This can extend beyond the product’s purpose to the experience they have, the way it makes them feel, or what they believe it does. Two people may buy the same product for very different reasons. Segmenting by usage rates 80/20 principle (Praedo’s law): o large percentage of revenue comes from a small, loyal percentage of customers Marketers may target heavy, moderate, and light users or nonusers. Usage rates can be linked to other methods such as demographic and psychographic segmentation Segmenting by brand loyalty The “brand loyalty” approach focuses on how strongly and how loyal consumers feel toward a product. Firms may offer frequent-purchase programs or attempt to develop brand loyalty over time through consumers’ stages of life. Consumers can become loyal to seemingly similar brands for very different reasons. o What are reasons you are loyal to specific brands? Using Multiple Segmentation Bases Segmentation is a tool used to more accurately reach the right markets, get to know potential customers, and ultimately satisfy their needs. Flexibility helps marketers increase their accuracy in reaching the right markets. Goal is getting to know potential customers better and satisfying their needs with appropriate goods and services o How well do you know your customers if you only segmented by age or gender alone? Market segmentation process Stage 1: Develop a relevant profile for each segment. o Identifying promising segments, then understanding the customers in each one Stage 2: Forecast market potential. o Using market segmentation and market opportunity analysis to produce a forecast of market potential within each segment Stage 3: Forecast probable market share. o Analyzing competitors’ positions in targeted segments Stage 4: Select specific market segments. o Using the accumulated analysis and forecasts to weigh the potential for reaching company goals and to justify committing resources to developing one or more segments Targeting Market segmentation is the deliberate selection of specific groups of customers. o Implicit in the idea is that different groups of customers have different tastes and different preferences. o This is reflected in the market mix. A segment should be: Identifiable, measurable, accessible, substantial, unique in its response, stable and viable/useful Segmentation targeting is deciding which market segment is the most attractive.
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- Marketing, Effective Segmentation