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This chapter looks further into key customer-driven marketing strategy decisions—how to divide up markets into meaningful customer groups (segmentation), choose which customer groups to serve (targeting), create market offerings that best serve targeted customers (differentiation), and positioning the offerings in the minds of consumers (positioning).

Chapter Objectives:
1.Define the four major steps in designing a customer-driven marketing strategy: market segmentation, market targeting, differentiation, and positioning 2.List and discuss the major bases for segmenting consumer and business markets 3.Explain how companies identify attractive market segments and choose a market targeting strategy 4.Discuss how companies differentiate and position their products for maximum competitive advantage in the marketplace. Most companies have moved away from mass marketing and toward target marketing—identifying market segments, selecting one or more of them, and developing products and marketing programs tailored to each.

Figure 7.1 (pg.216) shows the four major steps in designing a customer-driven marketing strategy.

Market segmentation involves dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes.

Market targeting (or targeting) consists of evaluating each market segment’s attractiveness and selecting one or more market segments to enter. Differentiation involves actually differentiating the firm’s market offering to create superior customer value.

Positioning consists of arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

MARKET SEGMENTATION (pg. 216-225)
Segmenting Consumer Markets

Table 7.1 (pg.217) outlines the 4 major variables that might be used in segmenting consumer markets. A marketer has to try different segmentation variables, on its own and in combination, to find the best way to view the market structure.

Geographic Segmentation: Geographic segmentation calls for dividing the market into different geographical units such as nations, regions, states, counties, cities, or even neighborhoods. A company must pay attention to geographical differences in needs and wants.

Demographic Segmentation: Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality. Demographic factors are the most popular bases for segmenting customer groups. This helps marketers to assess the size of the target market and ‘reach’ it efficiently.

Age and Life Cycle Stage is offering different products or using different marketing approaches for different age and life cycle groups.

Gender segmentation has long been used in clothing, cosmetics, toiletries, and magazines.

Income segmentation has long been used by the marketers of products and services such as automobiles, clothing, cosmetics, financial services, and travel.

Psychographic Segmentation: Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality characteristics.

Marketers use personality variables to segment markets.

Behavioral Segmentation: Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product.

Occasion segmentation is grouping buyers according to occasions when they get the idea to buy, actually make their purchase, or use the purchased item.

Benefit segmentation (Benefits sought) is grouping buyers according to the different benefits that they seek from the product.

User Status is segmenting markets into nonusers, ex-users, potential users, first-time users, and regular users of a product.

Usage Rates is grouping markets into light, medium, and...
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