MKT 340
PRIN OF MARKETING
Iowa State University
involves aggregating prospective buyers into groups that 1. have common needs and 2. will respond similarly to a marketing action
the relatively homogeneous groups of prospective buyers that result from the market segmentation process
a strategy where a firm uses different marketing mix activities, such a product features and advertising, to help consumers perceive the product as being different and better than competing products
a frame work to relate the market segments of potential buyers to products offered or potential marketing by an organization
3 Specific Segmentation Strategies
1. One product and multiple market segments 2. Multiple products and multiple market segments 3. Segments of one, or mass customization
One Product and Multiple Market Segments
-produces only a single product or service and attempts to sell it to two or more markets - avoids extra costs of developing and producing additional versions of the product ex. magazine and book covers
Multiple Products and Multiple Market Segments
- make multiple products even if it is more expensive to make - fits customer needs better, doesn't reduce quality or increase price ( ford cars, SUV, trucks)
"segments of one" or mass customization
tailoring goods or services to the tastes of individual customers on a high volume scale
manufacturing a product only when there is an order from a customer
the increased customer value achieved through performing organizational functions such as marketing or manufacturing more efficiently
are the new products or new chain simply stealing customers and sales from the older, existing ones?
criteria to use in forming the segments
- simplicity and cost-effectiveness of assigning potential buyers to segments
- potential for increased profits
- similarity of needs of potential buyers within a segment
- difference of needs of potential buyers among segments
- potential of marketing action to reach a segment
1. Geographic 2. Demographic 3. Psychographic 4. Behavioral
geographic segmentation variables
Region City size Statistical area Media-television Density
demographic segmentation variables
Gender Age Race/ethnicity Life stage Birth era Household size Marital status Income Education Occupation
psychographic segmentation variables
Personality Values Lifestyle Needs
behavioral segmentation variables
Retail store type Direct marketing Product features Usage rate User status Awareness/intentions
based on where prospective customers live or work (region, city size)
demographic segementation
based on some objective physical (gender, race), measurable (age, income), or other classification attribute (birth era, occupation) of prospective customers
psychographic segmentation
based on some subjective mental or emotional attributes (personality), aspirations (lifestyle), or needs of prospective customers
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
5 key steps in segmenting and targeting markets
1. Group potential buyers into segments 2. Group products sold into categories 3. Develop a market-product grid and estimate size of market 4. Select target markets 5. Take marketing actions to reach target markets
80% of a firm's sales are obtained from 20% of its customers
criteria to use in selecting target segments
1. market size 2. expected growth 3. competitive position 4. cost of reaching the segment 5. compatibility with the organization's objectives and resources
refers to the place a product occupies in consumer's minds on important attributes relative to competitive products
changing the place a product occupies in a consumer's mind relative to competitive products
involves competing directly with competitors on similar product attributes in the same target market
differentiation positioning
involves seeking a less-competitive, smaller market niche in which to locate a brand
4 steps to product positioning using perceptual maps
1. Identify the important attributes for a product in a brand class 2. Discover how target customers rate competing products or brands with respect to these attributes 3. Discover where the company's product or brand is on these attributes in the minds of potential customers 4. Reposition the company's product or brand in the mind of potential customers
a means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers