Chapter 8 Textbook Summary.docx

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Western University
Management and Organizational Studies
Management and Organizational Studies 2320A/B
Kevin Thompson

Chapter 8  Create value for targeted customers: 1. Select customers to serve a. Segmentation b. Targeting 2. Decide on a value proposition a. Differentiation b. Positioning  Market Segmentation o Geographic segmentation: dividing a market into different geographical units such as nations, regions, provinces, counties, cities, or neighborhoods 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  Age and life cycle segmentation: dividing a market into different age and cycle groups  Gender segmentation – long used in clothing cosmetics, toiletries, and magazines  Income segmentation o Psychographic segmentation: divides buyers 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  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  Benefit segmentation: dividing the market into groups according to the different benefits that consumers seek from the product  User status – markets can be segmented into nonusers, ex- users, potential users, first-time users, and regular users of a product  Usage rate – light, medium, and heavy product users  Loyalty status  Marketers rarely limit their segmentation analysis to only one or few variables  By going after segments instead of the whole market, companies can deliver just the right value proposition to each segment served and capture more value in return  Segmenting international markets can be based on geographic, economic, political, cultural, and other factors  Intermarket segmentation: forming segments of consumers who have similar needs and buying behaviour even though they are located in different countries  To be useful, market segments must be: o Measurable, accessible, substantial, differentiable, actionable  In evaluating different market segments, a firm must look at three factors: o Segment sixe and growth o Segment structural attractiveness o Company objectives and resources  Target market: a set of buyers sharing common needs or characteristics that the company decides to serve o 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 offer o Differentiated marketing (segmented marketing): a firm decides to target several market segments and signs separate offers for each  Increases the costs of doing business  Weigh increased sales against increased costs o Concentrated marketing (niche marketing): firm goes after a large share of one or a few segments or niches  Highly profitable but it involves higher risks o Micromarketing: the practice of tailoring products an
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