Chapter 8
Chapter 8
1. Explain what market segmentation is and when to use it.
Market segmentation is to aggregate potential buyers into groups that have common needs and will respond similarly to a marketing action. Market segments are the relatively similar groups of potential buyers that result from the market segmentation process. The existence of different market segments has caused firms to use a marketing strategy of product differentiation. This strategy is related to using different marketing mix activities, such as product features and advertising, to help consumers perceive a product as being different and better than competing products. One of the marketing segments’ tools is a market-product grid, which is a framework to relate the market segments of potential buyers to products offered or potential marketing actions. A business goes to the trouble and expense of segmenting its markets when it expects that this will increase its sales, profit, and return on investment. When expenses are greater than the potentially increased sales from segmentation, a firm should not attempt to segment its market. Three specific segmentation strategies that illustrate this point are (1) one product and multiple market segments, (2) multiple products and multiple market segments, and (3) segments of one, or mass customization.
2. Identify the five steps involved in segmenting and targeting markets.
After companies identify market needs, they have to link needs to actions by using the five-step process used to segment a market and select the target segments on which an organization wants to focus. The first step is to group potential buyers into segments. Grouping potential buyers into meaningful segments involves meeting some specific criteria such as similarity of needs of potential buyers within a segment and potential of a marketing action to reach a segment. Therefore, a marketer must find specific variables that can be used to create these various segments.
1. Explain what market segmentation is and when to use it.
Market segmentation is to aggregate potential buyers into groups that have common needs and will respond similarly to a marketing action. Market segments are the relatively similar groups of potential buyers that result from the market segmentation process. The existence of different market segments has caused firms to use a marketing strategy of product differentiation. This strategy is related to using different marketing mix activities, such as product features and advertising, to help consumers perceive a product as being different and better than competing products. One of the marketing segments’ tools is a market-product grid, which is a framework to relate the market segments of potential buyers to products offered or potential marketing actions. A business goes to the trouble and expense of segmenting its markets when it expects that this will increase its sales, profit, and return on investment. When expenses are greater than the potentially increased sales from segmentation, a firm should not attempt to segment its market. Three specific segmentation strategies that illustrate this point are (1) one product and multiple market segments, (2) multiple products and multiple market segments, and (3) segments of one, or mass customization.
2. Identify the five steps involved in segmenting and targeting markets.
After companies identify market needs, they have to link needs to actions by using the five-step process used to segment a market and select the target segments on which an organization wants to focus. The first step is to group potential buyers into segments. Grouping potential buyers into meaningful segments involves meeting some specific criteria such as similarity of needs of potential buyers within a segment and potential of a marketing action to reach a segment. Therefore, a marketer must find specific variables that can be used to create these various segments.