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Chapter 8

MGMA01H3 Chapter Notes - Chapter 8: Micromarketing, Rolex, Plaintext


Department
Management (MGM)
Course Code
MGMA01H3
Professor
Tarun Dewan
Chapter
8

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To create value for customers:
1) Select customers to serve segmentation and targeting
2) Decide on a value proposition differentiation and positioning
Segmentation: dividing a market into smaller groups with distinct needs or characteristics that might require separate
marketing mixes
Targeting: evaluating each market segment’s attractiveness and selecting one or more segments
Differentiation: differentiating the market offering to create superior customer value
Positioning: arranging a market offering to occupy a clear and desirable place relative to competing products in the
minds of consumers
Market Segmentation
Geographic: world region or country (asia), country region, city size, density (urban, rural) and climate
Demographic: Age, gender, family size, income, occupation, religion, education
Psychographic: social class, lifestyle or personality characteristics
Behavioral: consumer knowledge, attitudes, uses or responses to a product. Marketers believe these variables are the
best starting point for building segments. Buyers can also be grouped on occasion segmentation (when they get the idea
to buy, actually make the purchase or use the item). Eg: mother’s day promotions in stores. Benefit segmentation
divides the market based on the main benefits that consumers seek from the product. Eg: M&M store focuses on the
idea working mother can still produce a good meal
Companies often use multiple segmentation bases to identify smaller and better defined target groups.
Intermarket segmentation (cross-market): forming segments of customer who have similar needs and buying behavior
even though they are in different countries. Coke wants to relate to world teens and so they got this by using what teens
like the most music it is the official sponsor of American idol
Effective Segmentation -Market segments must be:
Measurable size and purchasing power can be measured (you have to be able to use data
Accessible segments can be reached and served. If a product is focused for single men and women then these
members should shop at particular malls or it is difficult to react out just to them be able to get to those people
Substantial segments are large and profitable to serve; segment should be the largest homogeneous group. It would
not make sense for a manufacturer to develop cars for those only abouve 7ft. should be a big enough deal and won’t
be good if only a few care about the good
Differentiable segments are differentiable and respond different to various marketing mix. Married woman and
single women cannot respond the same to a sale on perfume, this is not separate segments
Actionable effective programs can be designed for attracting and serving the segments able to serve the customers
and get them interested
Targeting
When evaluating market segments affirm must look at:
1) Segment size & growth
2) Structural attractiveness: segment is less attractive if it has many competitors or many substitute goods. Power
of buyers also affects segmentation because strong power means buyers will force prices down and this will
cause fewer profits for the sellers. Powerful suppliers have the power to control price and quantity
3) Company objectiveness and resources: the company lack the resources needed to succeed in an attractive
segment.
Selecting target market segments
Undifferentiated marketing (mass marketing): this is targeting broadly. A firm ignores market segment differences and
targets the whole market with one offer. Mass marketing focuses on what is common in the needs of consumers.
Disadvantage: cannot satisfy all customers, cannot compete with more focused firms that satisfy specific needs
Differentiated marketing (segmented marketing): a firm decides to target several market segments and designs separate
offers for each. For eg: P&G offers 10 different laundry detergents that compete with each other. Doing so increases the
total profit the company will earn as opposed to the profit of having one type and it improves the position However, this
increases the cost of production.
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