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What is a Market?
People or organizations with needs or wants & with the ability and willingness to buy.
What is a market segment?
A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs.
What is market segmentation?
The process of dividing a market into meaningful, relatively similar, and identifiable segments or groups - the purpose being to enable the marketer to tailer marketing mixes to meet the needs of one or more specific segments.
What four basic criteria make up a useful/successful segmentation scheme?
- Substantiality: Must be large enough
- Identifiability & Measurability: identifiable using consensus type data & measurable in # that would use
- Accessibility: the firm must be able to reach the targeted segments
- Responsiveness: ex. if all customers are equally price-conscious there is no need for high, med & low priced versions
What are 5 commonly used characteristics in segmenting a market?
Geography, demographics, psychographics, benefits sought, and usage rate.
What are 5 common bases of demographic segmentation?
Age, gender, income, ethnic background, & family cycle.
What are the 8 most common terms used to refer to different age groups when dealing with age segmentation?
- Young Children
- Generation Y (teens, young adults)
- Generation X
- Baby Boomers
What are the 4 steps in Segmenting a Market?
- Select a market or product category for study & define it.
- Choose a basis or bases for segmenting the market.
- Select segmentation descriptors which boil down more specific variables to use.
- Profile & analyze segments including info on segment's size, expected growth, brand loyalty, etc.
What is an undifferentiated targeting strategy and what are the advantages/disadvantages?
- A mass-market philosophy in which one marketing mix is used for the entire market.
- Advantages: Save$$$ in production/marketing costs
- Disadvantages: Unimaginative product offerings & Company more susceptible to competition
What is a concentrated targeting strategy and what are the advantages/disadvantages?
- A firm selects a market nich (ONE segment of a market) and directs all of its marketing efforts there.
- Adv: Concentration of resources- Can better meet the needs of a narrowly defined segment-Allows some small firms to better compete with large firms-Strong positioning
- Disadv: Segments too small or changing & Large competitors may more effectively market to niche segment.
What is an Multisegment targeting strategy and what are the advantages/disadvantages?
- A strategy in which two or more well-defined market segments are chosen and a distince marketing mix is developed for each.
- Adv: Greater financial success & Economies of scale in producing/marketing
- Disadv: High Costs & Cannibalization (when sales of a new product cut into sales of a firm's exissting products)
What is positioning?
The overall perception of a brand/product, with Position being the place a a product, brand or group of products occupies in consumers' minds relative to competing offerings.
What are the 7 primary Positioning Bases firms use?
- Attribute: Product is associated with feature or customer benefit.
- Price & Quality: Stress high price as sign of quality or low price as indication of value.
- Use or Application: Stressing its use (ex. Kahlua ads had 228 different ways to drink it)
- Product User: Focuses on a personality or type of user.
- Product Class: Objective being to position the product as being associated with a particular category of products.
- Competitor: Positions against competitors.
- Emotion: Focuses on how the product makes the consumers feel.
What is Repositioning, and how would a company use it?
Repositioning is changing consumers' perceptions of a brand in relation to competing brands. A company could use repositioning in order to sustain growth in slow markets or to correct positioning mistakes.