each market segment’s attractiveness and selects one or more segments to serve. Market targeting consists of designing strategies to build the right relationships with the right customers . Differentiation involves actually differentiating the market offering to create superior customer value. Positioning consists of positioning the market offering in the minds of target customers. LO 2 List and Discuss the Major Bases for Segmenting Consumer and Business Markets. ( List the major segmentation variables for both consumer and business markets. (Textbook, pp. 240–250)) There is no single way to segment a market. Therefore, the marketer tries different variables to see which give the best segmentation opportunities. For consumer marketing, the major segmentation variables are geographic, demographic, psychographic, and behavioral. In geographic segmentation , the market is divided into different geographical units, such as nations, regions, provinces, municipalities, cities, or neighborhoods. In demographic segmentation , the market is divided into groups based on demographic variables, including age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality. In psychographic segmentation, the market is divided into different groups based on social class, lifestyle, or personality characteristics. In behavioral segmentation , the market is divided into groups based on consumers’ knowledge, attitudes, uses, or responses to a product. Business marketers use many of the same variables to segment their markets. But business markets can also be segmented by business consumer demographics (industry, company size), operating characteristics , purchasing approaches , situational factors , and personal characteristics . The effectiveness of segmentation analysis depends on finding segments that are measurable , accessible , substantial , differentiable , and actionable . LO 3 Explain how Companies Identify Attractive Market Segments and Choose a Market-Targeting Strategy. To target the best market segments, the company first evaluates each segment’s size and growth characteristics, structural attractiveness, and compatibility with company objectives and resources. It then chooses one of four market-targeting strategies—ranging from very broad to very narrow targeting. The seller can ignore segment differences and target broadly by using undifferentiated ( or mass ) marketing . This method involves mass producing, mass distributing, and mass promoting the same product in about the same way to all consumers. Or the seller can adopt differentiated marketing —developing different market offers for several segments. Concentrated marketing (or niche marketing) involves focusing on only one or a few market segments. Finally, micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Local marketing refers to customizing marketing offers to a small group of people living in the same city or neighborhood or shopping at the same store, and individual marketing , better known as mass customization , is the practice of customizing a marketing offer to an individual.
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