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41 Cards in this Set
- Front
- Back
Market Segmentation
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involves aggregating prospective buyers into groups that have common needs and will respond similarly to a marketing action
links marketing needs to an organization's marketing program (specific marketing mix actions to satisfy those needs) |
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Market Segments
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relatively homogeneous groups of prospective buyers that result from the market segmentation process
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Product Differentiation
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A strategy that involves a firm using different marketing mix acitivties such as product features and advertising to help consumers percieve their product being different and better than competing products
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1) Forming meaningful groupings
2) Developing specific marketing mix actions |
Foundation of effective market segmentation
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Segments of One: Mass Customization
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tailoring goods or services to the tastes of individual customers on high volume scale
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Synergy
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the increased customer value achieved through performing organizational functions like marketing or manufacturing more efficiently
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Cannibalization
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new products or new chain stealing customers from the older existing ones
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1) Geographic Segmentation
2) Demographic Segmentation 3) Psychographic Segmentation 4) Behavioral Segmentation |
4 Segmentation Bases
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Usage Rate
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quantity consumed or patronage--store visits-- during a specific period
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Frequency Marketing
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strategy that focuses on usage rate. Frequent Fliers
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80/20 Rule
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a concept that suggest that 80% of a firms sales are obtained from 20% of its customers
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Market Product Grid
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a framework to relate the market segments of potential buyers to products offered or potential marketing actions by an organization
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1) Market Size
2) Expected Growth 3) Competitive Position 4) Cost of Reaching the Segment 5) Compatibility with the organizations objectives and resources |
5 Criteria to Select Target Segments
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product groupings
(breakfast- lunch- dinner) |
Running Horizontally along the market -product grid
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Market segments
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Vertically on the market-product grid.
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Product Positioning
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refers to the place an offering occupies in consumers' minds on important attributes relative to competitive products
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Product Repositioning
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Changing the place an offering occupies in a consumers mind relative to competitive products
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Head to Head Positioning
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competing directly with competitors on similar products attributes in the same target market
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Differentiation Positioning
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seeking a less competitive smaller market niche in which to locate a brand
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Perceptual Map
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A means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands and then take marketing actions
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Identifying Market needs:
Benefits in terms of: -Product feature -Expense -Quality -Savings in time and convenience |
Identifying Market needs
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Links to marketing actions:
- Take the steps to segment and target markets |
Links to marketing actions:
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Executing Marketing Program Actions:
A marketing mix in terms of: -Product -Price -Promotion -Place |
Executing Marketing Program Actions:
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Marketing Segmentation is only a means to an end: its purpose is to lead to tangible marketing actions that increase sales and profitability
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The purpose of Marketing segmentation
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An appropriate time to segment markets
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when a company believes that it can increase sales, profit, and have a return on its investment from all of the trouble and expense it goes through to segment the markets.
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Not an appropriated time to segment markets
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When expenses are greater than the potential of increased sales from segmentation
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3 segmentation strategies:
1. One Product and Multiple Market Segments 2. Multiple Products and Multiple Market Segments 3. Segments of One (Mass Customization) |
3 segmentation strategies
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1. One Product and Multiple Market Segments
* A single product or service sold to two or more market segments * Avoids cost of developing and producing additional product versions. |
1. One Product and Multiple Market Segments
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* Multiple products developed to satisfy different market segment
* Clearly more expensive * Worthwhile if o Serves customers’ needs better, o Doesn’t reduce quality o Doesn't increase price o Adds to the seller’s sales revenues and profits. |
2. Multiple Products and Multiple Market Segments
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Two tier marketing strategies
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different variations of the same product to high and low-end segments.
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build-to-order (BTO)
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manufacturing a product only when there is an order from a customer.
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CRM versus Synergies
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Key to successful product differentiation and market segmentation strategies is finding the ideal balance between satisfying a customer’s individual wants and the increased customer value achieved through performing organizational functions more efficiently.
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1. Simplicity and cost-effectivness of assigning potential buyers to segments.
2. Potential for increased profit and return on investment. 3. Similarity of needs of potential buyers within a segment. 4. Difference of needs of buyers among segments 5. Potential for marketing action to reach a segment |
Criteria for Forming Market Segments
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geographical segmentation
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based on some where prospective customers live or work
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demographic segmentation
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based on some objective physical, measurable, or other classification attribute of perspective customers.
(gender, race) (age, income) (birth era, occupation) |
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psychographic segmentation
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based on some subjective mental or emotional attribute, aspirations, or needs of prospective customers
(personality) (lifestyle) |
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behavioral segmentation
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based on some observable actions or attitudes by prospective customers- such as where they buy, what benefits they seek, how frequently they buy, and why they buy.
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* Statistical area.
* NAICS code. * Number of employees. * Usage rate |
Ways to Segment Organizational Markets
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1) divide the market into segments
2) actually pick the target segmetents |
2 different kinds of criteria in the market segmentation process
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1) Identifications of the important attributes for a product class
2) judgments of existing products or brands with respect to these attributes 3) Rating of an ideal product's brand or attributes. |
In determining the products position and preference of customers, companies obtain 3 types of data from consumers------In order to chart on perceptual maps
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1) Group potential buyers into segments
2) Group products to be sold into categories 3) develop market product grid and estimate size of market 4) Select target markets 5) Take marketing actions to reach target markets |
Steps in Segmenting and Targeting Markets
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