Mark 3000 1st Edition Lecture 6Outline of Last Lecture I. Factors influencing the consumer decision process II. Involvement and consumer buying decisions Outline of Current Lecture I. Segmentation II. Segmentation Targeting Process Current Lecture Segmentation are identifying and serving homogenous groups of consumers Segments naturally exist groups of consumers with similar needs/ wants and responses Target market: segment your firm chooses to serve Segmentation Targeting positioning process: 1. Strategy or objectives 2. Segmentation methods 3. Evaluate Segment attractiveness 4. Select Target Market 5. Identify and develop positioning strategy Step 1: Establish overall strategy or objectives Derived from mission and current state Also consistent with current situation: strengths, weaknesses, opportunities, and threats Why am I segmenting? Step 2: Segmentation methods or segmentation variables Segmentation Methods: Develops descriptions of different segments, which helps firms better understand the customer profiles in each segment Geographic: Organizes customers into groups on the basis of where they live- Continent, North America, Athens, Georgia, etc. - Not useful for companies whose products satisfy needs that vary by region These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Demographic: Groups consumers according to objective characteristics such as Age, gender, andincome - Most common segmentation strategy - Easy to define and easy to reach Psychographic: delves into how Consumers actually describe themselves - Study how people self select - 3 Main components: o Self values: goals for life, not just goals one wants to accomplish in a day o Self concept: The image a person has of him or herself o Lifestyles are the way we live - Values and lifestyle survey is a commonly used psychographic segmentation scheme o Classified into 8 categories - More expensive to identify potential customers Benefits: Segments consumers on the basis of the benefits they derive from the products - Convenience, economy, prestige - Different customers are seeking different benefits from same product category o Universities, bank, restaurants Behavioral: Divides customers into groups on the basis of how they use product or service - Occasion: When the product is purchased or consumed o Daily usage or special usage - Loyalty segmentation: These customers only exclusively buy from this firm o Invest in loyalty initiatives to retain profitable customers Combination: A mix off different segmentation methods such as geo-demographic segmentation: which uses a combination of geographic, demographic and lifestyle characteristics to classify consumers Step 3: Evaluate Segment Attractiveness: Determine whether the segment is worth pursuing 5 Components Identifiable: Must be able to identify who is within their market to be able to design products orservices to meet their needs - Who is in that market? - Is the segment unique? - Does each segment require a unique marketing mix? Substantial: Measuring the size of the firms - Too small and it is insignificant- If it is too big and it might need it’s own store Reachable: Reaching the consumers - Can you reach your customers so that they: - Know the product exists - Understand what it can do - Recognize how to buy it Responsive: Customers must move toward the firm’s products and be willing to accept the firm’s value proposition - Customers must react similarly and positively to the firm’s offeringProfitable: Current and future profitability of each segment Step 4: Selecting a Target Market: Firm must assess both the attractiveness of the target marketand its own competencies How many segments and which specific segments Segmentation strategy: How many? Undifferentiated or Mass Marketing: Firm assumes all consumers are the same, relative to the product category - The product or service provides similar benefits to most consumers - Used for commodities Multi-segment/ differentiated targeting: Target several marketing segments with different offering for each - Helps firms obtain a bigger share of the market and increase the market for product Concentrated targeting Strategy: Selecting a primary target market and focusing all energies on providing a product that fits that markets need Micromarketing/ One to one marketing: Extreme form of segmentation that tailors a product to suit an individual customer’s wants/ needs. - Cookies on the internet provide unique identification of each potential customer who visits and details how the customers has searched the site - Can lead to loyalty Cannibalization: New product cuts into sales of old product - Aim at new segment, hit old segment Firm selects 1 segment as its target market: - Concentrated/ niche marketingStep 5: Develop Positioning Strategy: 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 competitors. Using 4 P’s to develop value propositionPositioning methods: Firms position products and services based on different methods such as value proposition, salient attributes, symbols and competition - Value proposition: Target customers must have clear understanding of your competitive advantage - Value does not equal price it equals what you get for what you give - Attributes:Focusing on the attributes that are most important to the target market - Symbols: Well known symbols can create a position for brand that distinguishes it form competition - Competition: Firms can choose to position their products against specific competitor or entire product classification Perpetual Map: Displays in two or more dimensions the position of products or brands in the customers mind - Ideal points: position at which a particular market segment’s ideal product would lie on aperceptual