Badm 320 ch 9 - notes from online lecture PDF

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notes from online lecture...

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The segmentation, targeting, and positioning process - Step 1: establish the overall strategy or objectives - Articulate the vision or objectives of the company’s marketing strategy clearly - The segmentation strategy must be consistent with and derived from the firm’s mission and objectives as well as its current situation-- its strengths, weaknesses, opportunities, and threats (SWOT) - Step 2: use segmentation methods - Use a particular method or combination of methods to segment the market - Develops descriptions of the different segments, which helps the firms better understand the customer profiles in each segment - Firms can distinguish customer similarities within a segment and dissimilarities across segments - Geographic segmentation: organizes customers into groups on the basis of where they live - Most useful for companies whose products satisfy needs that vary by region - Better marketers make adjustments to meet the needs of smaller geographic groups - Demographic segmentation: groups consumers according to easily measured, objective characteristics such as age, gender, income, and education - Represent the most common means to define segments because they are easy to identify, and demographically segmented markets are easy to reach - Critical to defining an overall marketing strategy - Psychographic segmentation: delves into how consumers actually describe themselves - Psychographics: studies how people self-select, as it were, based on the characteristics of how they choose to occupy their time and what underlying psychological reasons determine those choices - Self values: goals for life, not just the goals one wants to accomplish in a day - Overriding desires that drive how a person lives his/her life - Self concept: the image people ideally have of themselves - People’s self image - Lifestyles: the ways we live - How we live our lives to achieve goals

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Values and lifestyles survey (VALS): most widely used psychographic segmentation - Examines the intersection of psychology, demographics, and lifestyles - Enables firms to identify target segments and their underlying motivations to develop strategic initiatives and communications - Benefit segmentation: groups consumers on the basis of the benefits they derive from products or services - Effective and easily to portray a product’s or service’s benefits in the firm’s communication strategies - Behavioral segmentation: divides customers into groups on the basis of how they use the product or service - Occasion - Occasion segmentation: behavioral segmentation based on when a product or service is purchased or consumed - Loyalty - Loyalty segmentation: investing in retention and loyalty initiatives to retain their most profitable customers - Using multiple segmentation methods - Firms often employ a combination of segmentation methods - Use demographics and geography to identify and target marketing communications to their customers - Use benefits or lifestyles to design the product or service and the substance of the marketing message - Geodemographic segmentation: uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers Step 3: evaluate segment attractiveness - Identifiable - Firms must be able to identify who is within their market to be able to design products or services to meet their needs - Substantial - If a market is too small or its buying power is insignificant, it won’t generate sufficient profits or be able to support the marketing mix activities - Reachable - The best product cannot have any impact if that market cannot be reached - Responsive

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The customers in the segment must react similarly and positively to the firm’s offering - Profitable - Marketers must focus their assessments on the potential profitability of each segment, both current and future - Segment profitability = (segment size x segment adoption percentage x purchase behavior x profit margin percentage) - fixed costs - Segment size: number of people in the segment - Segment adoption percentage: percentage of customers in the segment who are likely to adopt the product/service - Purchase behavior: purchase price x number of times the customer would buy the product/service in a year - Profit margin percentage: (selling price - average variable costs) / selling price - Fixed costs: advertising expenditure, rent, utilities, insurance, and administrative salaries for managers Step 4: select a target market - Undifferentiated targeting strategy, or mass marketing - If the product or service is perceived to provide similar benefits to most consumers, there is little need to develop separate strategies for different groups - Differentiated targeting strategy - Target several market segments with a different offering for each - Concentrated targeting strategy - When an organization selects a single, primary target market and focuses all its energies on providing a product to fit that market’s needs - Entrepreneurial start up ventures often benefit from this strategy - Micromarketing - When a firm tailors a product or service to suit an individual customer’s wants or needs Step 5: identify and develop positioning strategy - Market positioning: a process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products

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Value proposition: communicates the customer benefits to be received from a product or service and thereby provides reasons for wanting to purchase it - Components - Target market - Offering name or brand - product/service category or concept - Unique point of difference/benefits Positioning methods - Value proposition - Popular method because the relationship of price to quality is among the most important considerations for consumers when they make a purchase decision - Salient attributes - Focuses on the product attributes that are most important to the target market - Symbols - A well-known symbol can also be used as a positioning tool - Create a position for the brand that it distinguishes it from the competition - Competition - Firms can choose to position their products or services against a specific competitor or an entire product/service classification - Marketers must be careful that they don’t position their product too closely to their competition Positioning using perceptual mapping - Perceptual map: displays, in two or more dimensions, the position of products or brands in the consumer’s mind - Ideal points: where a particular market segments ideal product would lie on the map - Marketers follow 6 steps to derive a perceptual map - (1) determine consumers’ perceptions and evaluations of the product or service in relation to competitors’ product or service - (2) identify the market’s ideal points and size - (3) identify competitors’ positions - (4) determine consumer preferences - (5) select the position - (6) monitor the positioning strategy...