Marketing: Chapter 6 - Customer Value-Driven Marketing Strategy

Segmenting International Markets - Intermarket (cross-market Segmentation

Forming segments of consumers who have similar needs and buying behaviors even though they are located in different countries.

Selecting Target Market Segments - Undifferentiated Marketing

*Mass Marketing A firm might decide to ignore market segment differences and target the whole market with one offer. *This strategy focuses on what is common in the needs of consumers, rather than what is different. **This strategy is typically not as effective as others because these companies cannot compete with companies that pay attention to the differences and market better products that fit a niche or segment better.

Requirements for Effective Segmentation

*Measurable *Accessible: communicate w/ consumers *Substantial: large or at least profitable *Differentiable: how each segment is unique *Actionable: offer benefits/programs to make consumes actionable

Selecting Target Market Segments - Concentrated Marketing

*Niche Marketing Instead of going after a small share of a large market, a firm goes after a large share of one or a few smaller segments or niches. *Through concentrated marketing, the firm achieves a strong market position because of its greater knowledge of consumer needs in the niches it serves and the special reputation it acquires. **A company can market more effectively by fine-tuning its products, prices, and programs to the needs of carefully defined segments. **A company can market more efficiently by targeting its products or services, channels, and communications programs toward only consumers that it can serve best and most profitably.

Selecting Target Market Segments - Differentiated Marketing

*Segmented Marketing A firm decides to target several market segments and designs separate offers for each. *By offering separate products to separate markets, companies can hope for higher sells and stronger positions within these segments. Doing this creates more total sales than undifferentiated marketing. **This does make doing business more expensive though.

Market Targeting - Evaluating Market Segments

A firm must look at 3 factors: segment size and growth, segment structural attractiveness, and company objectives and resources. *A company wants to select segments that have the right size and growth characteristics based upon their company. Major structural factors affecting long-run segment attractiveness: contains aggressive competitors, is easy for new entrants, existence of many actual or potential substitute products that limit erasable prices and profits, bargaining power of buyers, and powerful suppliers that can control prices or reduce the quality and quantity of ordered goods and services. In the end, a company must decide to join a market based upon their own objectives and resources. Some segments can be dismissed because they don't mesh well with the company. Or the company could lack the skills and resources needed to succeed in an attractive market.

Target Market

A set of buyers sharing common needs or characteristics that the company decides to serve.

Segmenting International Markets

Companies can segment international markets using one or a combination of several variables. *They can segment by geographic location, grouping countries by regions. This assumes that countries that are close together will have many common traits and behaviors. However, sometimes marketers lump countries together that are not all that similar. *World markets can also be segmented based on economic factors. Countries might be grouped by population income levels or their overall level of economic development. These two factors shape a country's product and service needs, and therefore the marketing opportunities it offers. *Countries can also be segmented by political and legal factors such as the type and stability of the government, receptivity to foreign firms, monetary regulations, and amount of bureaucracy. *Cultural factors can also be used, grouping markets based according to common languages, religions, values, and attitudes, customs, and behavioral patterns. Technology has allowed marketers to define and reach segments of like-minded consumers no matter where in the world they are.

Marketing Segmentation

Companies divide large, diverse markets into smaller segments that can be reached more effectively and efficiently with products and services that match their unique needs.

Segmenting Business Markets

Consumer and business marketers use many of the same variables to segment their markets. Business buyers can be segmented geographically, demographically (industry, company size), benefits sought, user status, usage rate, and loyalty status. *Business marketers also use some additional variables, such as operating characteristics, purchasing approaches, situational factors, and personal characteristics. *Many companies establish separate systems for dealing with larger or multiple location customers.

Behavioral Segmentation - Loyalty Status

Consumers can be loyal to brands, stores, and companies. Buyers can be divided into groups according to their degree of loyalty. *Some consumers are completely loyal - they buy one brand all the time and tell others about it. *Other customers are somewhat loyal - they are loyal to 2 to 3 brands of a given product, while sometimes buying others. *Some customers show no loyalty to brands - they want something different each time or they buy what's on sale. *Some heavy users can be loyal - loyalty programs

Demographic Segmentation - Age and Life-Cycle Segmentation

Dividing a market into different age and life-cycle groups. *Marketers must be careful to guard against stereotypes when using age and life-cycle segmentation. **Ex: Not all 40 year old married couples are sending their children to college, some are just starting their family.

Segmenting Consumer Markets - Geographic Segmentation

Dividing a market into different geographical units, such as nations, states, regions, counties, cities, or even neighborhoods. *Companies may decide to operate in one or a few geographical areas, or even all of them, but but pay attention to geographical differences in needs and wants. *Based upon different needs - no snowblowers in Florida.

Demographic Segmentation - Income Segmentation

Dividing a market into different income segments.

Demographic Segmentation - Gender Segmentation

Dividing a market into different segments based on gender.

Segmenting Consumer Markets - Psychographic Segmentation

Dividing a market into different segments based on social class, lifestyle, or personality characteristics (preferences). *Marketers sometimes refer to brand-focused psychographic segments as "brand 'tribes'" - communities of core customers with shared characteristics, brand experiences, and strong affinities for a particular brand.

Segmenting Consumer Markets - Behavioral Segmentation

Dividing and market into segments based on consumer knowledge, attitudes, uses of a product, or responses to a product. *Many marketers believe that behavior variables are the best starting point for building market segments. *Response to mkt. efforts

Behavioral Segmentation - Occasion

Dividing the market into segments according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item. *Can help firms build up product usage. *Why consumers make the purchase

Behavioral Segmentation - Benefits Sought

Dividing the market into segments according to the different benefits that consumers seek from the product. *Requires finding the major benefits people look for in a product class, the kinds of people who look for each benefit, and the major brands that deliver each benefit. *Consumers want the product to work for a long time; extended/nominal decision making

Segmenting Consumer Markets - Demographic Segmentation

Dividing the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, religion, education, ethnicity, and generation. *Demographic factors are the most popular bases for segmenting customer groups.

Segmenting Consumer Markets - Using Multiple Segmentation Bases

Marketers rarely limit their segmentation analysis to only one or a few variables. They often use multiple segmentation bases in an effort to identify smaller, better-defined target groups. Doing this can help companies identify and better understand key customer segments, reach them more efficiently, and tailor market offerings and messages to their specific needs.

Behavioral Segmentation - Usage Rate

Markets can also be segmented into light, medium, and heavy product users. *Heavy users are often a small percentage of the market, but account for a high percentage of total consumption. *How often and how much consumers purchase.

Behavioral Segmentation - User Status

Markets can be segmenting into nonusers, ex-users, potential users, and regular users of a product. *Marketers want to reinforce and retain regular users, attract targeted nonusers, and reinvigorate relationships with ex-users. **Ex: life-stage changes - new parents, P&G ensures Pamper Swaddlers are #1 diaper given away at hospitals.