...Segmenting Business Markets SEGMENTING BUSINESS MARKETS Segmentation of markets remains important even though the number of buyers in a business market may be relatively fewer compared to a consumer market. The basic grouping of a business market is by customer location, customer type and transaction conditions. 1. Customer Location On most occasions, business markets are segmented on a geographical basis. Some industries are geographically concentrated. An example is a business that process natural resources locate themselves close to the source in order to minimize shipping costs. 2. Customer Type This sub-divided into four different categories: - a) Size b) Industry c) Organizational Structure d) Purchase Criteria a) Size: Business customer size can be estimated using factors such as sales volume, number of employees, number of production facilities and number of sales offices. Most sellers divide their potential market into large and small accounts, using separate distribution channels to reach each segment. The sellers force may contact large volume accounts directly, but to reach the smaller accounts, the sellers may use a middleman or rely on the internet or telemarketing. b) Industry: Firms that sell their products to other business may want to segment its market on the basis of industry. However, if a firm like the afore-mentioned one were to segment its potential customers by type of customer and then specializing in order to meet the needs of organizations...
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...Introduction to Marketing Dahlia El-Manstrly Department of Management Marketing Concepts . Marketing dynamics . Consumer behaviour . Market segmentation . Marketing mix . Customer relationship management Marketing definition 'The management process responsible for identifying, anticipating and satisfying customer requirements profitably' (CIM) 'satisfying needs and wants through an exchange process' (Kotler,2009) Dissatisfied customers can tell up to eleven other people about their bad experiences, which is two to three times more people than a satisfied customer will talk to. Smith, 1993 Consumer Behaviour- Customers How do they buy? What are their choice criteria? Who is important? Where do they buy? When do they buy? D Jobber, Principles and Practice of Marketing, . 1998 McGraw-Hill Consumer Behaviour Cont. .What do customers wants? .Functional Value .Social Value .Emotional Value .Epistemic Value .Conditional Value .What role (s) do customers play? .Customer as a user .Customer as a buyer .Customer as a payer Decision making process I’m hungry Problem recognition What’s available? Information search Fruit or chocolate? Information evaluation Chocolate! Decision I should’ve had fruit. Post-purchase evaluation How do consumers make a purchase decisions? High involvement: the Fishbein and Ajzen model...
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...decisions—how to divide up markets into meaningful customer groups (segmentation), choose which customer groups to serve (targeting), create market offerings that best serve targeted customers (differentiation), and positioning the offerings in the minds of consumers (positioning). Chapter Objectives: 1. Define the four major steps in designing a customer-driven marketing strategy: market segmentation, market targeting, differentiation, and positioning 2. List and discuss the major bases for segmenting consumer and business markets 3. Explain how companies identify attractive market segments and choose a market targeting strategy 4. Discuss how companies differentiate and position their products for maximum competitive advantage in the marketplace. Most companies have moved away from mass marketing and toward target marketing—identifying market segments, selecting one or more of them, and developing products and marketing programs tailored to each. Figure 7.1 (pg.216) shows the four major steps in designing a customer-driven marketing strategy. Market segmentation involves dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes. Market targeting (or targeting) consists of evaluating each market segment’s attractiveness and selecting one or more market segments to enter. Differentiation involves actually differentiating the firm’s market offering to create...
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...steps in designing a customer-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. 2. List and discuss the major bases for segmenting consumer and business markets 3. Explain how companies identify and attractive market segments and choose a market-targeting strategy 4. Discuss how companies differentiate and position their products for maximum competitive advantage Segmentation means diving a market into distinct groups with distinct needs, characteristics, or behaviours that might require separate marketing strategies or mixes. The company identifies different ways to segment the market and develops profiles of the resulting market segments. Buyers in any market differ in their wants, resources, locations, buying attitudes, and buying practices. Through market segmentation, companies divide large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs. We discuss four important segmentation topics, which is: 1. Segmenting consumer markets 2. Segmenting business markets 3. Segmenting international markets 4. Requirements for effective segmentation 4 major segmentation variables for consumer markets is 1. Geographic segmentation 2. Demographic segmentation 3. Psychographic segmentation 4. Behavioural segmentation Geographic Segmentation calls for dividing a market into different geographical units, such as global regions...
