Segmentation & Targeting Study Guide

Vocabulary flashcards based on Segmentation and Targeting concepts from MKT320F.

Segmentation

Dividing a broad heterogeneous market into subgroups of customers who share similar needs and preferences.

Targeting

Selecting which segments a firm wants to pursue based on attractiveness, competition, and company fit.

Positioning

Defining the firm's value proposition for target segments and developing an action plan.

STP Process

Segmentation -> Targeting -> Positioning; identifies potential customers, selects which to pursue, and formulates value proposition.

Identifiable (criterion)

You can determine who belongs to the segment and measure their characteristics.

Substantial (criterion)

The segment is large enough to serve profitably.

Accessible (criterion)

You can reach the segment through communication and distribution channels independent of other segments.

Stable (criterion)

The segment persists long enough for marketing efforts to pay off.

Differentiable (criterion)

Customers in the segment share needs that are meaningfully different from other segments.

Actionable (criterion)

You can design specific products and marketing programs for the segment.

Demographics

Observable customer characteristics such as age, income, gender, etc.

Geographics

Segmentation by country, region, city, urban/rural, and climate.

Psychographic Segmentation

Segmentation based on lifestyle, personality, activities, interests, and opinions.

Behavioral Segmentation

Segmentation based on usage rate, loyalty, product knowledge, and purchase occasion.

Benefits Sought Segmentation

Segmenting by what customers want from the product: convenience, value, safety, etc.

Firmographics

The B2B equivalent of demographics, including industry, firm size, and ownership.

Demand Space

The intersection of usage context and consumers' emotional/functional needs.

RFM Model

Recency, Frequency, Monetary value of purchases used in database marketing.

Share of Wallet

The portion of a customer's total spending in a category that goes to your firm.

Customer Self-Selection

Designing product features or pricing so customers reveal their segment through their choices.

Customer Journey Segmentation

Segmenting by how consumers interact with touchpoints.

Mass Marketing

Same product for everyone, typically low cost but risks competitors carving out niches.

Niche Strategy

Focus on a single segment, achieving a dominant share and high margins.

Multi-Segment Targeting

Different products for different segments, either simultaneously or sequentially.

Sequential Segment Entry

Building a strong position in one segment before expanding to adjacent ones.

Full Market Coverage

Targeting all segments, which is resource-intensive and risky.

One-to-One Marketing / Mass Customization

Personalizing products for individual customers at scale.

Factors for Target Selection

1) Segment characteristics, 2) Company fit, 3) Competition.

Product Strategy from Segmentation

Design different offerings per segment.

Pricing Strategy from Segmentation

Use pricing mechanisms that let segments self-select.

Communication Strategy from Segmentation

Choose messages and media that match the target segment.

Salesforce/Channel Strategy

Different sales approaches per segment.

Customer Management Strategy

Use past purchase behavior to manage customer relationships.

Cluster Analysis

Groups customers for high within-group similarity and large between-group distance.

Conjoint Analysis

Reveals true preferences by forcing tradeoffs among product attributes.

Multi-Attribute Model

Asks consumers to divide points across product attributes by importance.

Latent Class Analysis

Statistical method to unveil hidden segments through iterative grouping.

Response-Based Segmentation

Segments based on actual purchase behavior rather than stated preferences.

Preference-Based Segmentation

Segments based on stated or inferred preferences for product attributes.

Ethical/Privacy Issues

Companies must consider public reaction, privacy, and ethics in micro-targeting.

GDPR

General Data Protection Regulation implemented by EU in May 2018 for data privacy.