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Marketing Chapter 9 segmentation, targeting, and positioning
Terms in this set (56)
The segmentation, targeting, positioning process
1. Strategy or Objective
2. Segmentation Methods
Targeting (Describe segments)
3. Evaluate Segment Attractiveness
4. Select Target Market
5. Identify and Develop Positioning Strategy.
Step 1: Strategy or Objective
The first step in the segmentation process is to articulate the vision or objectives of the company's marketing strategy clearly. The segmentation strategy must be consistent with and derived from the firm's mission and objectives as well as its current situation.
A firms strategy can be CHANGED.
Step 2: Use Segmentation Methods
The second step in the segmentation process is to use particular method or cobination of methods to segment the market. This step also develops descriptions of the different segments, which helps firms better understand the customer profiles in each segment.
Discover customer similarities and dissimilarities across different segments.
The process of dividing the market into groups of customers who have different needs, wants, or characteristics is called MARKET SEGMENTATION.
organizes customers into groups on the basis of where they LIVE.
Country, region (northeast, southeast), or areas WITHIN a region (state, city, neighborhoods, zip codes).
MOST USEFUL for products that vary by region.
groups consumers according to easily measured, objective characteristics 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.
MOST COMMON method because they are EASY to identify.
delves into how consumers actually DESCRIBE themselves. Psychographic studies show how people self-select, as it were, based on the characteristics of how they choose to occupy their time (behavior) and what underlying psychological reasons determine those choices.
Made up of Self values, self image, lifestyles,
Study how people OCCUPY their time and the underlying psychological factors that determine their choices.
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 respect, self fulfillment, specific sense of belonging.
This motivation causes people to develop self images of how they want to be and then images of a way of life that will help them arrive at these ultimate goals.
is the image people ideally have of themselves.
the third component of people's pychogrhic makeup, are the way we live. How we live life to complete our lifelong goals.
Value and Lifestyle Survey (VALS)
owned and operated by Strategic Business Insights (SBI). MOST WIDELY used tool. Supports phychographic segmentation efforts.
VALS also enables firms to identify target segments and their underlying MOTIVATIONS. It shows correlations between psychology and lifestyle choices.
groups consumers on the basis of the benefits they derive from products or services. This can be a very powerful tool for finding needs and wants that are best satisfied. It is effective and relatively easy to portray a product's or service's benefits in the firm's COMMUNICATION strategies.
divides customers into groups on the basis of how they USE the product or service. Some common behavioral measures include OCCASION and LOYALTY.
falls under behavioural
based on when a product or service is purchased or consumed is called occasion segmentation.
Suits, some suits are for everyday, other suits are for special occasions.
delivering sandwiches to university.
falls under behavioural
investing in retention and loyalty initiatives to retain their most profitable customers.
New customers are expensive and loyal customers are profitable.
"Buy ten sandwiches, get the 11th free."
Using Multiple Segmentation Methods
All segmentation methods are useful, but each provides its unique advantages and disadvantages.
uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers. Can be useful for retailers because customers typically patronize stores close to their neighborhood.
Family Life Cycle
Stages of the family life cycle:
2. Coupling or Marriage
3. Parenting: Babies through adolescents
4. Launching adult children
5. Retirement or senior years.
Step 3: Evaluate Segment Attractiveness
...The third step in the segmentation process involves evaluating the attractiveness of the various segments.
Is the segment worth pursuing? Is the segment identifiable, substantial, reachable, responsive, and profitable?
firms must be able to identify who is within their market to be able to design products or services to meet their needs. It is equally important to ensure that the segments are distinct from one another, because too much overlap between segments means that distinct marketing strategies aren't necessary to meet segment members' needs.
Once the firm has identified its potential target markets, it needs to measure their sizes.
The best product or service cannot have any impact, no matter how identifiable or substantial the target market is, if that market cannot be reached. through persuasive communications and product distribution.
For a segmentation strategy to be successful, the customers in the segment must react similarly and positively to the firm's offering.
Some key factors to keep in mind in this analysis include market growth, market competitiveness, and market access.
