Week 5 Learning Material
Week 5 Learning Material
Key Concepts
Reading: Principals of Marketing 17 Edition Chapter 7 Page # 210
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.
Figure 7.1 shows the four major steps in designing a customer-driven marketing strategy.
involves dividing a market into smaller groups of buyers with distinct needs,
Market segmentation
characteristics, or behaviors that might require separate marketing strategies or mixes.
consists of arranging for a market offering to occupy a clear, distinctive, and desirable
Positioning
place relative to competing products in the minds of target consumers.
MARKET SEGMENTATION
Through market segmentation, companies divide large, heterogeneous markets into smaller
segments that can be reached more efficiently and effectively with products and services that
match their unique needs.
Table 7.1 outlines the major variables that might be used in segmenting consumer markets.
Geographic Segmentation
calls for dividing the market into different geographical units such as nations,
Geographic segmentation
regions, states, counties, cities, or even neighborhoods.
Demographic Segmentation
divides the market into groups based on variables such as age, gender,
Demographic segmentation
family size, family life cycle, income, occupation, education, religion, race, generation, and
nationality.
Demographic factors are the most popular bases for segmenting customer groups.
Age and Life-Cycle Stage is offering different products or using different marketing
approaches for different age and life-cycle groups.
Gender segmentation has long been used in clothing, cosmetics, toiletries, and magazines.
has long been used by the marketers of products and services such as
Income segmentation
automobiles, clothing, cosmetics, financial services, and travel.
Psychographic Segmentation
Behavioral Segmentation
is grouping buyers according to occasions when they get the idea to buy,
Occasion segmentation
actually make their purchase, or use the purchased item.
Benefit segmentation is grouping buyers according to the different benefits that they seek from
the product.
User Status is segmenting markets into nonusers, ex-users, potential users, first-time users, and
regular users of a product.
Usage Rate is grouping markets into light, medium, and heavy product users.
Loyalty Status is dividing buyers into groups according to their degree of loyalty.
PRIZM NE (one of the leading segmentation systems) classifies every American household
based on a host of demographic factors.
Consumer and business marketers use many of the same variables to segment their markets.
Business marketers also use some additional variables, such as customer operating
characteristics, purchasing approaches, situational factors, and personal characteristics.
Many marketers believe that buying behavior and benefits provide the best basis for segmenting
business markets.
Companies can segment international markets using one or a combination of several variables.
Geographic factors: Nations close to one another will have many common traits and
behaviors.
Economic factors: Countries may be grouped by population income levels or by their
overall level of economic development.
Political and legal factors: Type and stability of government, receptivity to foreign
firms, monetary regulations, and the amount of bureaucracy.
Cultural factors: Grouping markets according to common languages, religions, values
and attitudes, customs, and behavioral patterns.
Measurable: 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.
Differentiable: The segments are conceptually distinguishable and respond differently
to different marketing mix elements and programs.
Actionable: Effective programs can be designed for attracting and serving the
segments.
Assignments, Resources
Use Applying the Concepts 2 here
MARKET TARGETING
The largest, fastest-growing segments are not always the most attractive ones for every
company.
The company also needs to examine major structural factors that affect long-run segment
attractiveness.
A segment may be less attractive if it contains powerful suppliers who can control prices.
A target market consists of a set of buyers who share common needs or characteristics that the
company decides to serve. (Figure 7.2)
Undifferentiated Marketing
Using an undifferentiated marketing (or mass-marketing) strategy, a firm might decide to ignore
market segment differences and target the whole market with one offer.
This mass-marketing strategy focuses on what is common in the needs of consumers rather than
on what is different.
Differentiated Marketing
Using a differentiated marketing (or segmented marketing) strategy, a firm decides to target several
market segments and designs separate offers for each.
Concentrated Marketing
Using a concentrated marketing (or niche marketing) strategy, instead of going after a small share of
a large market, the firm goes after a large share of one or a few smaller segments or niches.
It can market more effectively by fine-tuning its products, prices, and programs to the needs of
carefully defined segments.
It can market more efficiently, targeting its products or services, channels, and communications
programs toward only consumers that it can serve best and most profitably.
Micromarketing
is the practice of tailoring products and marketing programs to suit the tastes of
Micromarketing
specific individuals and locations.
involves tailoring brands and promotions to the needs and wants of local customer
Local marketing
groups—cities, neighborhoods, and even specific stores.
Individual marketing is the tailoring of products and marketing programs to the needs and
preferences of individual customers.
Individual marketing has also been labeled one-to-one marketing, mass customization, and
markets-of-one marketing.
Target marketing sometimes generates controversy and concern. Issues usually involve the targeting of
vulnerable or disadvantaged consumers with controversial or potentially harmful products.
Problems arise when marketing adult products to kids, whether intentionally or unintentionally.
The growth of the Internet and other carefully targeted direct media has raised concerns about
potential targeting abuses.
The issue is not so much who is targeted, but how and for what. Controversies arise when marketers
attempt to profit when they unfairly target vulnerable segments or target them with questionable
products or tactics.
Socially responsible marketing calls for segmentation and targeting that serve not just the interests of
the company, but also the interests of those targeted.