GROUP 8 MARKETING MANAGEMENT TOPIC 7, 8 TOPIC 7 Identifying Market Segments and Targets 1. Self-check 7.1 1.

1. Most companies today are turning to micromarketing at one of four levels. Those levels are: segment marketing, niche marketing, local marketing, individual marketing. 2. Three preference segments: i. Homogeneous preferences exist when all consumers have roughly the same preferences ii. Diffused preferences exist when all consumers vary greatly in their preferences. iii. Clustered preferences exist when natural market segments emerge from groups of consumers with shared preferences. 2. Self-check 7.2 1. Four major segmentation variables: i. Geographic segmentation calls for dividing the market into different geographical units such as nations, states, regions, counties, cities, or neighborhoods. ii. Demographic segmentation the market is divided into groups on the basis of age and the other variables such as family size, family life cycle, gender, income, occupation, education, religion, race, generation, nationality, and social class. iii. Psychographic segmentation buyers are divided into different groups on the basis of lifestyle or personality and values. iv. Behavioral segmentation buyers are divided into groups on the basis of their knowledge of, attitude toward, use of, or response to a product. 2. Four PRIZM clusters: 3. Identify behavioral variables the marketer can use for constructing market segments. i. Occasions. Buyers can be distinguished according to the occasions on which they develop a need, purchase a product, or use a product. ii. Benets. Buyers can be classied according to the benets they seek. iii. User status. Markets can be segmented into nonusers, ex-users, potential users, rst-time users, and regular users of a product. iv. Usage rate. Markets can be segmented into light, medium, and heavy product users.

v. Loyalty status. Buyers can be divided into four groups according to brand loyalty status vi. Buyer-readiness stage. A market consists of people in different stages of readiness to buy a product: Some are unaware of the product, some are aware, some are informed, some are interested, some desire the product, and some intend to buy. vii. Attitude. Five attitude groups can be found in a market: (1) enthusiastic, (2) positive, (3) indifferent, (4) negative, and (5) hostile. 4. Identify four market segment groups based on brand loyalty status Buyers can be divided into four groups according to brand loyalty status i. hard-core loyals (who always buy one brand) ii. split loyals (who are loyal to two or three brands) iii. shifting loyals (who shift from one brand to another iv. switchers (who show no loyalty to any brand) 3. Self-check 7.3 Differentiate between macro-segmentation and micro-segmentation. Business marketers generally identify segments through a sequential process. The first stage is macro-segmentation. The company looks at which end-use market to serve, determine the most appropriate product application and the customer size. The second stage is micro-segmentation. The company distinguishes among customers buying on price, service, or quality. 4. Self-check 7.4 1. Market segments must rate favorably on five key criteria. i. Measurable: The size, purchasing power, and characteristics of the segments can be measured. ii. Substantial: The segments are large and protable enough to serve. A segment should be the largest possible homogeneous group worth going after with a tailored marketing program. iii. Accessible: The segments can be effectively reached and served. iv. Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mixes. If two segments respond identically to a particular offer, they do not constitute separate segments. v. Actionable: Effective programs can be formulated for attracting and serving the segments. 2. Five patterns of target market selection. The company can consider five patterns of target market selection listed below: i. Single- segment concentration: Through concentrated marketing, the firm gains a thorough understanding of the segments needs and achieves

a strong market presence. However, concentrated marketing involves higher than normal risks if the segment turns sour because of changes in buying patterns or new competition. For these reasons, many companies prefer to operate in more than one segment. ii. Selective specialization: the rm selects a number of segments, each objectively attractive and appropriate. This multi-segment coverage strategy has the advantage of diversifying the rms risk. iii. Product specialization: the firm makes a certain product that it sells to several different market segments. iv. Market specialization: the firm concentrates on serving many needs of a particular customer group. v. Full market coverage: the firm attempts to serve all customer groups with all the products they might need. In undifferentiated marketing, the firm ignores market-segment differences and goes after the whole market with one market offer. In differentiated marketing, the firm operates in several market segments and designs different programs for each segment. 3. Other considerations that must be taken into account in evaluating and selecting market segments: i. Segment-by-segment invasion plans: a company would be wise to enter one segment at a time. Mega-marketing is the strategic coordination of economic, psychological, political, and public-relations skills, to gain the cooperation of a number of parties in order to enter or operate in a given market. Once in, a multinational must be on its best behavior. This calls for well-thought-out civic positioning. ii. Ethical choice of market targets: The public is concerned when marketers take unfair advantage of vulnerable groups (such as children) or disadvantaged groups (such as poor people) or promote potentially harmful products. 5. Activity 7.1 True (T) or False (F) 1. A market segment consists of a group of consumers who share a similar set of needs and wants. T 2. Local marketing reflects a growing trend called macro-marketing. F 3. A company is customerised when it is able to respond to individual customers by customizing its products, services, and messages on a one-to-one basis. 4. Demographic variables are extremely popular because they are often associated with consumer needs and wants and they are easy to measure. T 5. Life stage defines a persons age. F 6. Members of Generation Y are generally open to overt branding practices and a hard sell, making product placements in computer and video games a popular way to reach this cohort. T

7. In the VALS segmentation system, thinkers are characterized as being successful, sophisticated, active, take-charge people with high self-esteem. F 8. With respect to loyalty status, if a consumer is loyal to two or three brands, he or she is called shifting loyal. F 9. An undifferentiated marketing program that will endow the product with a superior image and appeal to the broadest number of buyers. T 10. If a marketer is blocked from entering a market, the strategy of mega-marketing can be used to assist in breaking into that market. TOPIC 8 Creating Brand Equity

1. Self-check 8.1 1. Brands perform valuable functions for the firm. 2. Three key ingredients of customer-based brand equity: i. ii. iii. 2. Self-check 8.2 1. i. ii. iii. 2.