market
people or orgs with needs or wants and with the ability and willingness to buy
market segment
subgroup of people or orgs sharing one or more characteristics that cause them to have similar product needs
market segmentation
the process of dividing a market into meaningful, relatively similar, and identifiable groups or segments
3 Reasons for Market Segmentation
1) enables marketers to ID groups of customers with similar needs and analyze their characteristics and buying power
2) provides marketers with info to help them design marketing mixes specifically matched with the characteristics and desires of one or mo
Criteria for Segmentation
1) Substantiality: segment must be large enough to warrant developing special marketing mix
2) Identifiability/Measurability
3) Accessibility
4) Responsiveness: certain segment must respond differently, or there's no point of the segment
segmentation bases (variables)
characteristics of individuals, groups, or orgs... single variable is easier to implement yet multiple-variable is more precise
geographic segmentation
segmenting by
1) region of the world/country
2) market size
3) market density
4) climate
demographic segmentation
segmenting by
1) age
2) race
3) gender
4) income
5) ethnic background
6) family lifecycle
*info is often widely available
family life cycle (FLC)
series of stages determined by a combo of age, marital status, and the presence or absence of children
psychographic segmentation
segmenting by
1) Personality
2) Motives
3) Lifestyles
4) Geodemographics: neighborhood lifestyle categories
Benefit Segmentation
segmenting according to the benefits consumers seek from the product
Usage-Rate Segmentation
divides a market by the amount of product bought or consumed
80/20 principle
holds that 20% of all customers generate 80% of the demand, *not exact but often is true
satisficers
business customers who place an order with the first familiar supplier to satisfy product and delivery requirements
optimizers
business customers who consider numerous suppliers, both familiar and unfamiliar, solicit bids, and study all proposals carefully before selecting the optimal one
Segmenting Business Markets
can be on the basis of...
1) company characteristics
2) how they buy (satisfice/optimize)
3) purchasing criteria
4) volume of purchase
Steps in Market Segmentation
1) Select Market/Product Category for Study
2) Choose basis/bases for segmenting
3) Select segmentation descriptors
4) Profile and Analyze Segments
5) Select Target Markets
6) Design, implement, and maintain appropriate marketing mixes
Target Market
group of people or orgs for which an org designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges
undifferentiated targeting strategy
approach that IDs no segments and uses 1 marketing mix for everyone... appeals to broad spectrum, efficient due to economies of scale, potential savings on production/marketing costs, not very effective
concentrated targeting strategy
firm selects one market niche to offer one or more products for... useful for smaller firms or highly specialized products ex. Lamborghini
multisegment targeting strategy
chooses two or more market segments and develops a distinct marketing mix for each... very efficient, especially when choosing from well-known brands ex. Colgate
cannibalization
occurs when sales of a new product cut into the sales of a firm's existing products
one-to one marketing (customized)
so precisely defined that products are offered to exactly meet individuals needs...
4 trends lead to its continual growth: personalization, time savings, loyalty, and technology
ex. custom clothes from Lands End/ hairstylists
mass customization
company modifies basic good to meet the needs of an individual ex. custom shoes online, Dell, burger king
position
place a product, brand, or group of products occupies in a customer's mind relative to competing offerings
positioning
Developing a specific marketing mix to influence potential customers' overall perception of a brand, product line, or organization in general
3 Steps for Effective Positioning
1) Assess the positions occupied by competing products
2) Determine the dimensions underlying these positions
3) Choose a market position where marketing efforts will have the greatest impact
Product differentiation
A positioning strategy that some firms use to distinguish their products from those of competitors.
Distinctions can be real or perceived
Repositioning
Changing consumers' perceptions of a brand in relation to competing brands ex. Cadillac
Perceptual Mapping
A means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers' minds
Positioning Bases
1) Attribute
2) Price and Quality
3) Use or Application
4) Product User
5) Product Class
6) Competitor
7) Emotion