Examples of Consumer-based Market Segmentation in the following topics:
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- A market segmentation is developed based on one of two strategies and several consumer identifying characteristics like demographics and behavior.
- In the multi-segment strategy, a company focuses its marketing efforts on two or more distinct market segments.
- Segmentation of a market to define a target consumer base can be done in a variety of methods such as:
- It is actually based on the behavior of the consumer.
- Companies can segment the market according to the benefits sought by the consumer.
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- As you might expect, demographic segmentation variables are amongst the most popular bases for segmenting customer groups.
- Although industrial market segmentation is quite different from consumer market segmentation, both have similar objectives.
- Consumer-based market segmentation can be performed on a product specific basis, to provide a close match between specific products and individuals.
- It is actually based on the behavior of the consumer.
- Segmentations according to benefits sought by the consumer.
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- For example, the Christian consumer attends movies less frequently than consumers in general. - Population density can also place people in unique market segments.
- Also, since markets are very dynamic, and products change over time, the bases for segmentation must likewise change.
- Segmenting the consumer market by age groups is useful for several products.
- Many traditional gender-based boundaries are changing, and marketers must be aware of these changes.
- For example, Phillip Morris has segmented the market for cigarette brands by appealing psychologically to consumers in the following way:
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- As you read this chapter, you should develop an understanding of the following key marketing concepts:
- the important role marketing can play in the success of an organization
- understand the primary tools available to marketers and how they are used
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- Segmentation splits buyers into groups with similar needs and wants to best utilize a firm's finite resources through buyer based marketing.
- Market segmentation pertains to the division of a set of consumers into persons with similar needs and wants.
- With growing diversity in the tastes of modern consumers, firms are taking note of the benefit of servicing a multiplicity of new markets.
- While there may be theoretically 'ideal' market segments, in reality, every organization engaged in a market will develop different ways of imagining market segments, and create product differentiation strategies to exploit these segments.
- While it is relatively easy to identify segments of consumers, most firms do not have the capabilities or the need to effectively market their product to all of the segments that can be identified.
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- Customers can be purchasers who intend to resell the product or end users who intend to use or consume the product.
- The market can be categorized into separate groups called segments.
- Qualitative knowledge of the market based on experience may also be used to identify divisions that are likely to be useful.
- When a producer appeals to a market or market segment, the producer must take into account the distinction between the end user or consumer and the purchaser or decision maker.
- Each entity in the delivery chain will have different needs, so a complete market needs analysis must include all potential segments and all entities within each segment.
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- Concentrated marketing is a strategy which targets very defined and specific segments of the consumer population.
- An organization that adopts a concentration strategy chooses to focus its marketing efforts on only one very defined and specific market segment.
- However, there is no increase in the total profits of the sales as it targets just one segment of the market.
- CVS targets women since they make up 80% of the chain's customer base.
- Evaluate the advantages and disadvantages of adopting concentration strategies in consumer marketing
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- The key to consumer marketing breakthroughs is often successful and innovative market segmentation.
- The market segment must be stable enough that it does not vanish after some time
- The market segment is internally homogeneous (potential customers in the same segment prefer the same product qualities)
- The market segment is externally heterogeneous, that is, potential customers from different segments have different quality preferences.
- The market segment is able to leverage the appropriate marketing mix to respond to difference in preferences
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- While it is relatively easy to identify segments of consumers, most firms do not have the capabilities or the need to effectively market their product to all of the segments that can be identified.
- Rather, one or more target markets (segments) must be selected.
- Thus, market segmentation is a twofold process that includes:
- Market segmentation involves dividing a broad target market into subsets of consumers who have common needs (and/or common desires) as well as common applications for the relevant goods and services.
- An ideal market segment meets all of the following criteria:
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- B2B firms sell not to ultimate consumers but to other businesses.
- A B2B marketer must be able to distinguish between the industries it sells to and the different market segments that exist in each of them.
- Industrial marketers may segment markets by looking at the different ways and situations in which a product is used.
- Marketers may segment markets by identifying groups of customers who consider the same buying factors important.
- If the previous approaches are not useful in a particular situation, market advantages may still be realized by segmenting based on account size or geographic boundaries.