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UNC-Chapel Hill BUSI 406 - Segmenting the Market
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BUSI 406: Principles of Marketing Lecture 5 Outline of Last Lecture I. Two of the Csa. Company objectives & mission statementsb. Competitive environmentII. External Marketing Environmenta. Economic environmentb. Technological environmentc. Political/Legal environmentd. Cultural/Social environmentIII. Screening opportunitiesOutline of Current Lecture: How do we create/ decide on a target market? I. Segmentation a. Defining markets b. Dimensions to use c. Identifying segments d. Identifying segments to target e. Segmentation approaches II. Positioning a. Understanding customer’s view b. Positioning techniques c. Evaluating segment preferences d. Differentiating the marketing mix e. Relationship between positioning & targeting Current LectureTaking Advantage of Opportunities Identifying opportunities screen opps.  decideEx: LaZBoy = image of recliner, men (specifically older)such a strong image is good for their specific target marketThese 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.such a strong image is bad if they want to growMarketsMarket: a group of customers with similar needs who are willing to exchange something of value with sellers offering various goods/ services Two Types1. Generic Market: lots of ways to satisfy needs—a market with broadly similar needs; sellers offering various ways of satisfying those needs 2. Product-market: much more specific—a market with very similar needs and sellers offering various close substitute ways of satisfying those needs Relationship between Generic and Product marketsCustomer needs + Customer types + Geographic area + Product type= Generic definition = Product-market definitionSegmentation is a Two-step Process1. Naming broad product-market2. Segmenting markets to select target markets and develop marketing mixesBegin by Understanding Markets1. Look at all customer needs2. Narrow to some generic market 1-3: Specific Product Market3. Narrow to one broad product-market4. Homogenous product-markets 4: Segmenting to target markets5. Single target market; multiple; combined 5: Select target market approachEx. Bikes from Lecture 1 you have these types of bikers: Exercisers, Off-road adventurers; Transportation riders; Socializers; EnvironmentalistsHow Far Should Aggregating Go?partly status driven, partly dependability driven what is driving this product?Ex. three groups or six? How do you tell? 1. Can you tell a story from A and B. Are they really different?This is subjective in nature if you can really differentiate into smaller groups, then it is worth it to fine tune your marketing mixCriteria for Segmenting Markets1. Homogenous within markets2. Heterogeneous between markets3. Substantial: big enough4. Operational: useful for targeting and marketing mixAim at Specific Targets1. Single target market approach just talk to one target market2. Multiple target market approach several marketing mixes to a two or more target marketsa. why? to hit more people, create value, but really for diversification [if somethinggoes wrong with one, have a back-up]3. Combined target market approach talking to two or more segments, but lumping them together by giving them one marketing mix [neither is completely happy, but company is still diversifying and isn’t doing twice the work]Segmenting vs. CombiningThings to consider:- Combiners try to satisfy “pretty well”risk: competitors can better satisfy a niche market with single market approach- Too much: risky because lose segmentation- Segmenters try to satisfy “very well”going all in on satisfying smaller segmentEx. thinking of pie the first is smaller pieces of a pie; the second is a larger piece of a smaller pie- Profit is the balancing point- Segment or combine?- Segmenting may produce bigger salesMore often than not, segmenting is less risky [only have to do one thing well]Ex. Trek, bike company they are ultimately using multiple market approachDimensions for Segmenting Consumer Markets1. Behavioral Segmenting Dimensionsa. needs/ occupation/ educationb. benefits soughtc. thoughts/ ethnicity/ social classd. rate of usee. purchase relationshipf. brand familiarity g. kind of shoppingh. type of problem-solvingi. information required- marketers like to have this info, but usually have to ask hardest to get, hardest to use2. Geographic Segmentation Dimensionsa. region of world, countryb. region in a countryc. size of city- quick way to lump people together [toothpaste not as useful, but rain jackets might be an example—terrain, attire]3. Demographic Segmentation Dimensionsa. incomeb. sexc. aged. family sizee. family life of cycle- also quick way to lump people together available and cheap to get, alone with geographicSegmenting Consumer MarketsEx. Harris Teeter VIC card they get people’s purchase history each time + info on customer, so start to get demographics, geographic, and behavior [address, date, preferences] coupons at the end/ emails are trying to influence what consumers buy- Internal Company Techniqueso clusteringo customer relationship management (CRM)- External options/ possibilitieso can buy software/ buy use of softwareSegmenting Business Markets- kind of relationship- type of customer- demographics size, profit, revenue- how customers use the product- type of buying situation- purchasing methodsFinding Relevant Segmenting DimensionsAll potentialqualifying dimensionsdetermining dimensions (product type)determining (brand specific)Ex. Car buying car seller first looks at customer to see if buyer looks serious about buying—so what do you ask first? What brings you here today? [screening for urgency]Where are you coming from?/ What do you do? [screening for ability to buy] Budget? [qualifying]More direct questions: Do you have kids? What’s your budget? Use of car? How many people? Env’t? [screeningfor product type] Are you interested in an SUV?Do you care where it is made? What car perks do you like? Interior? Safety features? Driving performance? Durability? Experience with car brands? [brand specific]-Determining factor in this example was: is there a vent in the third row? So, buying the Chevi Traverse-Almost always people buy the same brandsBroader Ethical Issues- Ethical Issueso exploitationo creates unnecessary wantso does harm- International IssuesRelevant


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UNC-Chapel Hill BUSI 406 - Segmenting the Market

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