Market Segmentation (Ch. 7)

Market

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

Market Segment

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

Market Segmentation

The process of dividing a market into meaningful, relatively similar, and identifiable segments or groups.

Segmentation Bases

Characteristics of individuals, groups or organizations.

Geographic Segmentation

Segmenting markets by region of a country or the world, market size, market density, or climate.

Demographic Segmentation

Segmenting markets by age, gender, income, ethnic background, and family life cycle.

Family Life Cycle (FLC)

A series of stages determined by a combination of age, marital status, and the presence/absence of children.

Psychographic Segmentation

Market segmentation on the basis of personality, motives, lifestyles, and geodemographics.

Geodemographic Segmentation

Segmenting potential customers into neighborhood lifestyles categories.

Benefit Segmentation

The process of grouping customers into market segments according to the benefits they seek from the product.

Usage-Rate Segmentation

Dividing a market by the amount of product bought or consumed.

80/20 Principle

Twenty percent of all customer generate eighty percent of the demand.

Satisficers

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

Optimizers

Business customers who consider numerous suppliers, both familiar and unfamiliar, solicit bids, and study all proposals carefully before making a decision.

Target Market

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

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.

Concentrated Targeting Strategy

A strategy used to select one segment of a market for targeting marketing efforts.

Niche

One segment of the market.

Multisegment Targeting Strategy

A strategy that chooses two or more well-defined market segments and develops a distinct marketing mix for each.

Cannibalization

A situation that occurs when sales of a new product cut into sales of a firms existing products.

One-to-one Marketing

An individualized marketing method that utilizes customer information to build long-term, personalized, and profitable relationships with each customer.

Positioning

Developing 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 that many firms use to distinguish their products from those of competitors.

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.

Repositioning

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