chapter 6 Flashcards
what is the title of chapter 6?
Identifying Market Segments
and Target Customers
Effective targeting requires that marketers:
- Identify distinct groups of buyers who differ in their needs and wants (segmentation).
- Select one or more market segments to enter (targeting).
- For each target segment, establish, communicate, and deliver the right benefit(s) for the com-
pany’s market offering (developing a value proposition and positioning).
the process of identifying customers for whom the company will optimize its offer-
ing?
targeting
the firm ignores segment differences and goes after the whole market with one
offer. It designs a marketing program for a product with a superior image that can be sold to the broad-
est number of buyers via mass distribution and mass communications.
mass marketing
is the ability of a company to meet each customer’s requirements—to pre-
pare on a mass basis individually designed products, services, programs, and communications.
mass customization
focuses on customers whose needs the company can fulfill by ensuring that
its offerings are customized to their needs
strategic targeting
identifies the ways in which the company
can reach these strategically important customers
tactical targeting
identifies multiple segment with different needs, allowing for better design, pricing and communication to counter competitors
differentiated marketing
two principles of strategic targeting
target compatibility and target attractiveness
is a reflection of the company’s ability to outdo the competition in fulfilling the
needs of target customers—in other words, to create superior customer value.
target compatibility
essential resources for the success of a company’s targeting strategy include factors such as:
business infrastructure
access to scarce resources
skilled employees
technological expertise
strong brands
collaborator networks
includes assets such as manufacturing infrastructure that
houses the company’s production facilities and equipment
business infrastructure
gives the company a distinct competitive edge because it restricts the
strategic options of competitors
access to scarce resources
with technological, operational, and business expertise—especially those
involved in research and development, education, and consulting—are prime strategic assets
skilled employees
the expertise required to develop an offering that addresses a particular
customer need, includes a company’s proprietary processes, its technological processes, and its
intellectual property such as patents and trade secrets
technological expertise
enhance value by conferring unique identification on the offering and generat-
ing meaningful associations that create value over and above the value created by the offering’s attributes
strong brands
include vertical networks of collaborators in the company’s supply chain
(suppliers and distributors) and horizontal networks of research and development, manufacturing, and promotion collaborators that help the company create its offering and inform customers about it
collaborator networks
characteristics of core competencies
(1) it is a source of competitive advantage and makes a significant contribution to perceived customer benefits
(2) it has applications in a wide variety of markets
(3) it is difficult for competitors to imitate
reflects the ability of a market segment to create superior value for the company
target attractiveness
target customers can create two kinds of value for a company:
monetary and strategic
consists of the capability of customers to engender profits for the company
monetary value
monetary value includes:
customer revenues
costs of serving target customers
involve money received by the company from customers for the right to own or use its offering
customer revenues
include the expense of tailoring the offering’s benefits to the needs of target customers, along with communicating and delivering the offering to them
costs of serving target customers
refers to nonmonetary benefits that customers bring to the company
strategic value
three main types of strategic value
social value
scale value
information value
reflects the influence of target customers on other potential buyers
social value
denotes the benefits derived from the scale of the company’s operations. The eco-
nomics of its business model might lead a company to target low-margin or sometimes even unprofitable customer
scale value
the worth of the information that customers provide
information value
involves identifying target customers, as does strategic targeting, it has a different objective: to determine which customers to target and which to ignore, and to determine how the company’s offering can be effectively and cost-efficiently communicated and delivered to
the target customers that have already been selected
tactical targeting
involve demographic, geographic, behavioral, and psychographic descriptors
customer profile
include age, gender, income, occupation, level of education, religion, ethnicity, nationality, employment status, population density (urban or rural), social class, household
size, and stage in the life cycle
demographic factors
reflect the physical location of target customers
geographic (geolocation) factors
describe customers’ actions. These factors can include customers’ prior experience with the company’s offering, which can be as current customers, competitors’ customers, or new-to-the-category customers
behavioral factors
involve aspects of an individual’s personality—such as attitudes, value system, interests, and lifestyle
psychographic factors
An essential element of tactical targeting is ascertaining the profile characteristics of strategically important customer segments.
Aligning Customer Value and Customer Profile
To effectively reach and communicate with strategically important customer segments
Aligning Customer Value and Customer Profile
detailed profiles of one, or perhaps a few, hypothetical target consumers, imagined
in terms of demographic, psychographic, geographic, or other descriptive attitudinal or behavioral information.
Personas
the firm markets to only one particular segment
single-segment targeting
As markets become more fragmented, an increasing number of companies develop offerings targeting a greater number of smaller customer segments. As their customer base becomes more diverse, these companies transition from a single offering to a product line containing offerings that fit the needs of the diverse customers it serves.
targeting multiple segments
the firm sells a certain product to several different market segments
product specialization
the firm concentrates on serving many needs of a particular customer group, such as by selling an assortment of products only to university laboratories.
market specialization
divides a market into well-defined slices. A market segment consists of a group of consumers who share a similar set of needs and/or profile characteristics
market segmentation
types of segmentation
demographic
geographic
behavioral
psychographic
One reason variables such as age, family size, family life cycle, gender, income, occupation, education, religion, race, generation, nationality, and social class are so popular with marketers is that these variables are often associated with consumer needs and wants
demographic segmentation
Demographic Segmentation Variables
Age
Stage in the Life Cycle
Gender
Income
Race and Culture
divides the market into geographic units such as nations, states, regions, counties, cities, or neighborhoods
geographic segmentation
marketers divide buyers into groups on the basis of their actions. Many
marketers believe variables related to users or their usage—user status, usage rate, buyer-readiness stage, loyalty status, and occasions—are good starting points for constructing market segments.
behavioral segmentation
behavioral segmentation variables
user status
usage rate
buyer-readiness stage
loyalty status
occasions
Based on their prior experience with the company’s offering, consumers can be clas-
sified into nonusers, potential users, first-time users, regular users, and ex-users.
user status
We can segment markets into light, medium, and heavy product users.
usage rate
Some people are unaware of the product, some are aware, some are
informed, some are interested, some desire the product, and some intend to buy
buyer-readiness stage
Based on brand loyalty status, consumers can be divided into four main segments: hard-core loyal consumers who buy only one brand all the time, split-loyal consumers who are loyal to two or three brands, shifting-loyalty consumers who move from one brand to another, and switchers who show no loyalty to any brand.
loyalty status
Consumers buy a company’s products and services for different reasons. We can
distinguish buyers according to the occasions when they develop a need, purchase a product, or use an offering
Occasions
buyers are divided into groups on the basis of psychological traits, lifestyle, or values
psychographic segmentation
same variables that we use in consumer markets
segmenting business markets
common segmentation variables for business markets:
Demographic factors
Purchasing approaches
Situational factors
Personal characteristics
Operating variables
