Chapter 9: Segmentation, Targeting, and Positioning

Differentiated Targeting Strategy

-a strategy through which a firm targets several market segments with a different offering for each

Micromarketing

-an extreme form of segmentation that tailors a product or service to suit an individual customer's wants or needs; also called one-to-one marketing

Psychographic Segmentation

-is the method that delves into how consumers actually describe themselves. -Marketers determine into which segment an individual consumer falls.

Salient Attributes

A positioning strategy that focuses on the product attributes that are most important to the target market

Segment Profitability= (Segment size * Segment adoption percentage * Purchase behavior * Profit margin percentage) -Fixed Costs

Segment size= number of people in segment Segment Adoption Percentage= percentage of customers in the segment who are likely to adopt the product/service Purchase Behavior= purchase price * Number of times the customer would buy the product/service in a year Profit Margin Percentage= (Selling Price -Average Variable Costs)/Selling Price Fixed Costs= Advertising expenditure, rent, utilities, insurance, and administrative salaries for managers

______ is the image people ideally have of themselves.

Self Concept

Another term for self-concept is ______.

Self Image

______ are goals for life, not just the goals one wants to accomplish in a day. They are the overriding desires that drive how a person lives his or her life.

Self-Values

Individuals in different segments should have obvious ______ within the segment and greater ______ across the segments.

Similarities: Differences

Market differences across continents create opportunities for ______.

Geographic Segmentation

Concentrated Targeting Strategy

a marketing strategy of selecting a single, primary target market and focusing all energies on providing a product to fit that market's needs

Occasion Segmentation

a typical behavioral segmentation based on when a product or service is purchased or consumed

Which of the following are examples of self-values?

-Sense of belonging -Self-respect -Self-fulfillment

Which of the following are marketing segmentation approaches?

-Benefits -Geographic -Psychographic

Loyalty Segmentation

strategy of investing in loyalty initiatives to retain the firm's most profitable customers

Geodemographic Segmentation

uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers consumers in the same neighborhoods tend to buy the same type of cars, appliances, and apparel and shop at the same types of retailer

Values and Lifestyles Survey (VALS)

-examines the intersection of psychology, demographics, and lifestyles. U.S. consumer ages 18 and older are classified into one of the eight segments. -majority of consumers have one of three primary motivations: Ideals, Achievement, or Self Expression -the vertical dimension of the framework indicates level resources: VALS uses an expanded definition of resources to include not just key demographics such as age and income but measures curiosity, leadership, information seeking, and interest in experimentation.

Value Proposition

-unique value that a product or service provides to its customers and how it is better than and different from those of competitors

Undifferentiated Targeting Strategy (Mass Marketing)

-used for many basic commodities such as salt or sugar -a marketing strategy a firm can use if the product or service is perceived to provide the same benefits to everyone, with no need to develop separate strategies for different groups

Demographic segmentation is the most common segmentation strategy because these segments are ____________.

1. Easy to reach 2. Easy to identify

STP Process Steps

1. Establish Strategy or Objectives 2. Use segmentation methods 3. Evaluate segment attractiveness 4. Select target market 5. Identify and develop positioning strategy

The Main Value Proposition Components are:

1. Target Market 2. Offering name or brand 3. Product/Service category or concept 4. Unique point of difference/benefits

Suppose that Coca-Cola were to divide its market up into segments based on the amount of soda consumers drink (heavy, medium, and occasional soda drinkers). What type of segmentation does this represent?

Behavioral

______ segmentation forms market segments based on the way consumers use a product, such as more frequently or with greater loyalty.

Behavioral

What type of segmentation categorizes consumers on the basis of the outcomes they hope to derive from a product or service, such as clothing, appliances, toothpaste, or paper towels?

Benefit

How does developing descriptions of each market segment help firms? (Select all that apply.)

By identifying similarities within market segments By identifying differences across market segments

True or false: Once a firm selects a segmentation strategy, it should never be changed.

False

Benefit segmentation is often effective because it is relatively easy to portray a product's or service's benefits in the firm's _______ strategies.

Communication

A perceptual map is used in developing a positioning strategy in order to display the position of the products or brands in the ______ mind.

Consumer's

The easiest market segments to reach are those that have been segmented using which approach?

Demographic segmentation

The component of segmentation that is determined by how we live our lives to achieve goals is called ______.

Lifestyle

Ellie's Deli offers good sandwiches and fast service to its lunchtime customers from a nearby university. It also delivers the same sandwiches packaged with side dishes as part of its catering services. This is an example of ______ segmentation.

Occasion

While some segmentation methods rely on external descriptions and factors to break down the market, ______ segmentation relies on consumers' descriptions of themselves.

Psychographic

STP analysis occurs during which step of the marketing planning process?

