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Chapter 7

Chapter 7 - Segmentation, Targeting, & Positioning

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Department
Business
Course
BU352
Professor
Dave Ashberry
Semester
Fall

Description
Chapter 7 Segmentation, Targeting, & Positioning Segmentation, Targeting, Positioning Process Segmentation Targeting Positioning Evaluate Identify and Strategy or Profile Segment Select Target Develop Objectives Segments Attractiveness Market Positioning Strategy STEP 1: Establish Overall Strategy Objectives - Clearly articulate the mission and the objectives of a company’s marketing strategy - The strategy must be consistent with the firm’s mission and objectives and in line with SWOT STEP 2: Segmentation Bases - Develops descriptions of the different segments (needs, wants, characteristics) to better understand the profile of customers in each segment; helps to identify similarities and differences across customer segments Geographic Segmentation - Grouping of consumers on the basis on of where they live - Country, region, province, city, urban, rural, climate, topography - Useful for companies whose products satisfy needs that vary by region Demographic Segmentation - According to easily measured, objective characteristics - Age, gender, income, education, race, occupation, religion, marital status, family status, family life cycle, home ownership - Represent most common means to define segments; easy to identify & easy to reach - Sex in particular plays a significant role in how firms market products - Depending on the nature of the P/S, marketers may find it more advantageous to combine demographics with other segments to get better understanding Psychographic Segmentation - How consumers describe themselves; allows people to describe themselves using characteristics that help them choose how they occupy their time (behaviour) & what underlying psychological reasons determine those choices - Self-Values  goals for life; component of psychographics that refers to overriding factors that drive how a person lives his life o People develop how they want to be then determine a way of life that will help them arrive at that goal - Self-Concept  image people have of themselves - Lifestyle  the way we our lives to achieve goals; marketers have a built-in target group with similar interests & buying desires - VALS  classifies consumers into 8 segments based on their answers to the VALS questionnaire o Vertical dimension based on resources, and horizontal dimension based on the segment’s primary motivation o Innovators, thinkers, achievers, experiencers, believers, strivers, makers, survivors o 3 universal primary motives: ideals (guided by knowledge and principles), achievement (look for products that demonstrate success to their peers), self-expression o Firms find VALS is more useful than demographics - Difficult to identify segments with psychographics, therefore used in conjunction with other segment methods Behavioural Segmentation - On basis of the benefits derived from products or services, their usage rates or services, their user status, and their loyalty (convenience, economy, prestige, quality, speed, service) - usage rates (heavy, regular, light, occasional) - user status (current, ex, potential) - Benefit segmentation is the grouping of consumers on the basis of the benefits they arrive from products or services. - Loyalty segmentation - strategy of investing retention and loyalty initiatives to retain firm’s most profitable customers o Example: loyalty cards o Can be expensive Using Multiple Segmentation Methods - Geodemographic Segmentation  grouping of consumers on the basis of geographic, demographic, and lifestyle characteristics - PSYTE Clusters – groups all neighbourhoods in Canada into 60 different lifestyles clusters with specific locations - Can tailor the store to meet preferences of local community - Use it to find new locations (determine their best locations & find similar neighbourhoods) STEP 3: Evaluating Segment Attractiveness - In this step it involves evaluating the attractiveness of each segment by determining whether the segment is worth pursuing based on the 4 factors: Identifiable - Must determine who is within their market to be able to design products/services to meet their needs - Ensure segments are distinct because too much overlap means distinct marketing strategies are pointless Reachable - The market must be able to be accessed through persuasive communications & product distribution - Must know product exists & understand what it can do for them, & know how to buy it Responsiveness - The market must react similarly & positively to firm’s offering Substantial & Profitable - Once the firm has identified its potential target markets, it needs to measure the size and growth potential. - If market is too small or buying power is insignificant, it won’t generate sufficient profits or be able to support the marketing mix - Must focus assessments on the potential profitability of each segment (current & future) - Calculations page 217 - Segment profitability =(se
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