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MGMA01H3 (184)
Chapter 8

Week 6 - Chapter 8

8 Pages
118 Views

Department
Management (MGM)
Course Code
MGMA01H3
Professor
Alison Jing Xu

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1 | Page/MGTB0 4 We e k 6
- Since companies cannot appeal to all buyers in the marketplace, they must design customer-
driven marketing strategies that build the right relationships with the right customers
- Most companies are moving away from mass marketing and toward target marketing which is
identifying market segments and developing products and marketing programs tailored to each
XVLQJ³ULIOH´DSSURDFK>WDUJHWLQJ@UDWKHUWKDQ³VKRWJXQ´DSSURDFK>VFDWWHULQJHIIRU[email protected]
- There are four major steps in designing a customer-driven marketing strategy:
- Selects the customers that it will serve
o Market segmentation involves dividing a market into smaller groups with distinct
needs, characteristics, or behaviours that might require separate marketing strategies
o Market targeting (or targetingFRQVLVWVRIHYDOXDWLQJHDFKPDUNHWVHJPHQW¶V
attractiveness and selecting one or more segments to enter
- Decide on a value proposition (how to create value for target customers)
o Differentiation LQYROYHVDFWXDOO\GLIIHUHQWLDWLQJWKHILUP¶VPDUNHWRIIHULQJWRFUHDWH
superior customer value
o Positioning consists of arranging for a market offering to occupy a clear, distinctive,
and desirable place relative to competing products in the minds of target customers
Market Segmentation
- Through market segmentation, companies can divide large markets into smaller segments that
can be reached more efficiently and effectively with products/services that match their needs
- There are four important segmentation topics: segmenting consumer markets, business markets,
international markets, and requirements for effective segmentation
Segmenting Consumer Markets
- There are many ways to segment a market and a marketer has to try different segmentation
variable, alone and in combination for the best way to view the market structure:
- Geographic Segmentation
o Geographic segmentation is dividing a market into different geographical units such
as nations, regions, provinces, countries, cities, or neighbourhoods
o Many companies are localizing their products, advertising, promotion, and sales efforts
to fit the needs of individual areas
o E.g. video game companies create different versions of their games depending on the
world region in which the game is sold
o As well, some companies are fleeing the fiercely competitive major cities and suburbs
and seeking to tap into smaller towns
- Demographic Segmentation
o Demographic segmentation divides the market into groups based on variables such as
age, gender, family size, family life cycle, income, occupation, education, religion, race,
generation, and nationality
o Demographic factors are the most popular bases for segmenting customer groups since
consumer needs, wants, and usage rates often vary closely with demographic and it is
also an easier measure than most other types of variables
Age and Life-Cycle Stage
x Age and life-cycle segmentation divides a market into different age and
life-cycle groups
Chapter 8 ± Customer-Driven Marketing Strategy: Creating Value for Target Customers (pg. 240 ± 267)
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2 | Page/MGTB0 4 We e k 6
x E.g. Oscar Mayer offers Lunchables for kids and Deli Creations for adult
x Marketers must be careful to guard against stereotypes when using this
VHJPHQWEHFDXVHDJHLVDSRRUSUHGLFWRURIDSHUVRVlife cycle, health,
work or family status, needs, and buying power
x E.g. some 40-year-old couples may send their children off to university
or are just beginning a new family
Gender
x Gender segmentation divides a market into groups based on gender
x Has long been used in clothing, cosmetics, toiletries, and magazines
x E.g. P&G was among the first with Secret, an antiperspirant brand
specially formulated for a women also, packaged and advertised to
reinforce the female image
Income
x Income segmentation divides a market into different income groups
x Products and services such as automobiles, clothing, cosmetics, financial
services, and travel have long used this
x Many companies target affluent consumers with luxury goods/services
x Some companies such as, Dollarama, target low- and middle-income
groups and choose to locate stores in these areas
- Psychographic Segmentation
o Psychographic segmentation divides a market into different groups based on social
class, lifestyle, or personality characteristics
o Marketers can segment their markets by consumer lifestyles HJ5RFNSRUW¶VDGV
advertises how their shoes are meant for everyday activities and fits many lifestyles)
o Marketers can also use personality variables to segment markets (e.g. for the cruise
lines, Royal Caribbean appeals to high-energy couples and families while Regent Seven
Seas Cruise Line targets more serene and mature couples)
- Behaviour Segmentation
o Behavioural segmentation divides a market into groups based on consumer
knowledge, attitudes, uses, or responses to a product
Occasions
x Occasion segmentation divides the market into groups according to
occasions when buyers get the idea to buy, actually make their purchase,
or use the purchased item
x 6RPHKROLGD\VVXFKDV0RWKHU¶V'D\DQG)DWKHU¶V'D\ZHUH originally
promoted partly to increase the sale of candy, flowers, cards, and gifts
Benefits Sought
x Benefit segmentation divides the market into groups according to the
different benefits that consumers seek from the product
x Requires finding the major benefits people look for in the product class,
the kinds of people who look for each benefit, and the major brands that
deliver each benefit
x E.g. M&M Meat Shops target time-pressed busy working mothers with
the promise that M&M can help them serve a great meal
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3 | Page/MGTB0 4 We e k 6
