Chapter 8 Learning Objectives
LO 8-9: Explain how and why firms implement positioning strategies and how product differentiation plays a role.
- The term position refers to the place that the offering occupies in consumers' minds.
LO 8-1: Describe the characteristics of markets and market segments.
A group of people that lacks any one of these characteristics is NOT a market. (see "market" definition)
LO 8-4: Describe the bases commonly used to segment consumer markets.
Age Segmentation: Tweens and Teens- spend more than $200 billion of their own money and their parents' money each year Generation Y (millennial generation)- born between 1979 and 2003; make up 1/3 population. Generation X- born after baby boomers; disloyal and skeptical; desire experience. Baby Boomers- born between 1946 and 1964; spend $2.1 trillion a year; represent half of all spending in the United States; make up 49% of all affluent households; not brand loyal War Generation- ages 61-66 Great Depression Generation- ages 67-76 G.I. Generation- ages 77 and up
LO 8-4: Describe the bases commonly used to segment consumer markets.
Benefit Segmentation: - Benefits sought
LO 8-5: Describe the bases for segmenting business markets.
Business markets can be segmented on two general bases: - Company Characteristics - Buying Process
LO 8-5: Describe the bases for segmenting business markets.
Buying processes: - Governments - Institutions
LO 8-8: Explain how CRM can be used as a targeting tool
CRM Trends: One-size-fits all marketing no longer relevant Direct and personal marketing efforts will grow to meet needs of busy consumers. Consumers will be loyal to companies that have earned—and reinforced—their loyalty. Mass-media approaches will decline as technology allows better customer tracking. One-to-one marketing
LO 8-5: Describe the bases for segmenting business markets.
Company characteristics (producers and resellers): - customers' geographic location - type of company - company size - product use
LO 8-7: Discuss alternative strategies for selecting target markets.
Concentrated Targeting: Advantages: - Concentration of resources - Can better meet the needs of a narrowly defined segment - Allows some small firms to better compete with larger firms - Strong positioning Disadvantages: - Segments too small or changing - Large competitors may more effectively market to niche segment
LO 8-4: Describe the bases commonly used to segment consumer markets.
Demographic Segmentation: - Age - Gender - Income - Race/ethnicity - Family life-cycle
LO 8-4: Describe the bases commonly used to segment consumer markets.
Five bases are commonly used for segmenting consumer markets. 1. Geographic 2. Demographic 3. Psychographic 4. Benefits 5. Usage-rate
LO 8-4: Describe the bases commonly used to segment consumer markets.
Geographic Segmentation: - Region of the country or the world - Market size - Market density - Climate
LO 8-2: Explain the importance of market segmentation.
Market segmentation enables marketers to tailor marketing mixes to meet the needs of particular population segments.
LO 8-7: Discuss alternative strategies for selecting target markets.
Marketers select target markets using three different strategies: - Undifferentiated Targeting - Concentrated Targeting - Multisegment Targeting
LO 8-7: Discuss alternative strategies for selecting target markets.
Multisegment Targeting: Advantages: - Greater financial success - Economies of scale in producing/marketing Disadvantages: - High costs - Cannibalization
LO 8-9: Explain how and why firms implement positioning strategies and how product differentiation plays a role.
Products may be differentiated by: - Attribute - Price and Quality - Use or Application - Product User - Product Class - Competitor - Emotion
LO 8-4: Describe the bases commonly used to segment consumer markets.
Psychographic Segmentation: - Personality - Motives - Lifestyle - Geodemographics
LO 8-2: Explain the importance of market segmentation.
Segmentation helps marketers identify consumer needs and preferences, areas of declining demand, and new marketing opportunities.
LO 8-6: List the steps involved in segmenting markets.
Six steps are involved when segmenting markets: (1) selecting a market or product category for study; (2) choosing a basis or bases for segmenting the market; (3) selecting segmentation descriptors; (4) profiling and analyzing segments; (5) selecting target markets; and (6) designing, implementing, and maintaining appropriate marketing mixes.
LO 8-3: Discuss the criteria for successful market segmentation.
Successful market segmentation depends on four basic criteria: (1) a market segment must be substantial and have enough potential customers to be viable (2) a market segment must be identifiable and measurable, (3) members of a market segment must be accessible to marketing efforts, and (4) a market segment must respond to particular marketing efforts in a way that distinguishes it from other segments.
LO 8-7: Discuss alternative strategies for selecting target markets.
Undifferentiated Targeting: Advantages: - Potential savings on production/marketing costs Disadvantages: - Unimaginative product offerings - Company more susceptible to competition
LO 8-4: Describe the bases commonly used to segment consumer markets.
Usage-Rate Segmentation: - Former users - Potential users - First time users - Light or irregular users - Medium users - Heavy users