10 - Marketing Chapter 9 Market segmentation involves...

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Marketing Chapter 9 Market segmentation involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action. Market segments are relatively homogeneous groups of prospective buyers that result from the market segmentation process. Product differentiation is a strategy that involves a firm using different marketing mix activities, such as product features and advertising, to help consumers perceive the product as being different and better than competing products. Identify market needs Link needs to actions Execute marketing program actions Benefits in terms of Take steps to segment -Product features and target markets A marketing mix in terms of -Expense -Product -Quality -Price -Savings in time and -Promotion convenience -Place -One product and multiple market segments avoids the extra costs of developing and producing additonal versions of the product, which has many expenses (examples are movies, magazines, books) -Multiple products and multiple market segments Multiple products aimed at multiple market segments (Ford’s different lines are cars, SUVS, trucks). It is more expensive but is effective if it meets customers’ needs better. -Segments of one: mass customization Customer relationship management (CRM)— each customer has unique needs and wants. Build-to-order (BTO) is manufacturing a product only when there is an order from a customer. Synergy : the increased customer value achieved through performing organizational functions like marketing or manufacturing more efficiently -Customer’s should be better off as a result of increased synergies Link needs to actions. The steps: 1. Group potential buyers into segments a. Criteria to use in forming the segments i. Simplicity and cost-effectiveness of assigning potential buyers to segments ii. Potential for increased profit iii. Similarity of needs of potential buyers within a segment iv. Difference of needs of buyers among segments
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v. Potential of a marketing action to reach a segment b. Ways to segment consumer markets i. Geographic segmentation ii. Dempgraphic segmentation iii. Psychographic segmentation iv. Behavioral segmentation 1. 80/20 rule: the concept that suggests 80% of a firm’s sales are obtained from 20% of its customers 2. Group Products to be sold into categories 3. Develop a Market-Product Grid and Estimate the Size of Markets a. A market-product grid is a framework to relate the market segments of potential buyers to products offered or potential marketing actions by an organization 4. Select Target Markets a. Criteria to use in selecting the target segments i. Market size ii. Expected growth iii. Competitive position iv. Cost of reaching the segment v. Compatibility with the organization’s objectives and resources 5. Take Marketing Actions to Reach Target Markets Product positioning: the place an offering occupies in consumers’ minds on important attributes relative to competitive products product repositioning: changing the place an offering occupies in a
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This note was uploaded on 02/14/2011 for the course AEM 2400 at Cornell University (Engineering School).

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10 - Marketing Chapter 9 Market segmentation involves...

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