Strat Com Notes - Segmenting and Targeting (246-277)...

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Segmenting and Targeting ( 246-277) 10/10/2007 10:37:00 Reaching “everyone” costs money/sends unwanted messages to non- customers Segmenting identifies groups of customers/prospects most likely to respond  to marketing message Segmenting-grouping customers or prospects according to common  characteristics, needs, wants, or desires o Gives a marketer target options o Allows companies to focus MC efforts on segments that give greatest  potential return on investment Targeting-analyzing, evaluating, and prioritizing the market segments deemed  most profitable to pursue Moving Away from Mass Marketing GM was the first to offer models for each customer segment-different age  group-different car-move along age and retain customers Marketing today-more focused on smaller but more profitable segments of the  market Niche markets-distinct commonality shared by those making up a segment o Manufacturers are trying to take advantage of economies of scale- doing so by targeting smaller segments and niche markets instead of  one product for all customers in category One-to-one marketing-customizing products and marketing communication  according to individual needs Mass customization of products-manufacturing process that is programmed to  choose ingredients/parts to produce custom-designed goods-(ie. Dell) Steps in Segmenting and Targeting: o 1. Identify most profitable current customers o 2. Create profiles of these segments o 3. Target these segments to increase retention and customer growth o 4. Use profiles of profitable customers to locate prospect segments o 5. Evaluate prospect segments
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o 6. Target prospect segments that are most likely to respond o 7. Continue testing responsiveness of prospect segments with similar  profiles Know customer profiles o Costs less to sell additional products to current customers than to sell  to new ones o Some customers are more profitable than others o Once the most profitable ones are identified and profiled-the profile can  be used to find new customers Buyers vs. Users-to what extent should you target buyer instead of user Profitability Effective segmenting based on overall business and marketing objectives If expanding-weight the benefits of doing so-vs cost of doing so Creating/sending brand messages-represent expenses-segmenting and  targeting affects profits Analyze size of customer segments, spending patterns, relationship  maintenance costs o Unprofitable low-volume: little business and cost more to service than  company receives in profit-so charge them for extra services o unprofitable high-volume: buy in large quantities, so demand discounts 
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Strat Com Notes - Segmenting and Targeting (246-277)...

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