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C HAPTER 9: M ARKET S EGMENTATION , T ARGETING , AND P OSITIONING 1) What Market Segmentation Means a) Market Segmentation involves aggregating prospective buyers into groups that -Have common needs -Will respond similarly to a marketing action Market Segments : the relatively homogeneous groups of prospective buyers that result from the market segmentation process Product Differentiation : strategy that involves using different marketing mix activities (Examples product features or advertising) a.i) Segmentation: Link Needs to Actions (a.i.1) Market segmentation is only a means to an end: to lead to tangible marketing actions that can increase sales and profitability. Effective market segmentation (a.i.1.a) Forms meaningful groupings (a.i.1.b) Develops specific marketing mix actions a.ii) The Successful Footwear Segmentation Strategy (a.ii.1) Zappos creates positive customer experience and leads to repeat purchases (a.ii.2) Wide selection of shoes, overnight shipping, and free returns. b) When and How to Segment Markets b.i) Should not attempt to market when expenses are greater than the potentially increased sales from segmentation b.ii) Three specific Segmentation strategies (b.ii.1) One product and multiple market segments An organization produces only a single product or service and attempts to sell it to two or more market segments Avoids extra costs of developing and producing additional versions of the product. o Examples: Magazines or Harry Potter (b.ii.2) Multiple products and multiple market segments Examples: Ford selling different types of cars like SUVs, pick up trucks, vans Two-Tier Marketing firms offering different variations of same basic offering to high-end and low-end segments (Banana Republic and Old Navy) (b.ii.3) “Segments of one” or mass customization
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This note was uploaded on 10/19/2011 for the course MARKETNG 301 taught by Professor Schewe during the Spring '09 term at UMass (Amherst).

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