File Name: name and explain ways you can use to segment a heterogeneous market .zip
Markets are a group of potential buyers with needs and wants and the purchasing power to satisfy them. A basic definition of a market is a group of potential buyers with needs and wants and the purchasing power to satisfy them. The Market is People: Since exchange involves two or more people, the market can be thought of as people, individuals, or groups.
People constitute markets only if they currently recognize their need or desire for an existing or future product. Individuals and members of households are the largest category of markets, but business establishments and other organized behavior systems also represent valid markets. However, people or organizations must meet all five of the following basic criteria in order to represent a valid market:.
The Market is a Place: The market can also be thought of as a place or as a geographical area within which trading occurs. International markets, American markets, a shopping center, and even the site of a single retail store can be called a market.
Shopping Mall : A market is a place where trading takes place. An example of a market is a shopping mall. This identification of markets is useful for marketing decision-making purposes because factors such as product features, price, location of facilities, and promotional design are all affected by geographic factors. Finally, a market may be somewhere other than a geographical region, such as a catalog or ad that allows you to place an order without a marketing intermediary.
The Market is an Economic Entity: In most cases, a market is characterized by a dynamic system of economic forces including supply, demand, competition, and government intervention. Finally, the extent of personal freedom and government control produces free market systems, socialistic systems, and other systems of trade and commerce.
The primary types of markets are consumer markets, industrial markets, institutional markets, and reseller markets. These categories are not always clear-cut. In some industries, a business may be in a different category altogether or may even encompass multiple categories.
It is also possible that a product may be sold in all four markets. Consumer markets include individuals and households who buy consumer goods and services for their own personal use. They are not interested in reselling the product or setting themselves up as a manufacturer. The industrial market consists of organizations and the people who work for them, those who buy products or services for use in their own businesses or to make other products. For example, a steel mill might purchase computer software, pencils, and flooring as part of the operation and maintenance of their business.
The institutional market is made up of various types of profit and nonprofit institutions, such as hospitals, schools, churches, and government agencies. Institutional markets differ from typical businesses because they are motivated by satisfying esoteric, often intangible, needs rather than profits or market share. Because institutions operate under different restrictions and employ different goals, marketers must use different strategies to be successful.
All intermediaries that buy finished or semi-finished products and resell them for profit are part of the reseller market. This market includes approximately , wholesalers and 1,, retailers that operate in the US.
With the exception of products obtained directly from the producer, all products are sold through resellers. Producers are always cognizant of the fact that successful marketing to resellers is just as important as successful marketing to consumers.
Market segmentation pertains to the division of a set of consumers into persons with similar needs and wants. Due to limited resources, a firm must make choices in servicing specific groups of consumers. With growing diversity in the tastes of modern consumers, firms are taking note of the benefit of servicing a multiplicity of new markets.
The market segmentation and corresponding product differentiation strategy can give a firm a temporary commercial advantage. Most market segmentations are the techniques used to attract the right customer. By emphasizing a segmentation approach, the exchange process should be enhanced, since a company can more precisely match the needs and wants of the customer.
For example, a company such as Franco-American Spaghetti has differentiated its basic product by offering various sizes, flavors, and shapes. The objective is to sell more product, to more people, more often. The problem is not competition; the problem is the acknowledgment that people within markets are different and that successful marketers must respond to these differences. 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. A company selects its target market because it exhibits the strongest affinity to a particular product or brand. It is in essence the most likely to buy the product. The cereal appealed to children, while free bowling appealed to adults. While the market is initially reduced to its smallest homogeneous components perhaps a single individual , business in practice requires the marketer to find common dimensions that will allow him to view these individuals as larger, profitable segments.
A market segmentation is developed based on one of two strategies and several consumer identifying characteristics like demographics and behavior. There are two major segmentation strategies followed by marketing organizations: a concentration strategy and a multi-segment strategy. In the concentration strategy, a company chooses to focus its marketing efforts on only one market segment.
Only one marketing mix is developed. This strategy is advantageous because it enables the organization to analyze the needs and wants of only one segment and then focus all its efforts on that segment. Concentration Strategy : Rolex focuses on customers who want a luxury watch. Rolex is a prime example of the concentration strategy in market segmentation. In the multi-segment strategy, a company focuses its marketing efforts on two or more distinct market segments.
The organization does so by developing a distinct marketing mix for each segment. They then develop marketing programs tailored to each of these segments.
This strategy is advantageous because it can increase total sales since more marketing programs are focused at more customers. The disadvantage of this strategy is the higher costs stemming from the need for multiple marketing programs.
Segmentation of a market to define a target consumer base can be done in a variety of methods such as:. Geographic criteria—nations, states, regions, countries, cities, neighborhoods, or zip codes—define the market segments. The geo-cluster approach combines demographic data with geographic data to create a more accurate profile of a specific consumer. In areas prone to rain, you can sell things like raincoats, umbrellas, and gumboots. In hot regions, you can sell summer wear, while in cold regions, you can sell warm clothes.
