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Principles of Marketing, Chapter 8, Unit 5
Terms in this set (50)
Benefits used in Segmentation
Former, Potential, 1st time, Light or Irregular, Medium, Heavy
Usage Rate used in Segmentation
Identify target markets
The purpose of market segmentation, in both consumer and business markets.
Select a market or product category for study
Define the overall market or product category to be studied. First step involved in segmenting markets.
The overall market or product category to be studied
May be a market in which the firm already competes, a new but related market or product category, or a totally new one.
Anheuser-Bush closely examined the beer market
Before introducing Michelob light and Bud Light, as well as the salty snacks market before introducing the Eagle brand.
Choose a basis, or bases for segmenting the market
Requires managerial insight, creativity, and marketing knowledge, and is the second step in segmenting markets.
Select Segment Descriptors
Theses identify the specific segmentation variable to use, and is the third step in segmenting markets.
Example of Descriptors, if a company selects demographics
As a basis of segmentation, it may use age, occupation, and income as descriptors.
Example of Descriptors, if a company selects usage segmentation
It needs to decide whether to go after heavy users, nonusers, or light users.
Profile and Analyze Segments
Fourth step involved in segmenting markets, after selecting segmentation descriptors.
Profile and Analyze Segments, profile
Should include the segments' size, expected growth, purchase frequency, current brand usage, brand loyalty, and long-term sales and profit potential.
Information from profile
Can be used to rank potential market segments by profit opportunity, risk, consistency with organizational mission and objectives as well as other important factors to the firm.
Select target markets
A major decision that influences and often directly determines the firm's marketing mix. Fifth step in segmenting markets.
Design, implement, and maintain appropriate marketing mixes
This is intended to bring about mutually satisfying exchange relationships with target markets, and is the sixth and final step involved in segmenting markets.
It's unlikely that a single marketing mix will attract all segments of the market
Because most markets will include customers with different characteristics, lifestyles, backgrounds and income levels.
Because of the different variety of customers
If a marketer wishes to appeal to more than one segment of the market, it must develop different marketing mixes.
Buick targeting different target markets, people in their 60s
The lucerne Sedan is marketed which is a luxury car with a V8 engine and extras like onstar service.
Buick targeting different target markets, people who are generation Y
Are marketed with the Enclave, which is a crossover SUV
General strategies for selecting target markets
Undifferentiated, concentrated, and multisegmented
Undifferentiated targeting strategy
A market approach that views the market as one big market with no individual segment.
Companies with a single marketing mix
Are using the undifferentiated targeting strategy.
A firm that adopts an undifferentiated targeting strategy assumes
That individual customers have similar needs that can be met with a common marketing mix.
The first firm in the industry sometimes uses an undifferentiated targeting strategy
Because with no competition, the firm may not need to tailor marketing mixes to the preferences of market segments.
Likely to use an undifferentiated targeting strategy
Marketers of commodity products, such as flour and sugar.
Advantage of Undifferentiated Marketing Strategy
The potential savings on production/marketing costs.
Because only one product is being produced
Companies using undifferentiated marketing strategies should be able to achieve economies of mass production.
Marketing costs may be lower
For companies using undifferentiated marketing strategies with only one product to promote and a single channel of distribution.
Undifferentiated marketing strategies usually emerge by default
Rather than by design, reflecting a failure to consider the advantages of a segmented approach.
Often a sterile, unimaginative product offering that has little appeal to anyone
The negative result of undifferentiated marketing strategies and are also more susceptible to competitive inroads
More susceptible to competitive inroads, Hersey
Lost a big share of the candy market to Mars and other similar companies before it changed to a multisegment targeting position.
More susceptible to competitive inroads, Coca-Cola
Forfeited its position as the leading seller in supermarkets to Pepsi-Cola in the 50s, when they began offering several sizes of containers.
Toilet Tissue does not adopt an undifferentiated strategy
Instead the market has industrial segments and consumer segments.
Toilet Tissue, Consumer Segments
Demands a more versatile product in smaller quantities.
Toilet Tissue, Consumer Market is differentiated
With designer print or nonprint, cushioned or non cushioned, and economy priced or luxury priced.
Toilet Tissue, Industrial Buyers Want
Single-ply product sold in boxes of a hundred rolls.
Toilet Tissue, Fort Howard Corporation
Market share leader in industrial toilet paper, and does not even sell to the consumer market.
Undifferentiated strategy may be successful for a small grocery store in a small town
The isolated area may define all of the people that live in the town as its target market, and offer one mix that generally satisfies everyone there. This would work if there were three or four grocery stores there though.
Concentrated Targeting Strategy
A firm selects a niche for targeting its marketing efforts, which is one segment of the market.
Because a concentrated targeting strategy is appealing to a single segment, it can concentrate
On understanding the needs, motives, and satisfactions of that segment's members and on developing and maintaining a highly specialized marketing mix.
Starbucks Concentrated Targeting Strategy
Became successful by focusing on consumers who want gourmet coffee products.
Patek Philippe, Rolex, and Breguet
WAtchmakers who sell watches priced at $200,000 or more and are definitely pursuing a concentrated targeting strategy.
AARP pursues a concentrated strategy
If you consider people over 50 years old to be a single market segment of the overall population.
Small firms often adopt a concentrated targeting strategy to compete with larger firms, for example
Enterprise Rent-A-Car rose to number one by catering to people with cars in the shop, and now expanded into the airport market.
Some firms use a concentrated strategy to establish a strong position in a desirable market segment, for example
Porsche, targets an upscale automobile market through "class appeal, not mass appeal
Concentrated targeting violates
The adage "don't put all your eggs in one basket."
Concentrated Targeting risk, size
If the chosen segment is too small or if it shrinks because of environmental changes, the firm may suffer negative consequences.
OshKosh B'Gosh, Inc. and concentrated targeting
It was so successful in the children's clothing line business that attempts at going into other clothing market failed. So instead of going into maternity wear, it focused on children's eyewear, shoe, and plush toys.
Antidandruff Shampoos and concentrated targeting
Several small marketing firms using this strategy until Proctor and Gamble came in with Head and Shoulders and took half the market. Several companies went out of business because of it.
An individualized marketing method that utilizes customer information to build long-term, personalized, and profitable relationships with each customer.
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