Third

T or F: VALS enables firms to identify target segments and their underlying motivations to develop strategic initiatives and communications.

True

True or False: Lifestyles are a component of psychographic segmentation that describes how an individual lives his or her life to achieve goals.

True

Step 2: Use Segmentation Methods

Use particular method or combination of methods to segment the market. Also develops descriptions of the different segments, which helps firms better understand the customer profiles in each segment. With this information, firms can distinguish customer similarities within a segment and dissimilarities across segments. Marketers use (1)geographic, (2)demographic, (3)psycho-graphic, benefit, and (4)behavioral segmentation methods.

______ is a psychographic tool owned and operated by Strategic Business Insights (SBI) that classifies consumers into eight segments based on their answers to the questionnaire.

VALS

Self Value

are goals for life, not just the goals one wants to accomplish in a day. They are the overriding desires that drive how a person lives his or her life. Examples: the need for self respect, self fulfillment, or specific sense of belonging

The third step of the market segmentation process is to evaluate segment ________, which is based on such criteria as its profitability, responsiveness, and reachability.

attractiveness

Tapestry Segmentation

classifies all U.S. residential neighborhoods in 65 distinctive segments based on detailed demographic data and lifestyles of people who live in each U.S. block tract.

Perceptual Map

displays, in two or more dimensions, the position of products or brands the consumer's mind

Behavioral Segmentation

divides customers into groups on the basis of how they use the product or service. Some common behavioral measures include occasion and loyalty.

Identifiable

firms must be able to identify who is within their market to be able to design products or services to meet their needs segments are distinct from one another because too much overlap between segments mean that distinct marketing strategies aren't necessary to meet segment members' needs

Positioning Methods

firms position products and services based on different methods such as the value proposition, salient attributes, symbols, and competition

Responsive

for segmentation strategy to be successful, the customers in the segment must react similarity and positively to the firm's offering. if the firm's distinctive competencies, it cannot provide products or services to that segment; it should not target it.

Demographic Segmentation

groups consumers according to easily measured, objective characteristic such as age, gender, income, and education. -these variables represent the most common means to define segments because they are easy to identify, and demographically segmented markets are easy to reach.

Benefit Segmentation

groups consumers on the basis of the benefits they derive from products or services -because marketing is all about satisfying consumers needs and wants, dividing the market into segments whose needs and wants are best satisfied by the product benefits can be a very powerful tool

Market positioning involves a process of defining the marketing mix variables so that the target customers ______.

have a clear, distinctive understanding of the product

Step 5: Identify and Develop Positioning Strategy (Market Positioning)

involves a process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products.

Profitable

marketers must also focus their assessments on the potential probability of each segment, both current and future.

VALS enables firms to identify target segments and their underlying ______.

motivations

Substantial

once the firm has identified its potential target markets, it needs to measure their sizes. If market is too small or its buying power insignificant, it won't generate sufficient profits or be able to support the marketing mix activities.

Geographic Segmentation

organizes customers into groups on the basis of where they live -most useful for companies whose products satisfy needs that vary by region

Self Concept

people's self image, is how people ideally see themselves

Value

reflects the relationship of benefits to costs, or what the consumer gets for what he or she gives

After evaluating each market segment's attractiveness, the next step in the STP process is ______.

selecting a target market

Psychographics

studies how people self select, as it were, based on the characteristics of how they choose to occupy their time and what underlying psychological reasons determine those choices

Reachable

the best product or service cannot have any impact, no matter how identifiable or substantial the market is, if that market cannot be reached through persuasive communications and product distribution. the consumer must know that the product or service exists

Step 4: Select a Target Market

the key factor likely to affect this decision is the marketer's ability to pursue such an opportunity or target segment.

Ideal Point

the position at which a particular market segment's ideal product would lie on a perceptual map 1. Determine Consumer's perceptions and evaluations of the product or service in relation to competitors' product or service. 2. Identify the market's ideal points and size. 3. Identify competitors' positions. 4. Determine consumer preferences. 5. Select the position. 6. Monitor the positioning Strategy.

Step 1: Establish Strategy or Objectives

the segmentation strategy must be consistent with and derived from the firm's mission and objectives as well as its current situation, its strengths, weaknesses, opportunities, and threats (SWOT).

Lifestyles

the third component of people's psychographic makeup, are the ways we live. If values provide an end goal, and self-concept is the way we see ourselves in the context of that goal, lifestyles are how we live our lives to achieve goals.

After establishing overall objectives, why do marketers then use a particular method or combination thereof to identify and describe market segments?

to help understand the profile of each segment

Step 3: Evaluate Segment Attractiveness

to undertake this evaluation, marketers first must determine whether the segment is worth pursuing, using several descriptive criteria: is the segment identifiable substantial, reachable, responsive, and profitable