Chapter 7.docx

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Western University
Business Administration
Business Administration 3301K
John White

Chapter 7 The segmentation – targeting -- positioning process Step 1: Establish overall strategy • Develop mission, and segmentation strategy, must be aligned with companys current situation and SWOT. Strengths, weaknesses, opportunities, and threats Step 2: Segmentation Bases • Marketers must now specifically divide each segment, and have info on each segment • Geographic Segmentation - Segmenting by where people live • Demographic - Segmenting by easily measured characteristics such as age, income, gender, education levels - Demographic segment represented the most common way to segment cuz its so easily defined - Demographics consumers are easy to reach, must make sure to reach them correctly and not stereotype. Men watch action primetime tv, so show Gillette razors at that time • Psychographic - Segments consumers based on how they describe themselves, how they use their time, specific characteristics that define behaviour - Consumers want to be a certain way, fit in with groups, looks like this, and this has an impact on what they buy - They have self values which are life goals, extremely long term, and dictates how they live their life. Eg lexus tag line at one time was ‘pursuit of perfection,’ to reach people that have self value of being perfect all the time - Someones self value, which is what a person wants to achieve, creates self concept which is how a person seems themself. This self concept will match the self value of the person. Person who wants to be accepted, may view themself as fun and exciting to convince themself that people will want to be around them - Lifestyle is the way we live, we have our self value goal, the self concept which is how see ourself, now we must actually carry out the action to achieve all this - VALS is a psychographical tool developed by a company called SBI, that people can take like a test and it catagorizes them into 8 classes • Behavioural - Groups consumers based on the benefits they receive from products, their usage rates, and loyalty - Very useful for a company to know which people can be extremely satisfied by using your product - Specifically benefit segmentation is grouping ONLY by the benefits people receive from a product - Loyalty segmentation, grouping by the most loyal consumers • Using multiple segmentation methods - Each segmentation method has its own pros and cons: grouping by demographics and or by geo is easy but it doesn’t give specific info about consumer needs - Idea of birds of a feather flock together, marketers use geodemographic segmentation, which is a combo of geo, demographic, and lifestyle choices. People in the same neighborhood tend to buy similar things, you need to keep up with the jones’s - Beneficial because, a neighborhood has a certain income level, certain way of life, stores can position themselves close to neighborhoods since people like convenience and so forth Step 3: Evaluate Segment Attractiveness • Now that segments have been established, which ones are worth pursuing? Is the segment... • Identifiable - Firms must be able to identify the types of people within a segment - Has to be rather distinctive in comparison to other segments, or else you get segment overlap and thus specific marketing plans for a segment wouldn’t be necessary - Gap, gapbody, gapkids, babygap, old navy and banana republic • Reachable - The best product is useless if the segment cant be reached - Consumers must be aware of the product, what it does for them, how to get it - Uni students are considered hard to reach groups • Responsive - For segmentatio
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