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chapter 8 outline

chapter 8 outline - BMGT350 Chapter 8 LO1 Market...

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BMGT350 Chapter 8 LO1: Market Segmentation Market: people or organizations with needs or wants and the ability and willingness to buy o A group of people that lacks any one of these characteristics is not a market Market segment: a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs Market segmentation: process of dividing a market into meaningful, relatively similar, and identifiable segments or groups o Purpose is to enable the marketer to tailor marketing mixes to meet the needs of one or more specific segments LO2: The Importance of Market Segmentation Markets have a variety of product needs and preferences Helps marketers define customer needs and wants more precisely Helps decision makers to more accurately define marketing objectives and better allocate resources EX: Chicos o Targets women ages 35 to 55 o Has four nonjudgmental sizes: 0 (sizes 4-6), 1 (8-10), 2 (10-12), and 3 (14-16) LO3: Criteria for Successful Segmentation Marketers segment markets for 3 important reasons: o Enables marketers to identify groups of customers with similar needs and to analyze the characteristics and buying behavior of these groups o Provides marketers with information to help them design marketing mixes specifically matched with the characteristics and desires of one or more segments o Consistent with the marketing concept of satisfying customer wants and needs while meeting the organizations objectives Segments must meet 4 basic criteria: o Substantiality: segment must be large enough to warrant developing and maintaining a special marketing mix o Identifiability and measurability: segments must be identifiable and their size measurable
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o Accessibility: firm must be able to reach members of targeted segments with customized marketing mixes o Responsiveness: Unless segment responds to a marketing mix differently, no separate treatment is needed LO4: Bases for Segmenting Consumer Markets Segmentation bases (variables): characteristics of individuals, groups, or organizations o Marketers use segmentation bases to divide a total market into segments Key is to identify bases that will produce substantial, measurable, and accessible segments that exhibit different response patterns to marketing mixes Markets can be segmented using a single variable or several variables o Single variable segmentation, although less precise, has the advantage of being simpler and easier to use than multiple-variable segmentation o Multiple-variable segmentation is clearly more precise, but has disadvantages: Often harder to use than single-variable Usable secondary data are less likely to be available As the number of segmentation bases increases, the size of the individual segments decreases Commonly use one or more of following characteristics to segment markets: geography, demographics, psychographics, benefits sought, and usage rate Geographic segmentation o Region of the country or world o
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