goals for life, not just goals one wants to accomplish in a day o Self-Concept: the image a person has of himself or herself o Lifestyles: the way a person lives his or her life to achieve their goals.  Behavioural Segmentation: groups consumers based on the benefits they derive from products or services, their usage rate, their user status, and their loyalty. o Benefit Segmentation: groups together consumers based on the benefits they derive from products or services. o Loyalty Segmentation: strategy of investing in retention and loyalty initiatives to retain the firm’s most profitable customers. Step 3: Evaluate Segment Attractiveness  The third step in the segmentation process involves evaluating the attractiveness of the various segments.  To undertake this evaluation, marketers first must determine whether the segment is worth pursuing by using several descriptive criteria: o Identifiable: firms must determine who is within their market to be able to design products or services to meet their needs. o Reachable: consumers must know the product or service exists, understand what it can do for them, and recognize how to buy it. o Responsive: the customer on the segment must react similarly and positively to the firm’s offering. o Substantial and Profitable: once the firm has identified its potential target markets, it needs to measure their size, and growth potential. Step 4: Select Target Market  The fourth step in the STP process is selecting a target market.  Segmentation strategies: o
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