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...Nintendo’s success comes from meeting the entertainment needs of different groups of customers. Back in the 1980s, Nintendo was a 100-year-old Japanese manufacturer of toys and playing cards. If Nintendo managers had continued to just think about the “toy market,” the firm probably wouldn’t even be around now. Instead, they saw profitable new opportunities in the broader “entertainment seekers market.” In 1985, they released the Nintendo Entertainment System (NES) and interactive video games such as Super Mario Brothers. In those early days, video game consoles and software from different producers were quite similar. Even so, Nintendo’s NES stood out as offering better value. And Nintendo’s profits took off because once a household owned a NES console, it qualified as a prime target for new Nintendo games. As the market evolved, Nintendo developed more new products focusing on the needs of different groups of customers. In the 1990s, its popular handheld system, Game Boy, successfully delivered portable fun to kids. Another group of customers, the “hard-core gamers,” played complex and realistic games requiring consoles with high-speed processors and better graphics, so Nintendo offered them its GameCube console. But in this market Nintendo struggled to keep up with competitors like Sony’s PlayStation and Microsoft’s Xbox, which did a better job of meeting these customers’ needs. So planners at Nintendo looked for other customer groups whose needs were not being addressed; they thought...
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...TER Market Segmenting, Targeting, and Positioning C O M P E T E N C Y O B J E C T I V E S F O R M A S T E R Y 1. Identify the role of market segmentation in developing a marketing strategy. 2. Identify criteria for market segmentation. 3. Identify common types of positioning strategies. 5 Suppose you’ve created a great new offering you hope will become a hot seller. Before you quit your day job to market it, you’ll need to ask yourself, “Who’s going to buy my product?” and “Will there be enough of these people to make it worth my while?” Certain people will be more interested in what you have to offer than others. Not everyone needs homeowners’ insurance, not everyone needs physical therapy services, and not every organization needs to purchase vertical lathes or CT scanners. Among those that do, some will buy a few, and a few will buy many. In other words, in terms of your potential buyers, not all of them are “created equal.” Some customers are more equal than others, however. A number of people might be interested in your product if it’s priced right. Other people might be interested if they simply are aware of the fact that your product exists. Your goal is to figure out who these people and organizations are. To do this you will need to divide them up into different categories. The process of breaking down all consumers into groups of potential buyers with similar characteristics is called market segmentation. The key question you have to ask yourself when segmenting markets...
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...Name: Nguyen Khanh Linh Class: FB4A MARKET SEGMENTATION CASE STUDY * SILVERJET AIRLINE – Market segmenting is deeply believed to be one of the most important jobs in any companies. The purpose for segmenting a market is to allow company’s marketing program to focus on the subset of prospects that are most likely to purchase offering. If this job is done properly, this will help to bring the highest return back for marketing expenditures. If not, company will meet some heavy losses that may lead to bankrupt unfortunately. Silverjet airline is a reliable and authentic evidence for these statements above. Although this company achieved many prime successes, it had just existed for 2 years and was bankrupted in 2008 because of some serious mistakes. As far as I researched, the aviation industry has well-defined differentiated market segmentation, but most major airlines choose 3 types of segments: economy, business and first class passengers that strongly based on psychographic and behavior segmenting principles. To be more specific, depending on income and the purpose of travelling, airlines target 3 main segments as I said before. Economy class has cheap flight ticket cost which is suitable for anyone who has medium living standard or just travel for vacations. Business class passengers are given an increased level of customer service, better seats, a more spacious arrangement and the average price for a business class ticket. A first class passenger is willing to...