Usage Status
x Markets can be segmented into nonusers, ex-users, potential users, first-
time users, and regular users of a product
x Marketers wan to reinforce and retain regular users, attract targeted
nonusers, and reinvigorate relationships with ex-users
x Included in the potential user group are consumers facing life-stage
changes such as newlyweds when they begin to purchase new products
User Rate
x Can also be segmented into light, medium, and heavy product users
x Heavy product users account for a small percentage of the market but
account for a high percentage of total consumption
x (JDW%XUJHU.LQJWKH\WDUJHW³6XSHU)DQV´ZKRDUH\RXQJPDOHVDJHG
18-34 who eats at Burger King on average of 16 times per month
Loyalty Status
x Can be loyal to brands (Tide), stores (MEC), and companies (Toyota)
x Consumers can be completely loyal ± buy one brand all the time (Apple)
x Consumers can be somewhat loyal ± are loyal to two or three brands of a
given product or favour one brand while sometimes buying others
x Company can learn a lot by analyzing loyalty patterns in its market:
o Loyal customers ± pinpoint its target market/strategy better
o Less-loyal customers ± detect which brands are most competitive
o Customers who are shifting away ± learn about its weaknesses
- Using Multiple Segmentation Bases
o Marketers rarely limit their segmentation analysis to only one or a few variables
o Uses multiple segmentation bases to identify smaller, better-defined target groups, and
tailor market offerings and messages to their specific needs
o Several business information services ± such as Claritas, Experian, Acxiom, and
MapInfo ± provide multivariable segmentation systems that merge geographic,
demographic, lifestyle, and behavioural data to help companies segment their market
Segmenting Business Markets
- Consumer and business marketers use many of the same variables to segment their markets
such as geographically, demographically (industry, company size), or by benefits sought, user
status, usage rate, and loyalty. In addition, customer operating characteristics, purchasing
approaches, situational factors, and personal characteristics
- Within a given target industry and customer size, the company can segment by purchase
approaches and criteria
Segmenting International Markets
- Few companies have the resources or will to operate in all or in most of the countries around
the globe since each country can vary greatly in their economic, cultural, and political makeup
- International firms need to group their world markets into segments with distinct buying needs
and behaviours. Can segment by:
o Geographic location ± grouping countries by regions such as Middle East and Western
Europe. Assumes that nations close to one another will have many common traits and
behaviours but sometimes this is not the case (e.g. US and Mexico)
o Economic factors ± countries can be grouped by population income levels or level of
economic development
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Description
1 P a g e M G T B 0 4 W e e k 6 Chapter 8 Customer-Driven Marketing Strategy: Creating Value for Target Customers (pg. 240 267) - Since companies cannot appeal to all buyers in the marketplace, they must design customer- driven marketing strategies that build the right relationships with the right customers - Most companies are moving away from mass marketing and toward target marketing which is identifying market segments and developing products and marketing programs tailored to each :8L3J7L1O0,5574,.K>9,7J09L3J(7,9K079K,38K49J:3,5574,.K>8.,9907L3J0114798( - There are four major steps in designing a customer-driven marketing strategy: - Selects the customers that it will serve o Market segmentation involves dividing a market into smaller groups with distinct needs, characteristics, or behaviours that might require separate marketing strategies o Market targeting (or targeting .438L898410;,O:,9L3J0,.K2,7N0980J20398 attractiveness and selecting one or more segments to enter - Decide on a value proposition (how to create value for target customers) o Differentiation L3;4O;08,.9:,OOL1107039L,9L3J9K01L7282,7N0941107L3J94.70,90 superior customer value o Positioning consists of arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target customers Market Segmentation - Through market segmentation, companies can divide large markets into smaller segments that can be reached more efficiently and effectively with productsservices that match their needs - There are four important segmentation topics: segmenting consumer markets, business markets, international markets, and requirements for effective segmentation Segmenting Consumer Markets - There are many ways to segment a market and a marketer has to try different segmentation variable, alone and in combination for the best way to view the market structure: - Geographic Segmentation o Geographic segmentation is dividing a market into different geographical units such as nations, regions, provinces, countries, cities, or neighbourhoods o Many companies are localizing their products, advertising, promotion, and sales efforts to fit the needs of individual areas o E.g. video game companies create different versions of their games depending on the world region in which the game is sold o As well, some companies are fleeing the fiercely competitive major cities and suburbs and seeking to tap into smaller towns - Demographic Segmentation o Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality o Demographic factors are the most popular bases for segmenting customer groups since consumer needs, wants, and usage rates often vary closely with demographic and it is also an easier measure than most other types of variables Age and Life-Cycle Stage N Age and life-cycle segmentation divides a market into different age and life-cycle groups www.notesolution.com
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