Marketing Textbook Notes Chapter 6 Customer Driven Marketing Strategy Intro o Most companies have moved away from mass marketing and toward Target Marketing identifying market segments selecting one or more of them and developing products and marketing programs tailored to each Focusing on the buyers who have greater interest in the values they create best rifle approach NOT shotgun approach o Market Segmentation involves dividing a market into smaller segments of buyers with distinct needs characteristics or behaviors that might require separate marketing strategies or mixes o Market Targeting targeting consists of evaluating each market segment s attractiveness and selecting one or more market segments to enter o Differentiation is actually differentiating the firm s market offering to create superior customer value Positioning consists of arranging for a market offering to occupy a clear distinctive and desirable place relative to competing products in the minds of target consumers Market Segmentation o Segmenting Consumer Markets Geographic Segmentation calls for dividing the market into different geographical units nations regions states etc Many companies are localizing their products advertising promotion and sales efforts to fit the needs of their individual regions etc Demographic Segmentation divides the market into segments based on variables such as age life cycle stage gender income occupation education religion ethnicity and generation Most popular bases for segmenting because consumer needs often reflect their demographics and these variables are easier to measure than most others Age and Life Cycle Stage Consumer needs and wants change with age This type offers different products or marketing approaches for different age life cycle groups Age is often a poor predictor of a person s life cycle Health work or family status needs and buying power Gender Segmentation long used in clothing cosmetics toiletries and magazines It divides a market into different segments based on gender Income Segmentation divides the market into segments based on different levels of income The marketers of products and services such as cars clothing cosmetics financial services and travel utilize this Many companies will target affluent consumers with luxury goods and services but not all do Some retailers dollar stores for example successfully target the middle and lower classes Psychographic Segmentation divides buyers into different segments based on social class lifestyle or personality characteristics People in the same demographic group can have very different psychographic characteristics People buy products that reflect their lifestyles Marketers also use personality variables to segment markets o Mountain Dew projects a youthful and rebellious personality while Coke Zero appears to target more mature and practical personalities Behavioral Segmentation divides buyers into segments based on their knowledge attitudes uses or responses to a product Occasion Segmentation dividing the market into segments according to occasions when buyers get the idea to buy actually make their purchase or use the purchased item This can help firms build up product usage Holidays Benefit Segmentation dividing the market into segments according to the different benefits that consumers seek from the product Requires finding the benefits that people look for in a product class the kinds of people who look for each benefit and the major brands that deliver each benefit User Status divides the market into segments of nonusers ex users potential users first timers and regulars Marketers want to reinforce and retain regular users attract targeted nonusers and reinvigorate relationships with ex users Usage Rate divides the market into light medium and heavy product user segments Loyalty Status market segmented by consumer loyalty to brands stores and companies A company can learn a lot by analyzing loyalty patterns in its market and should start by studying its own loyal customers By studying less loyal buyers the company can detect which brands are most competitive with its own and learn about its marketing weaknesses to correct them Using Multiple Segmentation Bases Marketers often use multiple segmentation bases to identify smaller better defined target groups o Segmenting Business Markets Business marketers also use some additional variables to segment their markets customer operating characteristics purchasing approaches situational factors and personal characteristics Almost every company serves at least some business markets Ex American Express targets businesses through merchants corporations and small business segments Many companies establish separate systems for dealing with larger or multiple location customers o Segmenting International Markets Operating in many countries presents new challenges different countries can vary greatly in their economic cultural and political makeup International firms thus need to group their world markets into segments just as they do domestically Companies can segment international markets by geographic location economic factors political legal factors cultural factors Intermarket cross market Segmentation forming segments of consumers who have similar needs and buying behaviors even though they are located in different countries o Requirements for Effective Segmentation Measureable the size purchasing power and profiles of the segments can be measured Accessible the market segments can be effectively reached and served Substantial the market segments are large or profitable enough to serve A segment should be the largest possible homogeneous group worth pursuing with a tailored marketing program Differentiable segments are conceptually distinguishable and respond differently to different marketing mix elements and programs Actionable effective programs can be designed for attracting Market Targeting and serving the segments o Reveals the firm s market segment opportunities to be evaluated and thus the firm can decide how many segments it can serve best o Evaluating Market Segments Must look at 3 factors Segment size and growth segment structural attractiveness and company objectives and resources The largest and fastest growing segments are not always the most attractive ones for every company Smaller companies may lack the resources and skills needed to serve larger segments o Selecting Target Market Segments A segment is less attractive if it already contains