Marketing Chp 9 Lecture Notes Pt 1
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| Why business firms segment there markets: | To respond more effectively to the wants of groups of potential buyers to increase sales and profits
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| Market segmentation involves aggregating prospective buyers into groups, or segments, that: | 1) Have common needs 2) will respond similarly to a marketing action
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| Different market segments cause firms to use: | Product Differentiation
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| What is product differentiation | Marketing strategy that involves a firm using different marketing mix activities to help consumers perceive the products as being different and better than competing products
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| What does segmentation do: | The process of segmenting a market and selecting specific segments as targets is the link between the various buyers needs and the organizations marketing program
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| People or organizations should be grouped into a market segment accourding to | - similarity of needs and benefits they look for in making a purchase
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| Devloping Specific Marketing Mix (4 Ps) actions may involve: | - separate offerings and other aspects of themarketing mix, such as price, promotion, or distribution strategies
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| When to Segment Markets | One-Sized fits all mass markets no longer exist, firm goes to the trouble & expense of segmenting its markets when it expects that this will increase it sales, profit, & return on investment, when expenses are greater than the potentially increased sales
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| Three specific segmentation strategies | One product & multiple market segments, multiple products & multiple market segments, segments of one or mass customization
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| What is one product and multiple market segments | When a firm produces only a single product or service and attempts to sell it to two or more market segments, it avoids the extra costs of developing and producing additional versions of the product
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| What is multiple products and multiple market segments | Marketing different products is more expensive than producing just one but is justified if it serves customers'need better, doesnt reduce quality of increase price, and adds to sales and profits
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| What is segments of one (Mass Customization) | The essence of customer relation management (CRM) every customer has unique wants and needs. Next step beyond build-to-order (BTO), manufacturing a product only when one is ordered
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| What is synergy | Is the increased customer value achieved through performing organizational functions more efficiently, can lead to cannibalization of sales from one segment to another
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| Market segmentation involves aggregating prospective buyers into groups that have two key characteristics, what are they? | The groups should have common needs and respond similarly to a marketing action
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| In terms of market segments and products, whar are the three market segmentation startegies? | 1) One product and Multiple Market Segments 2) Multiple products and multiple markets segments 3) "segments of one" or mass customization
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| The process of segmenting a market and then selecting and reaching the target segments is divided into how many steps? | Five Steps
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| Criteria to Use in Forming the Segments | 1) Simplicity & Cost of Assiging potential buyers to segements 2) Potential for increased profit 3) Similarity of needs of potential buyers w/in a segment 4) Difference of needs of buyers among segments 5) potential of a marketing action to reach a segmen
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| What is simplicity and cost of assigning potential buyers to segments | Need to cost effectively identify characteristics of potential buyers in order to assign them to a segment
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| What is potential for increased profit | If future profit and ROI are maximized without segmentation, dont segment
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| What is similarity of needs of potential buyers within a segment | Potential buyers within a segment should be similar in terms of a marketing action, such as product features sought or advertising media used
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| What is the difference of needs of buyers among segments | If the needs of various segments arent very different, combine them into fewer segments. If increased sales dont offset extra costs combine segments and reduce the number of marketing action
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| What is potential of a marketing action to reach a segment | reaching a segment requires a simple but effective marketing action. If no such action exists, dont segment
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| What are the four general bases of segmentation and the typical variables that can be used to segment U.S. consumer markets | Geographic Segmentation, Demographic Segmentation, Psychographic Segmentation, Behavioral Segmentation
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| What is Geographic Segmentation | Based on where prospective customers live or work (region, city, state)
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| What is Demographic Segmentation | Which is based on some objective physical (gender, race) measurable (age, income) or other classification attribute (birth era, occupation) or prospective customers
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| What is Psychographic Segementation | Which is based on some subjective mental or emotional attributes (personality), aspiration (lifestyle), or needs of prospective customers
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| What is Behavioral Segmentation | Is based on some observable action 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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| What is usage rate | The quantity consumed or patronage (store visits) during a specific period
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| What is frequency marketing | Is a program that encourages consumers to use the product or service repeatedly
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| What is the 80/20 rule | It is what usage rate may be reffered as, it is a concept that suggests 80 percent of a firms sales are obtained from 20 percent of its customers
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| Ways to Segment Organizational Markets | Geographic, Demographic, Behavioral
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| What is gegraphic segments in organizational markets | Consists of metropolitan and micropolitan statistical areas
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| What is demographic segments in organizational markets | consists of NAICs, number of employees, sales
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| What is behavioral segments in organizational markets | consists of usage, rate, application
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| The process of segemnting and targeting markets is a bridge between what two marketing activities | Identifying market needs and taking marketing actions
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| What is the difference between the demographic and behavioral bases of market segmentation | Demographic segmentation is based on some objective physical, measurable, or other classification attribute of prospective customers wheras behavioral segmentation is based on some observable action or attitude by prospective customers
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