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Department
Management (MGM)
Course
MGMA01H3
Professor
Tarun Dewan
Semester
Fall

Description
CH 8: Customer- Driven Marketing Strategy: Creating Value for Target Customers  Market Segmentation- Dividing a market into smaller groups with distinct needs, characteristics, or behaviours that might require separate marketing strategies or mixes  Marketing Targeting (targeting)- The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter  Differentiation- Actually differentiating the market offering to create superior customer value.  Positioning- Arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.  Figure 8.1  Market Segmentation segmenting consumer markets, segmenting business markets, segmenting international markets, and requirements for effective segmentation  Segmenting Consumer Markets o Geographic Segmentation- dividing a market into different geographical units such as nations, regions, provinces, counties, cities, or neighbourhoods. o Demographic Segmentation- Dividing the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality.  Easier to measure than most other types of variables o Age and life-cycle Segmentation- Dividing a market into different age and life-cycle groups.  Poor indicator of a person’s life cycle, health, work or family status, needs and buying power o Gender Segmentation- Dividing a market into different groups based on gender. o Income Segmentation- Dividing a market into different income groups. o Psychographic Segmentation- Dividing a market into different groups based on social class, lifestyle, or personality characteristics. o Behavioural Segmentation- Dividing a market into groups based on consumer knowledge, attitudes, uses, or responses to a product. o Occasion Segmentation- Dividing the market into groups according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item. o Benefit Segmentation- Dividing the market into groups according to the different benefits that consumers seek from the products.  User Status: nonusers, ex-users, potential users, first-time users, and regular users  Usage Rate: light, medium, heavy product users.  Loyalty Status: segment a market based on consumer loyalty  By looking at customers who are shifting away from its brand, the company can learn about its marketing weakness.  Business marketers also use variables  customer operating characteristics, purchasing approaches, situational factors, and personal characteristics o World Market Segmentation: geographic segmentation, economic factors, cultural factors, political and legal factors o Intermarket Segmentation- Forming segments of consumers who have similar needs and buying behaviour even though they are located in different countries.  Requirements for Effective Segmentation: o Measurable: the size, purchasing power, and profiles o Accessible: the market segments can be effectively reached and served o Substantial: the market segments are large or profitable enough to serve. o Differentiable: the segments are conceptually distinguishable and respond differently to different marketing mix elements and programs o Actionable: Effective programs can be designed for attracting and serving the segments.  Market Targeting o Evaluating Market Segments 3 factors:  Segment Size: right size and growth. Not all companies can handle rapid growth.  Segment Structural Attractiveness: that affect long-run segment  Less attractive already have strong, and aggressive competitors, substitute products, relative power of buyers, strong bargaining power relative to seller force price down, powerful suppliers who can control prices or reduce the quality or quantity  Company Objectives and Resources o Selecting Target Market Segments (Fig. 8.2)  Target Market- A set of buyers sharing common needs or characteristics that the company decides to serve.  Undifferentiated Marketing (mass marketing)- A market coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one another.  Cons: harder to compete with more focused firms  Differentiated Marketing (or segmented marketing)- A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each.  Hopes for higher sales and stronger position within each market segments  Cons: Increase costs for differentiation  Concentrated Marketing (niche marketing)- A market coverage strategy in which a firm goes after a large share of one or a few segments or niches.  Instead of going for a small share of a large market, firm goes after a large share of one or a few smaller segments or niches.  Lets smaller companies focus their limited resources on serving niches that may be unimportant to or overlooked by larger competitors  Some mega marketers develop niche markets to create sales growths.  Cons: higher risk rely on one or a few segments  Micromarketing- The practice of tailoring products and marketing programs to the needs and
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