Chapter 6 - Segmentation and Targeting

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Western University
Management and Organizational Studies
Management and Organizational Studies 1021A/B
James O' Brien

Chapter 6Segmentation and Targeting The essence of market segmentation target markets and product positioning is based on two important facts 1 Consumers have diverse needs and a single product cannot satisfy everyone 2 Companies have finite amounts of money and it needs to be spent efficiently and effectively on those most likely to purchase the product Two main market segments y consumer marketconsists of products ideas and services that a person can purchase for personal use y business marketproducts that are purchased either to run a business or to be used as a component in another product or service Market segmentation involves aggregating prospective buyers into groups that have common needs and respond similarly to marketing programs Product differentiation involves positioning a product apart from the competition in the eyes of consumers y this doesnt mean a product has to be better than the competition sometimes adding a unique feature other times minimizing all costs to provide a cheaper alternative Forms of Market Segmentation 1 Mass Marketingthe marketing of a product to the entire market with no differentiation at all y Eg natural gas y this approach exists in a limited capacity today due to competitiveness of the market and the need to specifically address consumer needs with their offerings 2 Segment Marketingdesigning different products and services to meet the needs of different target groups y Common form of segmentation followed by large companies y Eg Kelloggs cereal offers healthy cereal for adultsfun presweetened cereals for children y Segmented approach also followed by companies in the businesstobusiness market Eg Bicks pickles may create pickles for a large fastfood chain designed to meet this key accounts specifications 3 Niche Marketingwhen a company focuses its efforts on a limited segment in the market
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