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...Introduction to Engineering Management- 2111-001 | EXECUTIVE SUMMARY At the start of this project, our team was given a special opportunity to develop a hands-on marketing project with a non-profit organization. This non-profit organization goes by the name of The Lightfactory, and is known as one of four museums of photography and film in the United States. The board of directors requested our team to develop an e-mail campaign strategy to improve membership and donor rates. However, as systems engineers, none of our team members had any prior knowledge of marketing or segmenting. Therefore our team was forced to do some extensive research on non-profit marketing, as well as database segmenting. The ideals and concepts learned throughout the research process were eventually used as a foundation for completing the project objectives proposed by the Lightfactory board of directors. Segmenting the database was a success and provided some key insights about the LightFactory’s customer base. Most of the customer’s in the database were segmented into three major populations: Big givers, Middle givers, and Low givers. These segments are customers who have donated more than once. Each segment shows the mean, median, mode, upper control limit, lower control limit, and other relevant statistical data. The database was also segmented by regular and former members that had enrolled in classes. Also the concentration of average donations and non-donors in all cities in North...
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...Market Segmentation and Product Positioning Market segmentation is the identification of portions of the market that are different from one another. Segmentation allows the firm to better satisfy the needs of its potential customer. Market segmentation also involves dividing a particular market into groups of individual markets with similar wants and needs. Market segmentation can allow a company to identify groups of similar consumers or potential consumers. It can allow a company to pin point different types of consumer behavior in regards to particular products of that company. Due to market segmentation, the company will be able to respond with appropriate marketing strategies that satisfy the different preferences of each chosen segment. Market segmentation can be used in different markets, such as industrial markets and consumer markets. According to NetMBA.com, industrial markets commonly use market segmentation to segment their different markets according to “1.) Location 2.) Company type and 3.) Behavioral characteristics” (www.netmba.com). In relation as to why industrial markets would use location as a segment would be due to shipping factors for the vendor. It is important for vendors for companies to be geographically positioned near the customers due to “shipping costs may be a purchase factor for vendor selection for products having a high bulk to value ratio” (www.netmba.com). Industrial markets would use company...
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...CASE STUDY: You are a Business Development Consultant. Your Firm is hired by a small business enterprise that is facing myriads of marketing and organizational challenges. YOUR JOB AS A BUSINESS DEVELOPMENT CONSULTANT IS TO 1) Analyze the problems in the business, 2) Research solutions and/or benchmark good practices, 3) Make suitable recommendations for improvements, and 4) Help the business to implement these recommendations satisfactorily. TEAM ASSIGNMENTS PRESENTATION: 15 MINUTES LEARNING OUTCOME 2: Be able to use the concepts of segmentation, targeting and positioning 2.1 Show macro and micro environmental factors which influence marketing decisions 2.2 Propose segmentation criteria to be used for products in different markets 2.3 Choose a targeting strategy for a selected product/service 2.4 Demonstrate how buyer behavior affects marketing activities in different buying situations 2.5 Propose new positioning for a selected product/service Submission Deadline: November 16, 2015 TEAM ASSIGNMENT: AC 2.1 Show macro and micro environmental factors which influence marketing decisions Guiding Term Paper Questions The business believes that competition from nearby businesses is preventing it from growing and increasing sales. However many other micro and macro factors are impacting sales and its marketing decisions. So show the macro and micro environmental factors that are impacting the performance of the business and explain how they are...
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...Chapter 8: Identifying Market Segments and Targets GENERAL CONCEPT QUESTIONS Multiple Choice 1. In ________ marketing, the seller engages in the mass production, mass distribution, and mass promotion of one product for all buyers. a. group b. mass c. general d. segmented e. differentiated Answer: b Page: 226 Difficulty: Medium AACSB: Analytic Skills 2. The argument for ________ marketing is that it creates the largest potential market, which leads to the lowest costs, which in turn can lead to lower prices or higher margins. a. niche b. micro c. macro d. differentiated e. mass Answer: e Page: 226 Difficulty: Medium AACSB: Reflective Thinking 3. A ________ consists of a group of customers who share a similar set of needs and wants. a. market target b. market group c. market slice d. market segment e. market level Answer: d Page: 226 Difficulty: Medium AACSB: Analytic Skills 4. A ________ consists of two parts: a naked solution and discretionary options. a. differentiated market offering b. flexible market offering c. rigid market offering d. vertical market offering e. horizontal market offering Answer: b Pages: 228 Difficulty: Hard AACSB: Analytic Skills 5. If a marketing manager observes that his or her market shows no natural segments and consumers seem to have roughly the same preferences, the marketing manager will most likely be faced with a ________ preferences pattern. a. homogeneous b. heterogeneous...
