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Chapter 8

BU352- Chapter 8 Notes.docx

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Hae Joo Kim

BU352 CH. 8 NOTES – SEGMENTATION, TARGETING, & POSITIONING Terms & Concepts Geographic The grouping of consumers on the basis of where they live. Segmentation ADVANTAGE; Info is readily available. DISADVANTAGE: does not help marketers determine customer needs. Demographic The grouping of consumers based on easily measured (objective) Segmentation characteristics. (Ex. Age, gender, income, education, etc.) ADVANTAGE: Info is readily available. DISADVANTAGE: does not help marketers determine customer needs. Psychographics Used in segmentation. How consumers describe themselves using characteristics that help them choose how they occupy their time (behavior) & what underlying psychological reasons determine their choices. LIMITITATIONS: - Not as objective as demographics - Harder to identify potential customers :. Often used w/ other segmentation methods Self-Values Goals one wants to accomplish in life (not just ones in a day). They refer to overriding desires that drive how a person lives his/her life. (Ex. Self-respect, self-fulfillment, sense of belonging). For marketers, these help determine the benefits the target market may be looking for from a product. Self-Concept The image a person has of him-/herself. A component of psychographics. Lifestyles The way a person lives his/her life to achieve goals. Part of psychographics. VALS Most widely used psychographic system developed by SRI Consulting Business Intelligence. Classifies consumers into 8 segments: Innovators, Thinkers, Believers, Achievers, Strivers, Experiencers, Makers, or Survivors. Behavioural Group of consumers based on the benefits they derive from Segmentation products/services, their usage rate, their user status & their loyalty. ADVANTAGE: Easy to portray a product’s/service’s benefits in a firm’s communication strategies. Benefit Segmentation The grouping of consumers based on the benefits they derive from products/services. Loyalty Segmentation Strategy of investing in loyalty initiatives to retain the firm’s most profitable customers. (ex. Loyalty cards) Geodemographic The grouping of consumers on the basis of a combination of geographic, Segmentation demographic, & lifestyle characteristics. PSYTE Clusters The grouping of all neighbourhoods in CAN into 60 different lifestyle clusters. Used for geodemographic segmentation. Undifferentiated Marketing strategy that can be used if everyone might be considered a Segmentation Strategy potential user of the product/service  the product/service is perceived to (Mass Marketing) provide the same benefits to everyone, w/ no need to develop separate strategies for different group. Can be effective for basic items. 1 Differentiated A strategy through which a firm targets several market segments w/ a Segmentation Strategy different offering for each. (ie. La Senza, La Senza Girl, La Senza Express). ADVANTAGE: - Helps company to obtain a bigger share of the market - Increase the market for their products overall - Helps to diversify a business  lowering company’s overall risk DISADVANTAGE: Expensive Concentrated Marketing strategy where a single, primary target market is selected & all Segmentation (Niche) energies are focused on providing a product to fit that market’s needs. Strategy Micromarketing (one- An extreme form of segmentation that tailors a product/service to suit an to-one marketing) individual customer’s wants/needs. Mass Customization The practice of interacting on a one-to-one basis w/ many ppl to create custom-made products/services. ***Providing one-to-one marketing to the masses.*** (ex. Nike & ID program) Positioning The mental picture that ppl have about a company & its products/services relative to competitors. Formed from sources like friends, family, reference groups, media, etc. Positioning Statement Expresses how a company wants to be perceived by consumers. Perceptual Map Displays the position of products/brands in the consumer’s mind. 5 Steps to Develop Perceptual Map: a) Determine consumers’ perceptions & evaluations of the product/service in relation to competitors’
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