Marketing (Chapter 7) Market Segmentation

Competitive advantage

An advantage over competitors gained by offering greater customer value either by having lower prices or providing more benefits that justify higher prices

Loyalty status

Behavioral; Consumers can be loyal to brands, stores, and companies. + Heavy Half (20-80) Rule

Socially Responsible Targeting

Marketing can generate controversy and concern with potentially harmful products to those who are vulnerable and disadvantage.

Positioning

Decide on a value proposition; Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers

Segmentation process

1. Identify the bases for segmentation 2. Develop a profile for each segments (behavioral analysis) measurable & quantifiable + Demographics and lifestyle + Media behavior- Accessible & targetable + Purchase behavior 3. Evaluate the potential of each segment (Economic Analysis) - Sufficient + Estimate the size, growth, education, occupation, income, and purchasing power 4. Select a segment + Compatibility with the company's mission and philosophy- compatible + Socially responsible targeting 5. Develop a differentiation and positioning strategy + To project a distinctive image of a product in consumers' minds

Differentiation

Decide on a value proposition; Differentiating the market offering to create superior customer value

Undifferentiated (mass marketing)

A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer

Differentiated (segmented marketing)

A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each.

Concentrated (niche marketing)

A market-coverage strategy in which a firm goes after a large share of one or a few segments or niches

Lifestyle

A pattern of life in which people live and spend time and resources, which is expressed through hence measured by their AIO

Benefit sought

Behavioral; Based on the inherent product benefits and attributes that consumers seek Ex. Automobile segments; Toothpaste segments

Usage rate

Behavioral; Market can be segmented into light, medium, and heavy product users.

Usage status

Behavioral; Markets can be segmented into nonusers, ex-users, potential users, first time users, regular users of a product.

Occasions

Behavioral; Segmenting consumers' life space based on important life events and seasons

PRIZM

Classifies every American household based on host of demographic factors-- such as age, occupation, education level, income,family composition, ethnicity, and housing. Also based on behavioral and lifestyle factors-- such as purchases, free-time activities, and media preferences. + Helps marketers segment people

Actionable

Criteria for selecting a target segment; Effective programs can be designed for attracting and serving the segments.

Sufficient (substantial)

Criteria for selecting a target segment; The market segment are large or profitable enough to serve. A segment should be the largest homogenous group worth pursuing a tailored marketing program

Accessible

Criteria for selecting a target segment; The market segments can be effectively reached and served

Differentiable

Criteria for selecting a target segment; The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs

Measurable

Criteria for selecting a target segment; The size, purchasing power, and profiles of the segment can be measured

Geographic segment

Dividing a market into different geographical units, such as nations, states, regions, counties, cities, or even neighborhoods

Psychographic (lifestyle) segmentation

Dividing a market into different segments based on social class, lifestyle, or personality characteristics + To reveal different needs, motives, perceptions, and values of similar demographics- a holistic description of consumers

Behavioral segmentation

Dividing a market into segments based on consumer knowledge, attitudes, uses, or responses to a product; NOT on the consumer characteristics

Demographic segment

Dividing the market into segments based on variables such as age, life-cycle stages, gender, income, occupation, education, religion, ethnicity, and generation

Local marketing

Part of micromarketing; Tailoring brands and marketing to the need and wants of local customer segments-- cities, neighborhoods, and even specific stores

Individual marketing

Part of micromarketing; Tailoring products and marketing programs to the needs and preferences of individual customers

Unique Selling Proposition (USP)

Product's unique value for consumers in terms of its distinctive benefit/feature- (Product position)

Market segmentation

Select customers to serve; Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs; To identify different groups of consumers who respond to various marketing stimuli differently; Benefits include: + To enhance the effectiveness of marketing efforts + To be able to deliver maximum satisfaction + To gain better knowledge bout the competition in a segment + To expose a segment who needs are not served or poorly served

Targeting

Select customers to serve; Evaluating each market segment's attractiveness and selecting one or more segments to enter

Micromarketing

Tailoring products and marketing programs to the needs and wants of specific individuals and local customer segments.

VALS

Value and Lifestyle (Segmentation) Study; + 8 segments according to Mrimary Motivation & Resources + To better know and understand the consumers and their desires + To know what and how to communicate (e.g., developing messages, communication style, and selecting media) Framework: - High resources + Innovators - Ideals + Thinkers + Believers - Achievement + Achievers + Strivers - Self-expression + Experiencers + Makers - Low resources + Survivors