Market Segmentation and Targeting

Flashcards covering key vocabulary and concepts related to market segmentation, targeting, and ethical considerations in marketing.

Market Segmentation

A formalized process of grouping customers who share a similar set of needs and wants.

Geographic Segmentation

Dividing consumer or business markets into different segments based on geographic location.

Psychographic Segmentation

Dividing buyers into groups based on psychological or personality traits, lifestyle factors, or their values and belief systems.

Demographic Segmentation

A predominant way of grouping consumers into different buckets based on factors like age, ethnic distribution, and education level.

Behavioral Segmentation

Dividing buyers into groups based on their knowledge of a brand or company, attitude towards them, use of a product, or response to a product.

Geo-demographic Segmentation

Combining geographic and demographic elements to gain a deeper insight into customer needs and wants.

VALS Framework

An elaborate framework used in marketing to understand individuals' preferences based on variables like availability of resources, interest in innovation, and motivation.

Buyer Readiness Stages

A progression of customer states from awareness to interest, willingness to purchase, trial, actual user, regular user, and frequent user.

User Status

Categorizing customers based on their usage level (e.g., light, medium, high users) or whether they are current users, as part of behavioral segmentation.

Loyalty Status

Often determined by the frequency or repeat purchase behavior of a customer towards a product or brand, as part of behavioral segmentation.

Business Market Segmentation (Demographics)

Grouping business markets based on organizational demographics, such as revenue generated or number of organizations.

Operating Variables (Business Market Segmentation)

Criteria used to segment business markets based on factors like the number of locations or employees of an organization.

Purchasing Approaches (Business Market Segmentation)

Criteria used to segment business markets based on whether purchasing is centralized or decentralized, or the decision-making process used.

Situational Factors (Business Market Segmentation)

Macro-environmental factors or supply chain constraints used to segment business markets.

Personal Characteristics (Business Market Segmentation)

Individual traits of people within an organization involved in purchasing decisions, used for segmentation.

Measurable (Segmentation Criteria)

A segment must have data available to allow marketers to quantify its size, purchasing power, and characteristics.

Substantial (Segmentation Criteria)

A segment must be large or profitable enough to serve; the cost of serving should not exceed the revenue it brings.

Accessible (Segmentation Criteria)

A segment must be able to be effectively reached and served cost-effectively, considering geographical variables, infrastructure, and financing mechanisms.

Differentiable (Segmentation Criteria)

A segment must respond differently to a marketing message or mix than other segments; otherwise, they can be grouped together.

Actionable (Segmentation Criteria)

The company must be able to effectively and cost-efficiently design a marketing mix to serve that customer base.

Porter's Five Forces

A framework used to determine the long-term attractiveness of a segment by analyzing the threat of intense segment rivalry, potential entrants, buyers gaining power, substitutes, and suppliers' bargaining power.

Threat of Intense Segment Rivalry

A force in Porter's model indicating high competition in a segment, which can lead to higher customer acquisition costs and reduced profitability.

Threat of Potential Entrants

A force in Porter's model assessing how easy or difficult it is for new companies to enter a market segment, impacting long-term attractiveness.

Threat of Buyers Gaining Power

A force in Porter's model where large, demanding institutional buyers or resellers can exert pricing and supply chain pressures on manufacturers.

Threat of Substitutes

A force in Porter's model identifying direct and indirect alternative products or services that exist in the marketplace, affecting a segment's attractiveness.

Threat of Suppliers' Bargaining Power

A force in Porter's model where a limited number of suppliers for components or services can raise prices, affecting a company's ability to serve its customer base profitably.

Needs-Based Segment

Grouping customers based on the similarity of the needs or the benefits they are seeking from a product, as the first step in the segmentation process.

Segment Storyboard/Asset Test

A step in market segmentation involving limited market testing, product rollouts, or advertising to understand how a segment responds to marketing mix variables.

Full Market Coverage

A level of segmentation where a company serves all segments with as many of the products that they may need.

Mass Marketing

A level of segmentation involving selling one product to all segments.

Single Segment Specialization

A level of segmentation focusing on niche markets that may not be large in size but are profitable due to the opportunity for customized marketing mixes.

Multiple Segment Specialization (Differentiated Marketing)

A level of segmentation involving developing different products for different segments.

Individual Marketing (Micro or One-to-One Marketing)

A level of segmentation where the product, pricing, promotion, and distribution are customized to a particular individual, often costly but driving high customer satisfaction.

Legal & Ethical Issues in Segmentation

Considerations related to targeting vulnerable or disadvantaged groups or promoting potentially harmful products, especially concerning regulations in industries like financial services or healthcare.