Chapter 8 Flashcards
What is a market?
People or organizations with needs/wants and the ability and willingness to buy
What is a market segment?
A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs
What is market segmentation?
The process of dividing a market into meaningful, relatively similar, and identifiable segments or groups
3 reasons a marketer would use market segmentation
- Helps marketers define customer needs and wants
- Leads to understanding of customer lifestyles, values, jobs, needs, and buying occasions
- Helps decision makers more accurately define marketing objectives and better allocate resources
What are the 4 basic criteria in order for a market segment to be legitimate?
Sustainability
Measurability/Identifiability
Accessibility
Responsiveness
What is sustainability within market segments?
A segment must be large enough to warrant developing and maintaining a special marketing mix
What is measurability and identifiability within marketing segments?
Information about a population within geographic boundaries, various age categories, and other social and demographic characteristics are often easy to get
Provide fairly concrete measures of segment size
What is accessibility within marketing segments?
The firm must be able to reach members of targeted segments with customized marketing mixes
What is responsiveness within marketing segments?
Segments need not be treated separately unless one market segment responds differently to a marketing mix than other segments
What are the 5 broad segmentation bases used by marketers?
Geographic
Demographic
Psychographic
Benefit
Usage-Rate
What are segmentation bases?
Characteristics of individuals, groups, or organizations that divide a market into segments
What is geographic segmentation?
Segmenting markets by a region of a country or the world, market size, market density, or climate
What is market density?
The number of people within a unit of land
What is demographic segmentation?
Segmenting markets by age, gender, income, ethnic background, and family life cycle
What are some typical characteristics of Gen Z?
1995-2015
Work for success
Etiquette for social media
Cautious
Starting to enter workforce
What are some typical characteristics of Millennials?
1980-1994
Idealistic/Pragmatic
Technology-proficient
Seeking experiences
Love private brands
What are some typical characteristics of the Baby Boomer generation?
1946-1964
Outspend average consumer in nearly every category
Spend time and money doing whatever is necessary to maintain vitality
What are some typical characteristics of Gen X?
1965-1979
“Sandwich generation”
Latchkey kids
Best educated
Disloyal to brands
Skeptical of big business
What are some typical characteristics of the Silent Generation?
Born before 1946
Ability to quietly persevere through hardships
Were taught to play by the rules
What’s important about gender segmentaion?
Women drive 70-80% of purchases of consumer goods/year
Companies that have traditionally targeted women are targeting men and vice versa
What’s important about income segmentation?
Income influences consumers’ wants and determines their buying power
What is disposable income?
What is discretionary income?
What is important about ethnic segmentation?
Need to focus on expanding ethnicities
3 largest minorities in US: Hispanic, African, Asian
What’s important about Family Life Cycle Segmentation?
Consumption patterns among people of same age/gender may differ because they’re in different stages of the family life cycle
What is the Family Life Cycle?
A series of stages determined by a combination of age, marital status, and the presence or absence of children
What is psychographic segmentation?
Segmenting markets on the basis of personality, motives, lifestyles, and geodemographics
What is personality and what is the ultimate descriptor?
Reflection of a person’s traits, attitudes, and habits
Clothing
What are some important motives in marketing?
Caring for loved ones
Status
What makes up lifestyle?
The way people spend their time
The importance of things around people
People’s beliefs
Socioeconomic characteristics (income, education) of people
What are geodemographcis?
Categories based on a combination of neighborhood, lifestyle, and other demographic variables
What is benefit segmentation?
The process of grouping customers into market segments according to the benefits they seek from a product
Groups potential customers on the basis of their needs/wants rather than on another characteristic, such as age or gender
What is usage-rate segmentation?
Dividing a market by the amount of a product bought or consumed
First-time, light, medium, heavy users
4 broad segments of the business market
Producers
Resellers
Government
Institutions
What are 6 characteristics of a company?
Geographic location
Type of company
Company size
Product use
Customer type
Volume of purchase
What are buying processes in market segmentation?
Segmenting customers on how they buy
price, quality, technical support, and service
What are 2 purchasing profiles for businesses?
Satisficers
Optimizers
What is a satisficer?
A business that contacts familiar suppliers and place the order with the first one to satisfy product and delivery requirements
What is an optimizer?
A business that considers numerous suppliers (familiar and unfamiliar), solicit bids, and study all proposals carefully before selecting one
What are the 6 steps in segmenting a market?
- 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
What goes in to step 1 of segmenting a market?
Define overall market
What goes in to step 2 of segmenting a market?
Managerial insight, creativity, and market knowledge
Product segments must meet 4 basic criteria of markets
What goes in to step 3 of segmenting a market?
Identify descriptors (specific segmentation variables)
What goes in to step 4 of segmenting a market?
Profile the market by including segment’s size, expected growth, purchase frequency, current brand usage, brand loyalty, and long-term sales and profit potential
What goes in to step 5 of segmenting a market?
This is a natural outcome of segmentation process
What goes in to step 6 of segmenting a market?
Marketing mix (4 Ps)
What are 3 strategies for selecting target markets?
Undifferentiated
Concentrated
Multisegment
What is an undifferentiated targeting strategy?
A marketing approach that views the market as one big market with no individual segments and thus uses a single marketing mix
What is a concentrated marketing strategy?
A strategy used to select one segment of a market for targeting efforts
Used for niche markets
What is a multisegment targeting strategy?
A strategy that chooses two or more well-defined market segments and develops a distinct marketing mix for each
What is cannibalization in marketing?
Occurs when sales of a new product cut into sales of a firm’s existing products
What is Customer Relationship Management?
Tracking interactions with customers to optimize customer satisfaction and long-term company profits
What are 4 trends that will lead to continued growth of CRM?
Personalization
Time savings
Loyalty
Technology
What is positioning?
Developing a specific marketing mix to influence potential customers’ overall perception of a brand, product line, or organization in general
What does the process of positioning require?
- Assessing the positions occupied by competing products
- Determining the important dimensions underlying these positions
- Choosing a position in the market where the organization’s marketing efforts will have the greatest impact
What is a position?
The place a product, brand, or group of products occupies in consumers’ minds relative to competing offerings
What is product differentiation?
A positioning strategy that some firms use to distinguish their products from those of competitors
What is perceptual mapping?
A means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers’ minds
What are 6 common positioning bases?
Attribute
Price and Quality
Use or Application
Product User
Product Class
Competitor
Emotion
How does a marketer use attribution to position products?
Product is associated with an attribute, product feature, or customer benefit
How does a marketer use price and quality to position products?
May stress high price as a signal of quality of emphasize a low price as an indication of value
How does a marketer use application or use to position products?
Ex. Kahlua liqueur was advertised as having 228 different ways to use the product
How does a marketer use product user to position products?
Focuses on the personality of a type of user
ex. Gap (basic) vs. Old Navy (trendy) vs. Banana Republic (luxury)
How does a marketer use product class to position products?
Position the product as being associated with a particular category of products
ex. Margarine and butter
How does a marketer use competition to position products?
Part of any positioning strategy
How does a marketer use emotion to position products?
Focuses on how the product makes customers feel
What is repositioning?
Changing consumers’ perceptions of a brand in relation to competing brands
