MKT Ch8 Segmentation, Targeting, and Positioning

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Learning Objective 8.1: Define the 3 major steps in designing a customer-driven marketing strategy, which include:
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1. market segmentation 2. targeting 3. positioning
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Learning Objective 8.2: List and distinguish among the 4 given requirements for effective segmentation, which include:
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1. measurability 2. accessibility 3. substantiality 4. actionability
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Learning Objective 8.3: Explain how companies identify ____ market segments and choose a market-targeting strategy.
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attractive
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Learning Objective 8.4: Illustrate the concept of positioning for ____ _____ by offering specific examples.
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competitive advantage
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Companies today recognize that customers are too numerous, too widely scattered, and too ____ in their needs and buying processes to _____ to them all.
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varied; appeal
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Most companies have moved away from mass marketing and toward target marketing; ____ market segments; _______ one or more of them; And ____ products and market programs tailored to each.
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identifying; selecting; developing
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Dividing a market into distinct groups that have similar needs and wants on one or more dimensions, who might require separate products and/or marketing mixes.
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Market Segmentation
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Evaluating each segment’s attractiveness and selecting one or more of the market segments:
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Market Targeting
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Developing a competitive positioning for the product and an appropriate marketing mix.
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Market Positioning
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The four major segmenting variables are:
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1. Geographic 2. Demographic 3. Psychographic 4. Behavioral
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The way the product is defined by consumers on important attributes.
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Positioning
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The 4 Requirements for effective segmentation:
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1. Measurability: the degree to which the segments’size and purchasing power can be measured. 2. Accessibility: the degree to which segments can be accessed and served. 3. Substantiality: the degree to which segments are large or profitable enough to serve as markets. 4. Actionability: the degree to which effective programs can be designed for attracting and serving segments.
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The 3 primary factors for choosing a market-targeting strategy.
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1. Segment size & growth 2. Segment structural attractiveness 3. Corporate objectives and resources
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The 3 given market-coverage strategies (alternatives; a company can adopt one) for selecting mkt segments Include:
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1. Undifferentiated Marketing 2. Differentiated Marketing, 3. Concentrated Marketing. The differentiating features of a company, product, or service, must be of some importance to the consumer markets.
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Measuring the market in order to calculate existing or future potential demand:
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Demand Analysis
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Federally defined large metropolitan areas based on supposed economic boundaries are referred to as:
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Metropolitan Statistical Areas
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The age cycle that runs from young/single to widow/widower.
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Family Life Cycle
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DINK:
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Dual income no kids
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DEWK:
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Dual employed with kids
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The largest generation of young people since the 1960’s, so called because they are the genetic offspring and demographic echo of their parents the baby boomers;
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Echo Boomers
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AIO:
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Activities, Interests and Opinions
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A topography of psychographic segmentation of consumers. this topography defines 8 different market segments;
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VALS
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A firm that supplies psychographic segmentation of consumers. their typology defines 31 different market segments.
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Cohorts
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Potential rating index zip code markets; this specific typology defines 66 segments of the market based on zip codes:
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PRIZM NE
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An umbrella concept of segmenting a market based on how a customer uses a product or service:
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Usage Segmentation
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The group of benefits that a consumer gets from the purchase of your product ; augmented product offering:
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Benefit Bundle
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A group of similar products in the market place that serve to fulfill the same needs and wants:
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Product Class
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The concept of making the product or service distinctively different from that of your competitors:
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Differentiation
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The process of choosing sub segments of the customers and allocating marketing resources toward the development of a product or service for each market variable;
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Target Marketing
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Rather than making the product the same for everyone the trend is to allow customers to personalize the product or service to fit their needs;
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Mass Customization
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Designed to determine how often does your customer visit your establishment:
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Frequency Segmentation
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The 3 user frequency segmentation types incude:
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1. Heavy 2. Medium 3. Light Users
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Designed to determine how much is your customer worth:
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Monetary Value Segmentation
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Designed to determine how your customer made the decision to purchase your product;
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Nature of Purchase Segmentation
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Designed to determine the specific special nature of the purchase (anniversary, birthday);
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Purchase Occasion Segmentation
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Designed to determine the reason for the purchase (business, pleasure);
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Purpose Segmentation
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Designed to determine the last time you purchased the product or service;
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Recency Segmentation
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A database analysis score used to identify customers on the basis of recency, frequency and monetary segmentation values. This score is used to direct targeted mailings;
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RFM:
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Designed to determine the time of day/year that the purchase will or has occurred;
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Timing Segmentation
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Designed to determine the routine of where you go to make your purchase;
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Where They Go Segmentation
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Designed to determine who will buy your product based on the price of your offerings;
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Price Segmentation
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Research that attempts to classify people’s behavior in terms of their lifestyles and values;
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Psychographic Research
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The philosophy of ______ _______ is to identify market segments, select one or more, and develop products and marketing mixes tailored to each selected segment.
