Marketing instructor question chptr 7&8 – Flashcards

The first step involves clear articulation of a firm's strategy and objectives. The second step is to use a segmentation method to segment the marketplace into different segments based on customer similarities within a segment and dissimilarities across segments. The third step is to evaluate the attractiveness of the various segments. The fourth step is selecting a target market. The fifth step is to identify and develop the position strategy

There is really no one "best" method to segment a market. Firms choose from various methods on the basis of the type of product/ service they offer and their goals for the segmentation strategy. For instance, if the firm wants to identify its customers easily, demographic or geographic segmentation likely will work best. But if it is trying to dig deeper into why customers might buy its offering, then psychographic, geodemographic, benefits, or behavioral segmentation (occasion and loyalty) work best. Typically, a combination of several segmentation methods is most effective.

Marketers use several criteria to assess a segment's attractiveness. First, the customer should be identifiable—companies must know what types of people are in the market so they can direct their efforts appropriately. Second, the market must be substantial enough to be worth pursuing. If relatively few people appear in a segment, it is probably not cost effective to direct special marketing mix efforts toward them. Third, the market must be reachable—the firm must be able to reach the segment through effective communications and distribution. Fourth, the firm must be responsive to the needs of customers in a segment. It must be able to deliver a product or service that the segment will embrace. Finally, the segment must be profitable, both in the near term and over the lifetime of the customer

Firms use a targeting strategy after they have identified its segments. An undifferentiated strategy uses no targeting at all and works only for products or services that most consumers consider to be commodities. The difference between a differentiated and a concentrated strategy is that the differentiated approach targets multiple segments, whereas the concentrated targets only one. Larger firms with multiple product/service offerings generally use a differentiated strategy; smaller firms or those with a limited product/service offering often use a concentrated strategy. Firms that employ a micromarketing or one-to-one marketing strategy tailor their product/service offering to each customer—that is, it is custom made. In the past, micromarketing was reserved primarily for artisans, tailors, or other craftspeople who would make items exactly as the customer wanted. Recently, however, larger manufacturers and retailers have begun experimenting with custom-made merchandise as well. Service providers, in contrast, are largely accustomed to customizing their offering

Positioning is the "P" in the STP (segmentation, targeting, and positioning) process. It refers to how customers think about a product, service, or brand in the market relative to competitors' offerings. Firms position their products and services according to several criteria. Some focus on their offering's value—customers get a lot for what the product or service costs. Others determine the most important attributes for customers and position their offering on the basis of those attributes. Symbols can also be used for positioning, though few products or services are associated with symbols that are compelling enough to drive people to buy. Finally, one of the most common positioning methods relies on the favorable comparison of the firm's offering with the products or services marketed by competitors. When developing a positioning strategy and a perceptual map, firms go through five steps. First they determine consumers' perceptions and evaluations of the product or service in relation to competitors. Second, they identify competitors' positions. Third, they determine consumer preferences. Fourth, they select the position. Finally, they monitor the positioning strategy