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Chapter 8

by: Taylor Gaunt

Chapter 8 3832

Taylor Gaunt
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About this Document

These notes will cover what is going to be on Exam 1
Marketing Management
Susan DelVecchio
Class Notes
marketing management




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This 7 page Class Notes was uploaded by Taylor Gaunt on Thursday February 11, 2016. The Class Notes belongs to 3832 at East Carolina University taught by Susan DelVecchio in Winter 2016. Since its upload, it has received 25 views. For similar materials see Marketing Management in Marketing at East Carolina University.


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Date Created: 02/11/16
Chapter 8 Segmenting and Targeting Markets Characteristics of a Market - People/organizations with needs/wants and with the ability/willingness to buy - Lacks any one of these characteristics = not a market Market Segmentation Market – people/organization w/ needs/wants and the ability/willingness to buy Market segment – subgroup of people/organization sharing 1+ characteristics that cause them to have similar product needs Market segmentation – process of dividing a market into meaningful, relatively similar, identifiable segments/groups The Importance of Market Segmentation Markets – variety of product needs/preferences Marketers – better define customer needs Decision makers – define objectives/allocate resources more accurately Criteria for Successful Segmentation Substantiality – must be large enough to warrant a special marketing mix Identifiability/measurability – must be identifiable and their size measurable Accessibility – must be reachable with marketing mix Responsiveness – no separate treatment is needed unless segment responds to a marketing mix differently Bases for Segmenting Consumer Markets Geography - Region of the country/world - Market size - Market density - Climate Demographics - Age o uses cohorts (Tweens, teens, millennials…) - Gender o 85% of consumers goods purchases annually are women - Income o Influences consumers’ wants and determines buying power - Ethnic background o Hispanic/African Americans/Asian are three largest US ethnic groups - Family life cycle o Marital status o Age o Children Psychographics - Personality o Reflects a person’s traits, attitudes, habits - Motives o Emotional, rational, status motives - Lifestyles o How time is spent o Importance of things around them o Beliefs o Socioeconomic characteristics - Geodemographic o Segmenting potential customers into neighborhood lifestyle categories o Combines geo/demo/lifestyle - Benefits sought o Process of grouping customers into market segments according to benefits they seek from product - Usage rate o Diving a market by amount of product bought or consumed o 80/20  Holding that 20% of all customers generate 80% of the demand Bases for Segmenting Business Markets - Market consists of four segments 1. Producers 2. Resellers 3. Government 4. Institutions - Company characteristics o Geographic location o Type of company o Size of company o Product use - Segmenting customer type = business marketers tailor marketing mixes to unique needs of particular types of organizations/industries Bases for Segmenting Business Markets - Satisficers o Contact familiar suppliers and place order w/ the first one to satisfy product/delivery requirements - Optimizers o Consider numerous suppliers/obtain bids/study all proposals before selecting one Buyer Characteristics – personal characteristics of the buyers influence their buying behavior/offer viable basis for segmenting some business markets - Demographic characteristics - Decision style - Tolerance for risk - Confidence level - Job responsibilities Steps in segmenting a market - Select a market for study - Choose bases for segmentation - Select descriptors - Profile/analyze segments - Select markets - Design, implement, maintain marketing mix Strategies for selecting target markets - Target market o Group of people/organizations for which the organization designs, implements, and maintains a marketing mix to meet that group’s needs o 3 general strategies  Undifferentiated  Mass market philosophy  Viewing market as one big market/using one marketing mix  Commodity products o Advantage  Potential savings on production/marketing costs o Disadvantages  Unimaginative product offerings  Company more susceptible to competition  Concentrated  Share similar needs and there are different croups (each w/ different needs)  One group of consumers = one target market  Aimed at one group of consumers, one segment  Examples o ESPN  Advantages o Concentration of resources o Meets narrowly defined segment o Small firms can compete o Strong positioning o Price sensitivity o Deeper brand loyalty  Disadvantages o Segments too small or changing o Large competitors may market to niches segment o Diversified risks o Susceptible to larger competitors especially when successful  Multi-segment targeting  Share similar needs and there are different groups (each with different need)  More than one group of consumers (more than one target market)  Each target market gets a separate marketing mix  Shoe company for men/women (NIKE)  Advantages o Larger market share o Large niche o Expertise/risks  Disadvantages o High costs o Cannibalization  Reduction sales volume/revenue as a result of introducing a new product o Customer confusion  80/20  Individual Marketing or Mass Customization  Each customer has his/her own set of unique needs  Marketing mix aims at each consumer  Each consumer gets a separate marketing mix  Example o Build-A-Bear  Advantages o Cost effective o Focus on customer retention/convenience  Disadvantages o Not for all markets o Successful for luxury not basic products o Return of customized products is a hassle o Barriers to entry CRM as a Targeting Tool CRM Trends - One size fits all marketing = irrelevant - Direct/personal marketing efforts will grow to meet needs of busy consumers - Consumers will be loyal to companies that have earned/reinforced their loyalty - Mass media approaches will decline as technology allows better customer tracking Positioning - The place a product, brand, or group of products occupies in consumers’ minds relative to competing offerings - Assumes that consumers compare products on the basis of important features - Requires assessing the positions occupied by competing products Product differentiation - Distinguish products from competitors Perceptual Mapping - Displaying/graphing in two or more dimensions, the location of products, brands, or groups of products in customers’ minds Repositioning - To sustain growth in slow markets - Correct positioning mistakes - Changing consumers’ perceptions of brand in relation to competing brands


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