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Target Marketing
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_____ ______ is to evaluate each segment’s attractiveness and select one or more of the market segments.
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Market Targeting
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_______ _______ divides buyers into different groups based on social class, lifestyle, and personality characteristics. Psychographic segmentation divides buyers into different segments based on social class, lifestyle, or personality characteristics People in the same demographic group can have very different psychographic characteristics Marketers also use personality variables to segment markets
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Psychographic Segmentation
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Many marketers believe that ______ _______ are the best starting point for building market segments.
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Behavior Variables
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The _______ rule states that in many businesses, a high percent of the business is generated by a low percent of the clientele.
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80/20
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_________ examines the degree to which segments are large or profitable enough to serve as markets.
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Substantiality
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A product difference is worth establishing to the extent that it satisfies the following criteria:
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Preemptive Affordable Profitable
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Sandals (www.sandals.com), an all-inclusive powerhouse in the Caribbean, is a leading resort operator for “mixed-gender couples only.” Sandals is an example of:
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product-variety marketing
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_________ gives buyers a too narrow picture of the company.
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Overpositioning
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A firm using a ________ _______ strategy targets several market segments and designs separate offers for each segment.
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Differentiated Marketing
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When choosing a market-coverage strategy, companies need to consider the following factors:
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Company’s resources; Degree of product homogeneity and market homogeneity. Competitor strategies
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McDonald’s offering regular hamburgers, Big Macs, and Quarter Pounders is an example of what type of marketing?
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Product-variety marketing
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____ _____ calls for dividing the market into different geographic units, such as nations, states, regions, counties, cities, or neighborhoods.
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Geographic Segmentation
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Dividing a market on the basis of gender.
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Gender Segmentation
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_____ _______ consists of dividing the marketing into groups based on demographic variables such as age, life cycle, gender, income, occupation, education, religion, race, and nationality
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Demographic Segmentation
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Undifferentiated marketing is more suited for homogeneous products. Products that can vary in design, such as restaurants and hotels, are more suited to differentiation or concentration.
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Degree of Product Homogeneity
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Leaving buyers with a confused image of a company.
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Confused Positioning
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When competitors use segmentation, undifferentiated marketing can be suicidal. Conversely, when competitors use undifferentiated marketing,, a firm can gain an advantage by using differentiated or concentrated marketing.
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Competitors’ Strategies
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An advantage over competitors gained by offering consumers greater value either through lower prices or by providing more benefits that justify higher prices.
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Competitive Advantage
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A market that is divided into two major market segments.
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Bifurcated Market
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____ ______ involves dividing a market into groups based on a consumer’s: knowledge, attitude, use, or response to a product.
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Behavioral Segmentation
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Dividing a market into different income groups.
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Income Segmentation
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The 3 major steps for designing a customer driven marketing strategy:
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1.Segmentation 2.Targeting 3.Positioning
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The 4 primary requirements for effective segmentation include:
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1. Measureability 2. Accessibility 3. Substantiality 4. Actionability
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Markets consist of buyers who differ based on what 4 primary factors?
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1. Wants 2. Resources 3. Locations 4. Buying Attitudes 5. Buying Practices
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Most companies have moved away from ___ marketing, toward target marketing.
