MKTG (Chapter 8) – Flashcards
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(1) People or organizations with (2) needs and wants and with (3) the ability and (4) the willingness to buy
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Market
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A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs
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Market Segment
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The process of dividing a market into meaningful, relatively similar, and identifiable segments, or groups
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Market Segmentation
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What is the purpose of Market Segmentation?
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To identify market opportunities
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Why is Market Segmentation important? (2)
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-Helps marketers define customer needs and wants -Helps decision makers define marketing objectives and better allocate resources
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What are 3 reasons for segmenting markets?
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-Enables marketers to identify groups of customers with similar needs and analyze buying behavior of these groups -Helps marketers design marketing mixes specifically matched with the characteristics and desires of one or more segments -Consistent with the marketing concept of satisfying customer wants and needs while meeting the organization's objectives
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What are 4 basic criteria the segmentation scheme must meet?
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-Accessibility -Identifiability and Measurability -Responsiveness -Substantiality
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A segment must be large enough to warrant developing and maintain a special marketing mix
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Substantiality
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Segments must be identifiable and their size measurable
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Identifiability and Measurability
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The firm must be able to reach members of targeted segments with customized marketing mixes
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Accessibility
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Markets can be segmented using any criteria that seem logical...unless one market segment responds to a marketing mix differently than other segments, however, that segment need not be treated separately
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Responsiveness
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Characteristics of individuals, groups, or organizations, to divide a total market into segments
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Segmentation Bases (Variables)
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What are 3 disadvantages of multi-variable segmentation?
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-As number of segmentation base increases, the size of the individual segments decrease -Harder to use -Usable secondary data are less likely to be available
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Segmenting markets by region of a country or the world, market size, market density, or climate
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Geographic Segmentation
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The number of people within a unit of land
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Market Density
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Why is Climate used in Geographic Segmentation?
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Because of its dramatic impact on residents' needs and purchasing behavior
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Why do consumer goods companies take a regional approach to marketing? (4)
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-Many firms need to find new ways to generate sales -Computerized checkout stations with scanners tell retailers which brands sell best in their region -Many packaged-goods companies are introducing new regional brands intended to appeal to local preferences -Consumer goods companies to react more quickly to competition
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Segmenting markets by age, gender, income, ethnic background, and family life cycle
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Demographic Segmentation
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What are the 5 types of Demographic Segmentation?
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-Age -Ethnic -Family Life Cycle -Gender -Income
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True/False: Millennials are more likely to listen to their peers regarding product decisions while distrusting advertising.
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True
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Which age segmentation is the most educated, diverse, and technology proficient group ever?
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Millennials
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What age segmentation grew up as Latchkey Kids?
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Generation X
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What are Latchkey Kids?
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Refers to Generation X and means this generation grew up as spending time alone at home while their (often divorced) parents worked long into the night
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Which age segmentation is more focused on experiences than products?
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Baby Boomers
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True/False: Men account for 85% of purchases of consumer goods each year.
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False (Women)
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Income level influences consumers' _______ and determines their ________________.
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Wants; buying power
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How have firms changed in order to meet the needs and wants of expanding ethnic groups?
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Some companies make products geared toward specific ethnic groups
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A series of stages determined by a combination of age, marital status, and the presence or absence of children
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Family Life Cycle
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Segmenting markets on the basis of personality, motives, life-styles, and geo-demographics
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Psychographic Segmentation
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What are the 4 types of Psychographic Segmentation?
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-Geo-Demographic Segmentation -Lifestyle -Motives -Personality
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Reflects a person's traits, attitudes, and habits
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Personality
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Segmentation divides people into groups according to the way they spend their time, the importance of the thing around them, their beliefs, and socioeconomic characteristics
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Lifestyle
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Clusters potential customers into neighborhood lifestyle categories
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Geo-Demographic Segmentation
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What can Psychographic variables be used for?
