Chapter 7: Segmenting and Targeting Markets

Vocabulary flashcards covering key concepts, criteria, segmentation bases, targeting strategies, and positioning principles from Chapter 7: Segmenting and Targeting Markets.

Market

People or organizations with needs or wants and with the ability and willingness to buy.

Market segment

A subgroup of people or organizations sharing one or more characteristics that cause them to have relatively similar product needs.

Market segmentation

The process of dividing a market into meaningful groups that are relatively similar and identifiable.

Substantiality

A criterion for successful segmentation stating that a selected segment must be large enough to justify the development and maintenance of a special marketing mix, ensuring it is profitable.

Identifiability and measurability

A criterion for successful segmentation stating that segments must be identifiable and their size measurable.

Accessibility

A criterion for successful segmentation requiring that a firm be able to reach members of targeted segments with customized marketing mixes.

Responsiveness

A criterion for successful segmentation stating that a market segment must respond differently to some aspect of the marketing mix than do other segments.

Segmentation base (or variable)

A characteristic of individuals, groups, or organizations used to divide a total market into segments.

Geographic segmentation

A method of dividing markets based on the region of the country or world, market size, market density, or climate.

Demographic segmentation

The method of dividing markets on the basis of demographic variables, such as age, gender, income, ethnic background, and family life cycle.

Family life cycle (FLC)

A series of life stages defined by a combination of age, marital status, and the presence or absence of children.

Psychographic segmentation

The method of dividing markets based on personality, motives, lifestyle, and geodemographics.

Geodemographic segmentation

A method of dividing markets on the basis of neighborhood lifestyle categories, combining geographic, demographic, and lifestyle segmentations.

VALS

The Values and Lifestyles Program, a consumer psychographic segmentation tool developed by SRI International that categorizes U.S. consumers by their values, beliefs, and lifestyles along the dimensions of resources and self-orientation.

Benefit segmentation

The method of dividing markets on the basis of benefits consumers seek from the product.

Usage rate segmentation

The method of dividing a market based on the amount of product purchased or consumed.

80/20 principle

A business heuristic (rule of thumb) stating that 20 percent of all customers generate 80 percent of the demand.

Macrosegmentation

A method of business market segmentation that entails dividing business markets into segments based on general characteristics such as geographic location, customer type, customer size, and product use.

Microsegmentation

The process of dividing business markets into segments based on characteristics of decision-making units within a macrosegment, such as key purchasing criteria, purchasing strategies, importance of purchase, and personal characteristics.

Satisficers

Business customers who usually contact familiar suppliers and place an order with the first supplier to satisfy product and delivery requirements.

Optimizers

Business customers who consider numerous suppliers, both familiar and unfamiliar, and then solicit bids and analyze options carefully.

Target market

A group of people or organizations for which an organization designs, implements, and maintains a marketing mix to fit the needs of that group or groups, resulting in mutually satisfying exchanges.

Undifferentiated targeting strategy

A marketing approach based on a mass-market philosophy, viewing the world as one big market with no individual segments and using a single marketing mix.

Concentrated targeting strategy

A marketing approach based on focusing marketing efforts on a single segment of a market or market niche.

Niche

One single segment of a market targeted by a firm using a concentrated targeting strategy.

Multisegment targeting strategy

A marketing approach based on serving two or more well-defined market segments and developing distinct marketing mixes for each.

Cannibalization

A situation that occurs when sales of a firm's new product cut into sales of its existing products.

Positioning

The development of a specific marketing mix to influence potential customers' overall perception of a brand, product line, or organization in general.

Position

The place a product, brand, or group of products occupies in consumers' minds relative to competing offerings.

Product differentiation

A positioning strategy designed to distinguish one firm's products from another's, where the differences can be real or perceived.

Perceptual mapping

A means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in the minds of present or potential customers.

Repositioning

Changing consumers' perceptions of a brand in relation to competing brands.