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Mass
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Segmentation that involves dividing buyers into groups based upon their knowledge, attitude, and use or response to the product
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Behavioral
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The 5 primary behavioral segmentation types:
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1. Occasion Segmentation 2. User Status 3. Usage rate 4. Loyalty Status 5. Buyer Readiness Stage
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People in the same _______ group can have very different _______ characteristics; marketers also use _____ variables to segment markets.
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demographic; psychographic; personality
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Marketers rarely limit their segmentation analysis to only one or a few variables; they often use ___ ____ ______ in an effort to identify smaller, better-defined target groups.
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multiple segmentation bases
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Gender marketing is most effective when combined with ____ and ______ information.
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lifestyle; demographic
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Consumer preferences change with age; however, marketers must be careful to guard against _____ when using age and life-cycle segmentation.
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stereotypes
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Demographic characteristics must be known to assess the ____ of the market and to ____ it efficiently.
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size; reach
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Income Segmentation: ______ does not always predict which customers will buy a given product or service.
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Income
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The 3 given demographic characteristics include:
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1. Age and Life-Cyle Stage; 2. Gender 3. Income:
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___ ____ buyers can be grouped according to occasions when they make a purchase or use a product.
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Occasion Segmentation
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___ ____ buyers can be grouped according to the product benefits they seek.
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Benefits Sought
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Knowing the benefits sought by customers is useful in what 2 given ways?
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1. Managers can develop products with features that provide the benefits their customers are seeking. 2. Managers can communicate more effectively with their customers if they know what benefits they seek.
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___ ____ buyers can be segmented into nonusers, former users, potential users, first-time users, and regular users of a product.
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User Status
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___ ____ buyers can be segmented into light, medium, and heavy product users.
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Usage Rate
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___ ____ buyers can be segmented on the basis of consumer loyalty; loyal customers are less price sensitive compared to brand-shifting patrons.
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Loyalty Status
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When evaluating different market segments a firm must look at what 3 primary factors?
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1. Segment Size and Growth (A company must first collect and analyze data on current segment sales growth rates and expected profitability for various segments) 2. Segment Structural Attractiveness (A segment might have desirable size and growth and still not offer attractive profits. The company must examine several major structural factors that affect long-run segment attractiveness; For example, a segment is less attractive if it already contains many strong and aggressive competitors) 3. Company Objectives and Resources (All companies must consider their own objectives and resources in relation to available segments; Some attractive segments can be dismissed quickly because they do not mesh with the company’s long-run objectives)
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After evaluating different segments, the company must decide which and how many segments to serve choosing from what 3 alternative marketing strategies?
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1. Undifferentiated Marketing Using an undifferentiated marketing strategy, a company ignores market segmentation differences and goes after the entire market with one market offer It focuses on what is common in the needs of consumers rather than on differences; provides cost economies, however, most contemporary marketers have strong doubts about this strategy in today’s highly competitive environment. It is difficult to develop a product and brand that will satisfy all or even most consumers. 2. Differentiated Marketing Using a differentiated marketing strategy, a company targets several market segments and designs separate offers for each; Differentiated marketing typically produces more total sales than undifferentiated marketing. 3.Concentrated Marketing Concentrated marketing, is especially appealing to companies with limited resources; instead of going for a small share of a large market, the firm pursues a large share of one or a few small markets.
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____ ______ is a research tool sometimes used to measure a brand’s position; (Figure 8-3 in the textbook) is an example of hotels plotted on the attributes of price and perceived service; where we can see a correlation between service and price; as price goes up, so does service.
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Perceptual Mapping
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Perceptual maps can be developed using ____ ______ of a number of product attributes; increased competition or an ineffective positioning strategy can make repositioning necessary.
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consumers’ perceptions
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Perceptual maps provide data supporting the need for _______.
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repositioning
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_________ examines the degree to which the segments’ size and purchasing power can be measured.
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Measurability
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_________ examines the degree to which segments can be accessed and served is referred to as.
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Accessibility
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_________ examines the degree to which effective programs can be designed for attracting and serving segments.
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Actionability

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