Ch. 6 - Segmentation, Targeting, and Positioning Flashcards
Why is there so much variety in the products available to consumers?
Different varieties of different products make people happy. There is not 1 optimal product since people have different preferences.
What was Howard Moskowitz’s contribution to marketing?
He emphasized the importance of diversity in products. Instead of looking for one optimal product, he looked for clusters of data indicating a preference for certain products.
Market Segmentation
Dividing the total market into smaller, distinct, relatively homogeneous groups who respond similarly to marketing strategies. Different marketing mixes used for different segments
What are the different forms of market segmentation?
- Undifferentiated Marketing
- Differentiated Marketing
- Concentrated Marketing
- Micro Marketing
Undifferentiated Marketing
Focus is on common needs of consumers (mass marketing)
Differentiated Marketing
Firm targets several segments (based on clusters of consumers), designs separate offers for each.
Concentrated Marketing
Firm acquires a large share of one segment (aim to be the biggest player in one segment.
Micro Marketing
Customizing offer to the tastes of specific individuals or locations
What are the different variables companies use to segment the market (segmentation variables)?
- Demographic
- Geographic
- Psychographic
- Behavioural/product-usage
Demographic Segmentation
Dividing consumer groups according to personal characteristics (e.g. gender, age, income, occupation, religion, generation, and more)
Geographic Segmentation
Dividing market into groups based on location or environment (e.g. country, province, city, density, climate)
Psychographic Segmentation
Dividing the market based on people’s shared attitudes and behaviour, personality, lifestyles, hobbies, and interests
Lifestyle
People’s decisions about how to live their daily lives, including family, job, social, and consumer activities
Behavioural Segmentation
Dividing a consumer population into homogeneous groups based on their knowledge, attitude, use, or response to a product
How can companies engage in behavioural segmentation?
Companies can study:
- Purchase occasion for buyers
- Benefits people seek when they buy
- User status
- Usage rates (how often is a product used)
- Loyalty
The Segmentation Process
After a company has segmented the market, they must:
1. Develop a profile for each segment
2. Evaluate each segment
3. Select specific market segment(s) (target marketing)
What criteria do companies use to evaluate each segment of the market?
- Size & growth rate
- Attractiveness
- Company objectives & resources
Size & Growth Rate (Segment Criteria)
Evaluate the current size of the segment and determine if the segment will grow or shrink over time and by how much.
Attractiveness (Segment Criteria)
Determine if your customers can access your product and that they will buy enough to make your product profitable
What do companies need to do after segmenting the market and picking a target?
- Decide what differentiates them from their competition and what makes them unique
- Choose one or some of these differences to focus on (1-2 key differences)
How can companies differentiate their product from their competitors?
- Position product away from or against competitors
- Product Differentiation
- Branding/benefits offered
- Other factors such as services, channels, and people
How can companies position their product away from or against their competitors?
They can position the product against something consumers already know, but away from the leader to differentiate (useful if the company knows that they are not a leader)
How can companies differentiate their product using product attributes?
- Lower price than their competitors
OR - Higher quality compared to their competitors
Positioning
The way the product is defined by consumers on important attributes; the place the product occupies in consumers’ minds relative to competing products
