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Exam 2 Study Guide - Exam II Review Marketing Chapter 9...

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Exam II Review: Marketing Chapter 9: Identifying Market Segments and Targets Analyze a product advertised in a magazine Does the advertisement emphasize any product differentiation? Market segmentation results in market segments, a relatively homogenous collection of prospective buyers. Market segmentation relates the organization’s actions to customer needs. The existence of different market segments has caused firms to use a marketing strategy of product differentiation , a strategy that has come to have two different but related meanings. In its broadest sense, product differentiation involves a firm’s using different marketing mix activities, such as advertising, to help consumers perceive the product as being different and better than competing products. The two related meanings of product differentiation involve a firm’s 1. using different marketing mix activities to help consumers perceive the product as being different and better than competing products and 2. selling two or more products with different features targeted to different market segments. Review the company’s website to see if you could devise a probable market-product grid. A market-product grid is a framework to relate the segments of a market to products offered or potential marketing actions by the firm. Thus, each cell in a market-product grid can depict the estimated market size of a given product sold to a specific market segment. In the book, there is a market-product grid showing how different Reebok shoes reach segments of customers with different needs. The grid also suggests one of the potential dangers faced by a firm that uses market segmentation. (Look at Figure 9-2) Developing a market-product grid means labeling the markets and products. In addition, the size of the market in each cell must be estimated. Which consumer segments are being addressed? What is the overall positioning associated with the product? A business firm goes to the trouble and expense of segmenting its markets when this increases its sales revenue, profit, and return on investment. When its expenses more than offset the potentially increased revenues from segmentation, it should not attempt to segment its market. 1. One Product and Multiple Market Segments: When a firm produces only a single product or service and attempts to sell it to two or more market segments, it avoids the
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extra costs of developing and producing additional versions of the product. Examples: movies, magazines, and books are single products frequently directed to two or more distinct market segments. 2. Multiple Products and Multiple Market Segments: Reebok’s different styles of shoes, each targeted at a different type of user, are an example of multiple products aimed at multiple markets. Manufacturing these different styles of shoes may be more expensive than producing a single style but seems worthwhile if it serves customers’ needs better, doesn’t reduce quality or increase prices, and adds to the sales revenues and profits.
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