Current and future profits.
Consider these factors: Market access, market competitiveness, market growth
Segment profitability formula
segment size x segment adoption percentage x purchase behavior x profit margin percentage - fixed costs.
Step 4: Select a Target Market
... the fourth step in the STP process is to 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. Thus, a firm assesses both the attractiveness of the target market and its own competencies very carefully.
targeting strategies: differentiated, concentrated, micromarketing or one to one, undifferentiated or mass marketing.
If the product or service is perceived to provide similar benefits to most consumers, there simply is little need to develop separate strategies for different groups.
Undifferentiated targeting strategy (Mass marketing)
when everyone might be considered a potential user of its product.
use this method if you sell commodities, or products that are considered the same as those of your competitors.
differentiated targeting strategy
target several market segments with a different offering for each.
Firms embrace differentiated targeting because it helps them obtain a bigger share of the market and increase the market for their products overall. Readers of Golf Digest probably are unlike readers of digest in their interest, as well as in their demogrphics, such as gender, age and income.
This can help offset potential losses.
Concentrated Targeting Strategy
When an organization selects a SINGLE, primary target market and focuses all its energies on providing a product to fir that market's needs.
Entrepreneurs, helps them make the most our of their limit resources.
Micromarketing (one-to-one marketing)
when a firms tailors a prodcut or service to suit an individual customer' s wants or needs, it is undertaking an extreme form of segmentation.
Step 5: Identify and Develop Positioning Strategy
... the last step in developing a market segmentation strategy is 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.
communicates the customer benefits to be received from a product or service and thereby provides reasons for wanting to purchase it.
Made up of: target market, offering name or brand, product/service category concept, and unique point of difference/benefits.
COMMUNICATES the customer benefits provided by a product or service.
firms position products and services based on different methods such as the value proposition, salient attributes, symbols, and competition.
is a popular positioning method because the relationship of price to quality is among the most important considerations for consumers when they make a purchase decision.
Positioning Using Perceptual Mapping
Displays, in two or more dimensions, the position of products or brands in the consumer's mind.
Vertical vs Horizontal.
Select a position according to what the market segment it is targeting. Pick a position near a segment's ideal point.
where a particular market segment's ideal product would lie on the map.
1. Determine consumers perceptions and evaluations in relation to competitors
2. Identify the market's ideal points and size
3. Identify competitor's positions
4. Determine consumer preferences
5. Select the position
6. Monitor the positioning strategy.
Ease of developing or accessing distribution channels and brand familiarity is also known as market
A firm assesses attractiveness of a target market in light of its own competencies using a SWOT analysis
Market positioning is done so that the target customers have an understanding of the product offered by the company in comparison with
After evaluating each market segment's attentiveness, the firm can focus on
Key factors, both current and future, that marketers use to focus on their assessments on potential profitability.
Market growth, Market competitiveness. and market access.
A _ is a small text file providing a unique identification for each site visitor.
Stages of the family life cycle
2. Coupling or marriage
3. Parenting: babies through adolescents
4. Launching adult children.
Retirement or senior years.
5. Retirement or senior years.
Calculating Segment Profitability
Segment size X Segmentation Adoption percentage X purchase behavior X profit margin % - fixed cost
Make percentages into decimals. Multiply price by how many times they purchase.
firms position their products based on methods such as
the value proposition, salient attributes, symbols, and competition.
Which of the following are the Circles for a Successful Value Proposition? Select as many as apply
Benefits by competitors, customer needs and wants, benefits the company provides.
A well-known symbol can be used as a ____ tool, distinguishing the brand from its competition.
predict consumer wants and needs poorly.
is a subset of behavioral segmentation
One positioning strategy focuses on the product attributes that are most ____ to the target market
Compared to most available targeting strategies, differentiated targeting is
What is not a factor influecning the profitabliity of a segment over the lifetime of a typical customer relationship
Psychographics is a more ___ method used to identify potential customers
Individuals in different segments should have obvious _____ within the segment and greater ____ across the segments
most noticeable and important.
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