1 Marketing Test 2 Chapter 6 Target Markets Segmentation Evaluation and Positioning Any organization that wants to succeed must identify its customers and develop and maintain marketing mixes that satisfy the needs of those customers 2 categories of markets 1 Consumer consists of purchasers and household member who intend to consume or benefit from the purchased products and do not buy products for the main purpose of making a profit 2 Business individuals or groups that purchase a specific kind of product for one of three purposes resale direct use in producing other products or use in general daily operations Target Market Selection Process 1 Identifying appropriate targeting strategy a Undifferentiated target strategy a single marketing mix and directs an entire market for a particular product HOMOGENEOUS large number of people have similar needs 1 Assumes that all customers in the target market have similar needs one marketing mix can satisfy most customers 2 One type of product with little or no variation one price one promotional program aimed at everybody and one distribution method a Examples salt sugar and certain kinds of farm produce b Concentrated targeting strategy through market segmentation HETEROGENEOUS diverse product needs 1 Market segmentation is the process of dividing a total market into groups that consist of 2 people with relatively similar product needs The company is better able to develop a satisfying marketing mix for a relatively small portion of a total market that to develop a mix that meets the needs of all people 3 Concentrated targeting strategy a market segmentation strategy in which an organization targets a single market segment using one marketing mix It allows a firm to specialize a b Concentrating on a single segment permits a firm with limited resources to compete with larger organizations that may have overlooked smaller segments Ex luxury sports cars Porsche c d Puts all it s eggs in one basket may be hard to move into other segments c Differentiated Targeting Strategy a A strategy in which an organization targets two or more segments by developing a marketing mix for each segment b After a concentrated segment some firms expand i Ex Dove women now have men s Dove products c A company with excess production capacity may find differentiated strategy advantageous Victoria s Secret Pink stores Segmentation variables characteristics of individuals groups or organizations used to divide a market into segments Location age gender and rate of product usage can all be bases for segmenting markets The segmentation variable should relate to customers needs for uses of or behavior toward the product To classify accurately the variable must be measurable Choosing one or more segmentation variables is a critical step in targeting a market Variables for segmenting consumer markets 2 Segmentation variables can be grouped info four categories demographic geographic psychographic and behavioristic DEMOGRAPHIC GEOGRAPHIC Age race ethnicity income education occupation family size family life cycle religion and social class Marketers rely on these demographic characteristics because they are often closely linked to customers needs and purchasing behaviors and can be readily measured Climate terrain city size population density and urban rural areas also influence customer product needs Markets may be divided into regions because one or more geographic variables can cause customers to differ from one region to another Market density the number of potential customers within a unit of land area Geodemographic segmentation A method of market segmentation that clusters people in zip code areas and smaller neighborhood units based on lifestyle and demographic information Micromarketing An approach to market segmentation in which organizations focus precise marketing efforts on small geographic markets PYSCHOGRAPHIC Personality characteristics motives and lifestyles When motives are used to segment a market the market is divided according to consumers reasons for making a purchase VALS classifies consumers based on psychological characteristics that are correlated with purchase behavior and key demographics Value and Lifestyle survey It s a questionnaire to determine a consumer s VALS type which can be integrated into larger questionnaires to find out about consumers lifestyle choices VALS research is also used to create new products as well as to segment existing markets BEHAVIORISTIC A market may be separated into users classified as heavy moderate or light and nonusers To satisfy a specific group marketers may create a distinctive product set special prices or initiate special promotion and distribution activities How customers use or apply products may also determine the method of segmentation Benefit segmentation The division of a market according to benefits that consumers want from the product benefits customers seek are their product needs Variables for segmenting business markets Marketers segment business markets according to geographic location type of organization customer size and product use Market Segment Profiles A market segment profile describes the similarities amount potential customers within a segment and explains the differences among people and organizations in different segments Marketers use market segment profiles to asses the degree to which their possible products can match or fit potential customers product needs Relevant Market Segments After analyzing market segment profiles a marketer is likely to identify several relevant market segments that require further analysis 3 Market potential the total amount of a product that customers will purchase within a period at a specific level of industry wide marketing activity Company sales potential The max percentage of market potential that an individual firm within an industry can expect to obtain for a specific product Select Specific Target Markets Selecting appropriate target markets is important to an organization s adoption and use of the marketing concept philosophy Identifying the right target market is the key to implementing a successful marketing strategy whereas failure to do so can lead to low sales high costs and severe financial losses Product Positioning and Repositioning Product positioning creating and maintaining a certain concept of a product in customers minds When marketers introduce a product they try to position it so that it appears to have the characteristics that
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