Market Segments

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CUSTOMER-DRIVEN MARKETING STRATEGY: CREATING VALUE FOR TARGET CUSTOMERS

PREVIEWING THE CONCEPTS – CHAPTER OBJECTIVES
define the four major steps in designing a customer-driven marketing strategy: market segmentation, market targeting, differentiation, and positioning list and discuss the major bases for segmenting consumer and business markets explain how companies identify attractive market segments and choose a market targeting strategy discuss how companies differentiate and position their products for maximum competitive advantage

JUST THE BASICS
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). Then, the chapters that follow explore the tactical marketing tools—the Four Ps—by which marketers bring these strategies to life.

INTRODUCTION

Best Buy: Embracing the Angels and Ditching the Demons.

Best Buy set out to identify its best customers and win their loyalty by serving them better. At the same time, it identifies less attractive customers and began to send them packing.

To better differentiate itself in a crowded marketplace, Best Buy needed to stake out is own turn – to identify its best customers and serve them in ways that no discount on online competitor could. Rather than trying to make all customers happy all of the time, Best Buy segmented its market and sharpened it’s positioning. This resulted in what they term “customer centricity.

How has this worked for Best Buy? Very well. They have designed a customer-driven marketing strategy that builds the right relationships with the right customers.

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
Through market segmentation, companies divide large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs.

Segmenting Consumer Markets

Geographic Segmentation

Geographic segmentation calls for dividing the market into different geographical units such as nations, regions, states, counties, cities, or even neighborhoods.

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.

Age and LifeCycle Stage is offering different products or using different marketing approaches for different age and lifecycle 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,...
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