AEM 240 P2 Review (Chapter + TNote)

AEM 240 P2 Review (Chapter + TNote) - Chapter 9 Identifying...

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Chapter 9: Identifying Market Segments and Targets Why Segment Markets? What Market Segmentation Means Market Segmentation: aggregating prospective buyers into homogenous groups of 1) common needs and 2) similar responses to marketing actions o Market Segments: relatively homogenous groups of prospective buyers that result from the market segmentation Because there are different market segments, firms use product differentiation ; a firm using different marketing mix activities (new product features and advertising) so consumers perceive the product as being different/better than other competing products Market-product grid : Framework relating the segments of a market to products or marketing actions of the firm When to Segment Markets Only do market segmentation if marginal revenue from market segmentation covers costs Marketing segmentation occurs when there are multiple markets Wont occur when there’s one market Examples of Successful Market Segmentation Movies, magazines, and books are single products which often target two or more distinct market segments Customer relationship management (CRM) : Every customer has unique wants o recent efficiencies in manufacturing and marketing has made customers compromise their individual tastes and settle for standardized products o Mass customization : tailoring goods/services to the tastes of many customers (brought about by the internet’s ordering and marketing processes) o Mass standardization: Build-to-order (BTO): manufacturing a product only when there is an order from a customer o this shortens inventories and allows quick delivery times The Segmentation Trade-Off: CRM versus Synergies Synergy: Increased customer value achieved through performing organizational functions more efficiently (mergers and acquisitions) o Ex. more products, improved quality on existing products, lower prices o The ultimate criterion for an organization’s marketing success in customer relationship management is that customers should be better off as a result of increased synergies When increased customer value comes from the addition of new products we must ask if the new products are cannibalizing sales from our older products Steps in Segmenting and Targeting Markets
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Identify market needs Take Steps in segmenting and targeting markets: 1) group potential buyers into segments 2) Group products to be sold into categories 3) Develop a market-product grid and estimate size of markets 4) Select target markets 5) Take marketing actions to reach target markets Execute Marketing Program Step 1: Group Potential Buyers into Segments This step answers the question if market segmenting is a good idea for the firm Segment consumers into two categories o 1) Customer characteristics Demographic s (age, gender, marital status, education, ethnicity, occupation, income) Marketers just recently are now targeting the male shopper, 2 types of male shoppers: o Metrosexual: 20-50 yr old, gay taste o
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