Study guide for Test 3.
Test 3 will cover Chapters 9, 10, 11, and 12. Here is a list of topics that might be helpful to know for the test. Market segmentation: involves aggregating prospective buyer into group that (1) have common needs and (2) will respond similarly to a marketing action. Market segmentation are the relatively homogeneous groups of prospective buyers that result from the market segment process. Product differentiation is the strategy involves a firm using different marketing mix activities such as product features and advertising to help consumers perceive the product as being different and better than competing products.
The foundation of effective market segmentation is (1) forming meaningful groupings and (2) developing specific marketing mix action.
Three specific segmentation strategies: (1) one product and multiple market segments, (2) multiple products and multiple market segments, and (3) “segments of one” or mass customization. (1) One product and multiple market segments: only a single product or service and attempt to sell it to 2 or more market segments, it avoid the extra costs of developing and producing additional versions of the product… exp: movies, magazines, books. (2) Multiple products and multiple market segments: Ford’s different lines of cars, SUVs, pickup trucks are each targeted at different type of customer. It’s clearly more expensive but more effective if it meets customers’ needs. Two- tier marketing strategies: high-end and low-end segments. (3) “Segments of one” or mass customization: means tailoring good or services to the tastes of individual customers on a high volume scale. Mass customization is the next step beyond build-to-order (BTO), exp: Dell…
5- Steps process use to segment a market and select the target segments: Step 1: Group potential buyers into segments
Criteria for selecting target market:
Simplicity and cost- effective ness of assigning potential buyers to segments Potential for increased profit
Similarity of needs of potential buyers within a segment
Difference of need of buyers among segments
Potential of a marketing action to reach a segment
Ways to segment the market: these four segmentation are:
Geographic segmentation: city size, region
Demographic segmentation: age, race, gender
Psychographic segmentation: personality, lifestyle
Behavioral segmentation: product features. Usage rate- is the quantity consumed or patronage during a specific period. 80/20 rule, a concept that suggest 80 percent of a firm’s sales are obtained from 20 percent of its customers. Variables to use in forming segments
Ways to segment organization markets
Step 2: Group products to be sold into categories
Step 3: Develop a market- product grid and estimate the size of markets Market-product grid: is a framework to relate the market segment of potential buyers to product offered or potential marketing actions by an organization Forming a Market-product grid
Estimating market size
Step 4: Select target markets, there are 2 different kinds of criteria in the market segmentation process: Divide the market into segments
Actually pick the target segments
Criteria to use in selecting target markets
Cost of reaching the segment
Compatibility with organizational objectives and resources
Choose the products and segments
Step 5: Take marketing action to reach target markets
Market-product synergies: a balance act
Marketing synergies, running horizontally across the grid, each row represent an opportunity for efficiency in term of market segment Product synergies, running vertically down the grid, each column represent an opportunity for efficiency in research and development and production Product positioning refers to place an offering occupies in consumer’s minds on important attributes relatives to competitive products....
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