Market_Segmentation

Chapter 5 The logic of marketing segmentation is quite simple and is based on the idea that a single product item can seldom meet the needs and wants of all customers. Typically, consumers vary as to their needs, wants, and preferences for products and services, and successful marketers adapt their marketing programs to fulfill these preference patterns. If a particular group can be served profitably by a firm, it is a viable market segment. Market segmentation is defined as the process of dividing a market into groups of similar consumers and selecting the most appropriate group(s) for the firm to serve. The group or market segment that a company selects to focus on is called a target market. The market segmentation process consists of delineate firm’s current situation, determine consumer needs and wants, divide markets on relevant dimensions, develop product positioning, decide segmentation strategy, and design marketing mix strategy. Delineate the firm’s current situation is intended to be a reminder of tasks to be performed prior to marketing planning. Determine consumer needs and wants emphasize on marketing strategies that depend on discovering and satisfying consumer needs and wants. Consumer attitudes, preferences, and benefits sought, which are determined through marketing research, are commonly used for segmentation purposes. The next step is divide markets on relevant dimension. This step is often considered to be the whole of marketing segmentation. Three important questions should be considered: (1) should segmentation be a priori or post hoc' (2) How does one determine the relevant dimensions or bases to use for segmentation' (3) What are some bases for segmenting consumer and organizational buyers markets' An a priori segmentation approach is one in which the marketing manager has decided on the appropriate basis for segmentation in advance of doing any research on market. Post hoc segmentation is an approach in which people are grouped into segments on the basis of research findings. Both of these approaches are valuable, and the question of which to use depends in part on how well the firm knows the market for a particular product class. There is no simple solution for determining the relevant dimensions for segmenting markets. At least some initial dimensions can be determined from previous research, purchase trends and managerial judgment. Consideration and research of sought benefits are a strongly recommended approach in the marketing literature. There three useful bases for segmenting consumer and organizational markets. Benefit segmentation focus on benefits sought by consumers. Benefit segmentation is clearly a market-oriented approach to segmentation that seeks to identify consumer needs and wants and to satisfy them by providing products and services with the desired benefits. Psychographic segmentation focuses on consumer lifestyles. Lifestyles are measured by asking consumers about their activities (work, hobbies, vacations), interests (family, job, community), and opinions (about social issues, politics, business). The activities, interest, and opinion is equal to AIO. The best know psychographic segmentation is called VALS, formerly known as “the values and lifestyles program.” Geodemographic segmentation identifies specific households in a market by focusing on local neighborhood geography to create classifications of actual, addressable, mappable neighborhoods where consumers live and shop. One geodemographic system is called PRIZM NE. The develop product positioning step is concerned with positioning the product favorably in the minds of customers relative to competitive products. Several different positioning strategies can be used. First, products can be positioned by focusing on their superiority to competitive products based on one or more attributes. Second, products can be positioned by use or application. Third, products can be positioned in terms of particularly types of product users. Fourth, products can be positioned relative to a product class. And, finally, products can be positioned directly against particular competitors. One way to investigate how to position a product is by using a positioning map, which is a visual depiction of customer perceptions of competitive products, brands, or models. The firm is now ready to select its segmentation strategy. There are four basic alternatives. First, the firm may decide not to enter the market. Second, the firm may decide not to segment but to be mass marketer. Third, the firm may decide to market to one segment. Fourth, the firm may decide to market to one or more than one segment and design a separate marketing mix for each. Three important criteria on which to base such decisions are that a viable segment must be measurable, meaningful, and marketable. Measurable- the firm must be capable of measuring its size and characteristics. Meaningful- a meaningful segment is one that is large enough to have sufficient sales and growth potential to offer long-run profits for the firm. Marketable- a marketable segment is one that can be reached and served by the firm in an efficient manner. Design marketing mix strategy- the firm is now in a position to complete its marketing plan by finalizing the marketing mix or mixes to be used for each segment.