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...-Interpreting and reporting the findings Chapter5 1. Customer-driven marketing strategy 2. The buyer decision process Need recognition- Information search- Evaluation of alternatives- Purchase decision- Post-purchase behavior 3. Stages in the adoption process Awareness- Interest- Evaluation- Trial- Adoption 4. Types of buying situations Straight rebuy, Modified rebuy, New task, System selling, Buying centre Chapter6 1. Customer driven marketing strategy -Segmentation -Targeting -Differentiation -Positioning 2. Market segmentation -Segmenting consumer markets -Segmenting business markets -Segmenting international markets -Requirements for effective segmentation * -Measurable, Accessible, Substantial, Differentiable, Actionable 3. Market Targeting -Evaluating market segments *-segment size and growth -segment structure attractiveness -company objectives and resources -Selecting target market segments -Socially responsible target marketing 4. Differentiation and positioning -Positioning maps -Choosing a differentiation and positioning strategy -Communicating and delivering the chose position Chapter7 1....
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...Why Segment a Market? There are several important reasons why businesses should attempt to segment their markets carefully. These are summarized below Better matching of customer needs Customer needs differ. Creating separate offers for each segment makes sense and provides customers with a better solution Enhanced profits for business Customers have different disposable income. They are, therefore, different in how sensitive they are to price. By segmenting markets, businesses can raise average prices and subsequently enhance profits Better opportunities for growth Market segmentation can build sales. For example, customers can be encouraged to "trade-up" after being introduced to a particular product with an introductory, lower-priced product Retain more customers Customer circumstances change, for example they grow older, form families, change jobs or get promoted, change their buying patterns. By marketing products that appeal to customers at different stages of their life ("life-cycle"), a business can retain customers who might otherwise switch to competing products and brands Target marketing communications Businesses need to deliver their marketing message to a relevant customer audience. If the target market is too broad, there is a strong risk that (1) the key customers are missed and (2) the cost of communicating to customers becomes too high / unprofitable. By segmenting markets, the target customer can be reached more often and at lower cost Gain share...
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...activities in the field of marketing that deal with the analysis of the strategic initial situation of a company and the formulation, evaluation and selection of market-oriented strategies and therefore contribute to the goals of the company and its marketing objectives. Marketing strategy includes: product strategy, price strategy, marketing channel strategy, promotion strategy, etc. Marketing strategy planning is a process of interaction and a process of creation and repeatedly. Ansoff’s Matrix(Explain how the diversification strategy within the Ansoff matrix differs from the other three strategies.): The Ansoff Matrix is a strategic planning tool that provides a framework to help executives, senior managers, and marketers devise strategies for future growth. Ansoff's matrix has four main growth strategies. Market penetration In market penetration strategy, the organization tries to grow using its existing offerings in existing markets. In other words, it tries to increase its market share in current market scenario . This involves increasing market share within existing market segments. This can be achieved by selling more products or services to established customers or by finding new customers within existing markets. Here, the company seeks increased sales for its present products in its present markets through more aggressive promotion and...
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...Shannon Bailey MAR 1011 Week 2 Case Study 1. Is segmenting customers as “Explorers,” “Admirals,” and the like a useful marketing tool? Why or why not? I believe that segmenting customers is a useful marketing tool because what would seem like too expensive of a trip may actually turn into something that could be made reality and not so out of reach. It would enable the customer to see options. It would also enable the company to match what the customer is looking for specifically more specifically. Segmenting the consumers allows the company to promote their service more efficiently and effectively. To me it seems like it would allow the consumer to feel as if they are more involved in their trip, like an adventure versus something that could be burdening of an added expense. 2. Which segments of the cruise market are most likely to be influenced by social media? Why? I think that the segment of the cruise market that would be most influenced by social media would be the first segment. I think that this would be most likely influenced by social media because it describes the different enjoyable activities that are offered. I believe this allows the consumer to see that a cruise could be fun and you could make tons of memories. It also goes into detail about the cruise not being just for pleasure but also business and how the meeting could potentially be money-saving compared to land based meetings. It changes the consumer...
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