Market Segmentation and Product Positioning

These flashcards cover the key concepts of market segmentation, product differentiation, mass customization, and positioning strategies as discussed in the lecture.

What is market segmentation?

Market segmentation involves aggregating prospective buyers into groups that have common needs and will respond similarly to marketing actions.

What are the two main criteria for creating market segments?

1) Common needs among the group 2) Similar response to marketing actions.

What is product differentiation?

Product differentiation is a strategy where a firm uses different marketing mix actions to help consumers perceive the product as being different and better than competing products.

Name the three specific segmentation strategies mentioned.

1) One product and multiple market segments 2) Multiple products and multiple market segments 3) Segments of one (mass customization).

What is mass customization?

Mass customization is the strategy of tailoring products or services to the tastes of individual customers on a high-volume scale.

How does Apple utilize build-to-order (BTO)?

Apple uses BTO to manufacture products only when an order is placed, reducing work-in-progress inventories and shortening delivery times.

What is cannibalization in marketing?

Cannibalization occurs when new products or chains steal customers and sales from existing products.

What is the 80/20 rule?

The 80/20 rule suggests that 80 percent of a firm's sales are obtained from 20 percent of its customers.

What criteria should a marketing manager consider when developing market segments?

1) Simplicity and cost-effectiveness 2) Potential for increased profit 3) Similarity of needs within segments 4) Difference of needs among segments 5) Potential of marketing actions to reach segments.

What is behavioral segmentation?

Behavioral segmentation is based on observable actions or attitudes by prospective customers, such as purchasing behavior and benefits sought.

What does the term 'customer lifetime value' (CLV) mean?

CLV represents the financial worth of a customer over the course of their relationship with a company, taking into account their loyalty, usage rate, and the company's service cost.

Define product positioning.

Product positioning refers to the place a product occupies in consumers’ minds based on important attributes relative to competitive products.

What are two main approaches to product positioning?

1) Head-to-head positioning - competing directly with competitors on similar attributes. 2) Differentiation positioning - focusing on a less-competitive market niche.