This consists of dividing the market into groups based on variables such as age, gender, family size, income, occupation, education, religion, race, and nationality. Demographic segmentation variables are among the most popular bases for segmenting customer groups because customer wants are closely linked to variables such as income and age and because there is a plethora of demographic data available.
In psychographic segmentation, consumers are divided according to their lifestyle, personality, values, and social class. Foreigners within the same demographic group can exhibit very different psychographic profiles. Consumers are divided into groups according to their knowledge of, attitude toward, use of, or response to a product. It is actually based on the behavior of the consumer. Companies can segment the market according to the occasions of use, such as whether the product will be used alone or in a group, or whether it is being purchased as a present or for personal use.
Search for:. Market Segmentation. What Are Markets Markets are a group of potential buyers with needs and wants and the purchasing power to satisfy them. Learning Objectives Diagram the different types of markets and their relationship to one another. The total number of buyers must be large enough to be profitable for the company. Markets can also be a place such as a shopping center. This identification of markets is useful for marketing decision-making purposes because factors such as product features, price, location of facilities, and promotional design are affected by geographic factors.
The market can be defined as an economic entity because in most cases, a market is characterized by a dynamic system of economic forces including supply, demand, competition, and government intervention. These categories are not always clear-cut and in some industries, a business may be in a different category altogether or may even encompass multiple categories. Key Terms latent : Existing or present but concealed or inactive. A situation when there is an abundance of product, prices are usually low, and customers dictate the terms of sale.
Learning Objectives Examine the benefits of market segmentation. Key Takeaways Key Points The market segmentation and corresponding product differentiation strategy can give a firm a temporary commercial advantage.
While the market is initially reduced to its smallest homogeneous components perhaps an individual , business in practice requires the marketer to find common dimensions that will allow him to view these individuals as larger, profitable segments.
Key Terms target : A person or group of people that a person or organization is trying to employ or to have as a customer, audience etc. Developing a Market Segmentation A market segmentation is developed based on one of two strategies and several consumer identifying characteristics like demographics and behavior. Learning Objectives Review the characteristics of market segmentation.
Key Takeaways Key Points The two major segmentation strategies followed by marketing organizations are concentration strategy and multi- segment strategy. Segmentation of a market to reach a target consumer base can be done by defining consumers in terms of geographic, demographic, psychographic, and behavioral characteristics.
An ideal market segment is possible to measure, large enough to earn profit, stable, possible to reach, internally homogeneous, externally heterogeneous, consistent in response to market stimulus, reachable in a cost-effective manner, and useful in determining marketing mix.
Often synonymous with the four Ps: price, product, promotion, and place. Licenses and Attributions. CC licensed content, Shared previously.
Markets can be segmented primarily according to geographic, demographic, usage, and psychological segments—or a combination of the above. There are many different ways by which a company can segment its market, and the chosen process varies from one product to another see. Also, since markets are very dynamic, and products change over time, the bases for segmentation must likewise change. Bases for Segmentation : One way to segment markets is by consumer and industrial markets. Regional differences in consumer tastes for products as a whole are well-known. Markets according to location are easily identified and large amounts of data are usually available. Also, many companies simply do not have the resources to expand beyond local or regional levels.
Learn about the 4 most common types of market segmentation, plus some other ones that you may have missed. Market segmentation is an increasingly important part of a strong marketing strategy and can make all the difference for companies in competitive market landscapes, such as e-commerce. When up against a range of online competitors, effective communication is the best way to differentiate your business. Market segmentation offers an opportunity to pinpoint exactly what messaging will drive your customers to make a purchase. The 4 basic types of market segmentation are: 1. Demographic Segmentation 2.
Market segmentation is one of the most efficient tools for marketers to cater to their target group. The process is being practised by marketers since the late s. Simple though it may be, it is of vital use to forming any marketing plan. Market segmentation is a process of dividing the market of potential customers into smaller and more defined segments on the basis of certain shared characteristics like demographics, interests, needs, or location. The member of these groups share similar characteristics and usually have one or more than one aspect common among them which makes it easier for the marketer to craft marketing communication messages for the entire group.
In market segmentation, one distinguishes homogeneous groups of Request full-text PDF Different variables or criteria can be used to segment a market (see e.g. destination segments are defined because it can be used to identify is that it presents segmentation as a conceptual model of the way a.
Market segmentation is a process of dividing a heterogeneous market into relatively more homogenous segments based on certain parameters like geographic, demographic, psychographic, and behavioural. It is the activity of dividing a broad consumer or business market , normally consisting of existing and potential customers , into sub-groups of consumers known as segments based on some type of shared characteristics. In dividing or segmenting markets, researchers typically look for common characteristics such as shared needs, common interests, similar lifestyles, or even similar demographic profiles. The overall aim of segmentation is to identify high yield segments — that is, those segments that are likely to be the most profitable or that have growth potential — so that these can be selected for special attention i.
Identifying needs and recognizing differences between groups of customers is at the heart of marketing. CVS Pharmacy is one of the most successful drug store chains in America. What is the reason for this success?
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For many years, marketing specialists have segmented their target customers to understand who might buy a service or product.