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Can be used individually to segment markets or can be combined with other variables to provide more detailed descriptions of market segments
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The process of grouping customers into market segments according to the benefits they seek from the product
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Benefit Segmentation
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Divides a market by the amount of product bought or consumed
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Usage-Age Segmentation
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Why is segmenting by Usage Rate important?
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Enables marketers to focus their efforts on heavy users or to develop multiple marketing mixes aimed at different segments
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A principle holding that 20 percent of all customers generate 80 percent of the demand
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80/20 Principle
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What 4 segments does the business market consist of?
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-Governments -Institutions -Producers -Re-sellers
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How do firms that sell to Geographically concentrated industries benefit?
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By locating close to their markets
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What does segmenting by Customer Type allow business marketers to do?
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To tailor their marketing mixes to the unique needs of particular types of organizations or industries
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What are 6 company characteristics?
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-Company Type -Customer Type -Geography -Organization's Size -Product Use -Volume of Purchase
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What are 2 types of purchasing profiles?
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-Satisficers -Optimizers
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Business customers who place an order with the first familiar supplier to satisfy product and delivery requirements
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Satisficers
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Business customers who consider numerous suppliers, solicit bids, and study all proposals carefully before selecting one
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Optimizers
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What are 5 buyer characteristics?
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-Confidence Level -Decision Style -Demographics -Job Responsibilities -Tolerance for Risk
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What are the 6 steps in segmenting a market?
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-Select a market or product category for study -Choose a basis or bases for segmenting the market -Select segmentation descriptors -Profile and analyze segments -Select markets -Design, implement, and maintain appropriate marketing mixes
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A group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges
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Target Market
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What are 3 general strategies for selecting target markets?
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-Undifferentiated Target Strategy -Concentrated Target Strategy -Multisegment Targeting
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A marketing approach that views the market as one big market with no individual segments and thus uses a single marketing mix
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Undifferentiated Target Strategy
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Who generally uses the Undifferentiated Target Strategy?
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The first firm in an industry
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What is an advantage of Undifferentiated Target Strategy?
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The potential for saving on production and marketing
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What are 2 disadvantages of Undifferentiated Target Strategy?
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-Unimaginative product offerings -Company more susceptible to competition
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A strategy used to select one segment (niche) of a market for targeting marketing efforts
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Concentrated Targeting Strategy
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What type of firms often adopt a Concentrated Targeting Strategy?
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Small firms
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What are 4 advantages of Concentrated Targeting Strategy?
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-Allows small firms to better compete with larger firms -Can better meet the needs of a narrowly defined segment -Concentration of resources -Strong positioning
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What are 2 disadvantages of Concentrated Targeting Strategy?
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-Segments too small or changing -Large competitors may more effectively market to niche segment
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A strategy that chooses two or more well-defined market segments and develops a distinct marketing mix for each
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Multisegment Targeting
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What are 2 advantages of Multisegment Targeting?
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-Economies of scale in producing/marketing -Greater financial success
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What are 2 disadvantages of Multisegment Targeting?
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-High costs -Cannibalization
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Occurs when sales of a new product cut into sales of a firm's existing products
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Cannibalization
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A process that influences potential customers' overall perception of a brand, product line, or organization in general
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Positioning
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The place a product, brand, or group of products occupies in consumers' minds relative to competing offerings
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Position
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What does Positioning assume?
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That consumers compare products on the basis of important features
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A positioning strategy that some firms use to distinguish their products from those of competitors
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Product Differentiation
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A means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers' minds
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Perceptual Mapping
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What are the 7 Positioning bases?
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-Attribute -Competitor -Emotion -Price and Quality -Product Class -Product User -Use or Application
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This Positioning Base may stress high price as a signal of quality or emphasize low price as a indication of value
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Price and Quality
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This Positioning Base focuses on a personality type of user
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Product User
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The objective of this Positioning Base is to position the product as being associated with a particular category of products
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Product Class
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Changing consumers' perceptions of a brand in relation to competing brands
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Repositioning
