MKTG Exam 2 Study Guide 6 7 8 9 10

Design implement maintain marketing mix bases of

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Design, implement, maintain marketing mix Bases of Segmentation Characteristics of individuals, groups, or organizations Five possible bases Geography Demographics Psychographics Product benefits Usage rate The bases can be used individually or in combination If possible, give each segment a name Geography Segmenting markets by region, market size, market density, or climate. Examples: Region : (1) Pacific, Mountain, Mid-west … (2) City west, City east, Downtown … Size : under 99,999, 100,000-199,999, 200,000 or over Density : urban, suburban, rural Climate : northern, southern Example: R.J. Reynolds Tobacco Company (Actually a geodemographic segmentation) 4 brands: Winston, Camel, Salem and Doral Segmenting the market of a major American city North Shore Higher education level and concerned more about health Promotes low-tar brands Southeast Blue-collar and conservative Promotes Winston South Side African-American communities Promote the high menthol content of Salem, heavily using the African-American press and billboards. Demographics Segmenting by age, gender, income, ethnic background, and family life-cycle. Psychographics Segmenting by personality, motives, lifestyle, geodemographics. Heavily used by advertising agencies Example: Claritas PRIZM system 8
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Geodemographics combination of geographic, demographic and lifestyle segments by neighborhoods/zip codes Claritas PRIZM Neighborhoods Product Benefits Segmenting by the benefits consumes seek from the product; it is the most frequently used base for segmentation Usage-rate Segmenting by the amount of product bought. Possible segments: light users, medium users, and heavy users. 80/20 principle : 20 percent of all customers generate 80 percent of the demand Serving and creating heavy users Segmenting Business Markets Company characteristics o Geographic location o Type of company / industry o Company size, etc. o Volume of purchases o Product use Buying processes o Satisficers or optimizers o Buying center characteristics (including individual buyer characteristics) o Buyer power Factors Influencing Segment Attractiveness Segment size and growth current dollar sales, growth rate, profit margins Segment structural attractiveness competitors substitute products power of buyers and suppliers Targeting Strategies Undifferentiated Targeting Multisegment Targeting Concentrated Targeting Niche Marketing A niche is a more narrowly defined group, typically a small market whose needs are not being well served. Usually there is a price premium. 9
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“There will be no market for products that everybody likes a little, only for products that somebody likes a lot.” Fortune 1989 but still true Pros and Cons of the Strategies Undifferentiated Targeting Potential savings on production and marketing costs.
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