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Market Segmentation

Involves two steps: identifying groups of people (or organizations) with certain shared needs and characteristics and aggregating (combining) these groups into larger market segments according to their interest in the product's utility.

Behavioristic Segmentation

To group consumers by purchase behavior.Variables include user status, usage rate, purchase occassion, and benefits sought.

User Status

potential users, nonusers, ex-users, regulars, first-timers, and users of competitors' products.

Volume Segmentation

dividing the market by usage (volume of use)

Usage Rates

The extent to which consumers use a product: light, medium, or heavy.

Purchase Occasion

A method of segmenting markets on the basis of when consumers buy and use a good or service.


High quality, low price, status, sex appeal, good taste, health consciousness.

Benefit Segmentation

The process of grouping customers into market segments according to the benefits they seek from the product

Geographic Segmentation

segmenting markets by region of a country or the world, market size, market density, or climate

Demographic Segmentation

dividing a market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality.

Geodemographic Segmentation

the grouping of consumers on the basis of a combination of geographic, demographic, and lifestyle characteristics

Psychographic Segmentation

dividing the market into smaller groups based on consumer attitudes, personality, interests, values, and lifestyles

Primary Motivation

consumers are inspired by three primary motivations: Ideals, achievements, and self-expression


varying levels of ______ which include money, education, or self-confidence.

Business (industrial) Markets

Include manufacturers, government agencies, wholesalers, retailers, banks, and institutions that buy goods and services to help them operate.


Such as retail businesses that resell to consumers

North American Industry Classification System (NAICS) Codes

Method used by the U.S. Department of Commerce to classify all businesses. The _______ are based on broad industry groups, subgroups, and detailed groups of firms in similar lines of business.

Primary Demand Trend

the projection of future consumer demand for a whole product category based on past demand and other market influences; use because you need to know the market potential for the product/service

Target Marketing Process

determines the content, look and feel of its advertising

Target Market

That group of segments the company wishes to appeal to, design products for, and tailor its marketing activities toward.

Product Concept

the consumer's perception of a product as a bundle of utilitarian and symbolic values that satisfy functional, social, psychological, and other wants and needs

Marketing Mix

the blending of product, distribution, price, and communications.

Product Element

Major activities typically include the way the product is designed & classified, positioned, branded & packaged

Product Life Cycle

Four stages that product goes through over its life: introduction, growth, maturity, and decline.

Early Adopters

Those who adopt an innovation early in the diffusion process but after the innovators.

Primary Demand

Demand for a product category rather than for a specific brand

Introductory (pioneering) Phase

company incurs considerable costs for educating customers, building a widespread dealer distribution and encouraging demand, Any new product category, the company incurs considerable costs for educating customers, building widespread dealer distribution, and encouraging demand. Spends significant advertisng sums at this stage to establish a position as a market leader adn to gain a large share of market before the growth stage begins.

Pull Strategy

directing the promotional mix at ultimate consumers to encourage them to ask the retailer for a product

Sales Promotion

Short-term incentives to encourage the purchase or sale of a product or service.

Push Strategy

promotional strategy in which the producer uses advertising, personal selling, sales promotion, and all other promotional tools to convince wholesalers and retailers to stock and sell merchandise.

Growth Stage

the second stage of the product life cycle when sales typically grow at an increasing rate, many competitors enter the market, large companies may start to acquire small pioneering firms, and profits are healthy

Maturity Stage

The product life cycle stage in which sales growth slows or levels off

Selective Demand

demand for a specific brand

Decline Stage

final stage of product life cycle: obsolescence, new technology, changing customer taste, cease all promotion, or fade out quickly.


A bundle of intangible benefits that satisfy some need or want, are temporary in nature, and usually derive from completion of a task.

Equipment-based Service

A service business that relies mainly on the use of specialized equipment. ex: railroads

People-based Service

Relies on the creative talents and marketing skills of indivuals. (Law firm or bank)


The first strategic decision to be made.

Perceptible Differences

differences between products that are readily apparent to the consumer

Hidden Differences

Imperceptible but existing differences that may greatly affect the desirability of a product. ex gums may taste the same, advertising needs to show these differences to enhance product dseirability

Induced Differences

Distinguishing characteristics of products effected through unique branding, packaging, distribution, merchandising, and advertising. ex: Many product classes, such as aspirin, salt, gasoline, packaged foods, liqour, and financial services


The fundamental differentiating device for all products.

Individual Brand

giving each product within a line a different name (Procter & Gamble has brand names for its dif laundry detergents: Tide, Cheer, Dash)

Family Brand

marketing several different products under the same brand name

National Brands

brands that are owned and initiated by national manufacturers or service companies; also known as producer brands.

Private Labels

personalized brands applied by distributors or dealers to products supplied by manufacturers; sold at a lower price in a large chain store ex: kenmore, craftsman, etc.

Licensed Brands

companies pay a substantial fee for the right to use another companys brand name. ex coca cola clothing

Brand Equity

The totality of what consumers, distributors, dealers--even competitors--feel and think about the brand over an extended period of time.

Copy Points

copywriting themes in the products advetising

Price Element

amount charged for the good or service- including deals, discounts, terms, warranties and so on, the factors affecting the price are market demand, cost of production, and distribution, competition, and corporate objectives

Distribution Element

How and where customers will buy a company's product; either direct or indirect distribution.

Direct Distribution

When companies sell directly to end users or consumers.

Network (multilevel) Marketing

a method of direct distribution in which individuals act as independent distributors for a manufacturer or private-label marketer; one of the fastest growing methods of direct distribution

Distribution Channel

Comprises all the firms and individuals that take title, or assist in taking title, to the product as it moves from the producer to the consumer.

Intensive Distribution

stocking the product in as many outlets as possible

Selective Distribution

distribution that sends products to only a preferred group of retailers in an area

Cooperative Advertising

an arrangement in which the manufacturer and the retailer split the costs of advertising the manufacturer's brand

Exclusive Distribution

giving a limited number of dealers the exclusive right to distribute the company's products in their territories

Vertical Marketing System (VMS)

A centrally programmed and managed system that supplies or otherwise serves a group of stores or other businesses.


A contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a business using a name and format developed and supported by the franchisor.

Communication Element

all marketing-related communications between the seller and the buyer

Communications Mix

the blend of personal selling, advertising, direct marketing, sales promotions and public relations a firm employs to communicate with potential consumers., a variety of marketing communication tools, grouped into personal and non personal selling

Personal Communication

Includes all person-to-person contact with customers.

Nonpersonal Communication

use some medium as an intermediary for communicating, including advertising, direct marketing, pr, collateral materials, and sales promotion.

Direct Marketing

like taking the store to the customer.


(a direct marketing technique) to increase productivity through person-to-person phone contact.


news releases, feature stories

Special Events

open houses, factory tours, VIP parties, grand openings

Collateral Materials

many accessory items companies produce to integrate and supplement their advertising or PR activies. ex: booklets, catalogs, brochures, films, sales kits, promotional products, and annual reports.

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