Chapter 6 - Creating Value for Target Customer Flashcards
target market
a set of buyers sharing common needs or characteristics that the company decides to serve
4 ways to create value for target customers (2 main ways with 2 terms each)
Select Customers to Serve:
- segmentation
- targeting
Decide on a value proposition:
- differentiation
- positioning
Any marketing strategy must be consistent with … and be based on …
- the firm’s mission statement
- current assessments from a SWOT analysis
4 segmentation methods (with examples)
- geographic segmentation (nations, regions, cities)
- demographic segmentation (age, gender, income, ethnicity)
- psychographic segmentation (lifestyle, personality)
- behavioral segmentation (benefit, loyalty)
define psychographic segmentation
Divides a market into segments based on how people spend their time and what they perceive important in life (self concept/ideal self, and lifestyle)
pro and con of psychographic segmentation
Pro - More useful to predict consumer behavior than demographics
Con - More expensive to identify consumers
benefit segmentation
- type of behavioral segmentation
- groups consumers on the basis of the benefits they derive from products
user status (types)
nonusers, ex-users, potential users, first-time users, and regular users
usage status (types)
light, medium, and heavy product users
loyalty - why is it good to target these consumers
- Cheaper to keep an existing customer
- Profitable in the long term
- Think 80/20 rule
to be useful, market segments must be … (5 things)
- substantial
- measureable
- accessible
- differentiable
- actionable
substantial
- Market segment must be large or profitable enough to serve
- assess current size and growth and market competitiveness
measurable
Size and purchasing power (income) of market segment can be measured
accessible
market segment must be effectively reached and served
differentiable
different market segments may respond differently to a firm’s offering
actionable
A marketing firm has resources to design and serve with effective marketing mix
Since no marketer has sufficient resources to create value for all consumers, what must marketers assess to select a target market?
A marketing firm must assess both the attractiveness of target market and its own competencies carefully
competencies
strengths and weaknesses based on a SWOT analysis
4 flow chart steps in selecting a target market:
- undifferentiated (mass marketing)
- differentiated (segmented) marketing
- concentrated (niche) marketing
- micromarketing (local or individual marketing)
Targeting broadly –> targeting narrowly
value proposition
The company must decide on the positioning of its product or brand. How it will create differentiated value for the target market and which position it wants to occupy in that market
product proposition
the way a product is defined by consumers on important attributes (Can be realized by persuasive communications)
6 positioning methods
- Product (Salient attributes, Benefits)
- Price
- People (Customer service)
- Channels (Location, delivery)
- Image (Symbol, Logo)
- Competition
4 positioning steps
- Determine consumers’ perceptions and evaluations of the company’s product in relation to competitors’.
- Identify a set of competitive advantages of the product on which to build a position.
- Select the position.
- Monitor the positioning strategy.
How to develop a positioning statement
- A statement that summarizes company or brand positioning using this form: To (target segment and need), our (brand) is (concept) that (point of difference)
- All the company’s marketing mix efforts must support the chosen positioning strategy
