distribution, and so on. So the ultimate criterion for an organization's marketing success is that customers should be better off as a result of the increased synergies. o The organization should also achieve increased revenues and profits from the product differentiation and market segmentation strategies it uses. When the increased customer value involves adding new products or a new chain of stores, the product differentiation–market segmentation trade-off raises a critical issue: Are the new products or new stores simply stealing customers and sales from the older, existing ones? This is known as cannibalization . Understand what variables are used to segment markets (e.g. geographic, demographic, psychographic, behavioral) o Geographic Segmentation , which is based on where prospective customers live or work (region, city size) o Demographic Segmentation which is based on some objective physical (gender, race), measurable (age, income), or other classification attribute (birth era, occupation) of prospective customers o Behavioral Segmentation Product features. Understanding what features are important to different customers is a useful way to segment markets because it can lead directly to specific marketing actions, such as a new product, an ad campaign, or a distribution channel. For example, college dorm residents frequently want to keep and prepare their own food to save money or have a late-night snack. However, their dorm rooms are often woefully short of space. MicroFridge understands this and markets a combination microwave, refrigerator, freezer, and charging station appliance targeted to these students. Usage rate. Usage rate is the quantity consumed or patronage—store visits—during a specific period. It varies significantly among different customer groups. Airlines have developed frequent-flier programs to encourage passengers to use the same airline repeatedly to create loyal customers. This technique, sometimes called frequency marketing, focuses on usage rate. One key conclusion emerges about usage: In market segmentation studies, some measurement of usage by, or sales obtained from, various segments is central to the analysis. Understand the concepts of positioning and repositioning o Product positioning refers to the place a product occupies in consumers' minds on important attributes relative to competitive products. o By understanding where consumers see a company's product or brand today, a marketing manager can seek to change its future position in their minds. This requires product repositioning , changing the place a product occupies in a consumer’s mind relative to competitive products. Head-to-head positioning involves competing directly with competitors on similar product attributes in the same target market. Using this strategy, Dollar rental car competes directly with Avis and Hertz.
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- Spring '08
- Marketing, Medtronic