Market Segmentation, Targeting, and Positioning

CH 9. Market Segmentation, Targeting, and Positioning ● Market segmentation involves aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action. ● Market segments are the homogenous groups of prospective buyers resulting from market segmentation. ● Product differentiation: this strategy involves using different marketing mix actions. such as product features and advertising to help customers perceive products differently from competitors - when the expenses are greater than the increase in sales from segmentation a firm should not attempt to segment its market Segment markets when there is an opportunity for increased returns Three segmentation strategies: 1. One product and multiple market segments (Example: Books) 2. Multiple products and multiple market segments (Example: Cars) 3. Segments of one–“mass customization” (Example: Build-to-order) mass customization: tailoring products or services to the taste of individual customers on a high-volume scale organizational synergy: the increased customer value achieved through performing organizational functions such as marketing or manufacturing more efficiently Ways to segment consumer markets: 1. Geographic segmentation (location) - 2. Demographic segmentation (objective attributes) gender, race, age, income, birth or occupation 3. Psychographic segmentation (personality & lifestyle) 4. Behavioral segmentation (product features & usage rate) Demographic: This segmentation is based on characteristics such as age, gender, income, education, occupation, and family size. It helps in understanding the basic profile of the target market. Geographic: This segmentation is based on the physical location of consumers. It includes factors such as country, region, city, climate, and population density. It helps in tailoring marketing strategies to specific geographical areas. Psychographic: This segmentation is based on consumers' attitudes, values, interests, and lifestyles. It helps in understanding the psychological and behavioral aspects of the target market. Behavioral: This segmentation is based on consumers' buying behavior, usage patterns, brand loyalty, and benefits sought. It helps in identifying different grou CH 10. Developing New Products and Services A product is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers’ needs and is received in exchange for money or something else of value. Products: a good, service, or idea consisting of a bundle of tangible and intangible attributes to satisfy consumer needs Services: intangible activities or benefits that an organization provides to satisfy customers Goods: tangible attributes that a consumer’s five senses can perceive intangible: attribute consisting of its delivery or warranties and embody more abstract concepts 1. Nondurable goods: good items consumed in one or a few uses such as food or fuel 2. Durable goods: one that lasts over many uses, such as appliances and cars Ideas: leads to a product or action such as a concept for an innovation or for getting people out to vote Consumer products: 1. Convenience products – Frequently purchased-(minimum purchase effort) 2. Shopping products – Compares criteria. (compares price, quality, and style) 3. Specialty products – Special effort to search/buy. 4. Unsought products – Items the consumer does not know about. Product class (or industry): a category for products ex: iPad classified as a table. Product item: a specific product that has a unique brand or size Different product forms exist within the product class: Example: In the recorded music industry there are records, tapes, CDs, MP3s. Product item: A product item is a specific product that has a unique brand, size, or price. Product line: A product line is a group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range. Product mix: A product mix consists of all of the product lines offered by an organization. Marketing reasons for new-product failures: 1. Insignificant difference. point of 2. Incomplete market and product protocol. 3. Failure to satisfy customer needs on critical factors. 4. Bad timing. 5. No economical access to buyers. 6. Poor execution of the marketing mix. 7. Too little market attractiveness. 8. Poor product quality. The new-product development process consists of the seven stages an organization goes through to identify opportunities and convert them to salable products or services.