Explain what is meant by a market.
A market consists of
people and organizations with the necessary purchasing power and willingness
and authority to buy. Markets may be classified according to product type.
Consumer products are purchased by the ultimate consumer for personal use.
Industrial products are purchased for use directly or indirectly in the
production of other goods and services.
Outline the role of market segmentation in developing a marketing strategy.
Market segmentation refers to the process of dividing the total
market into several homogeneous groups. It plays an important role in the
development of marketing strategies, because most products are targeted at
specific market segments. The segmentation process allows marketers to choose
their target markets more accurately.
Explain each of the four bases for segmenting consumer markets.
Consumer markets may be
divided on the basis of geographic, demographic, psychographic, or benefit
segmentation. Geographic segmentation, one of the oldest forms, is the process
of dividing the overall market into homogeneous groups on the basis of
population location. The continual shifts in U.S. and foreign populations
necessitate considerable effort in identifying the various geographic segments.
The most commonly use form of segmentation is demographic segmentation, which
classifies the overall market into homogeneous groups based on such
characteristics as age, sex, and income level. Psychographic segmentation, a
relatively new approach, uses behavioral profiles developed from analyses of
consumers' activities, opinions, interests, and lifestyles to identify market
segments. Benefit segmentation &- sometimes called behavioral segmentation
&- is perhaps the most useful approach. This approach segments markets on
the basis of the perceived benefits consumers expect to derive from a good or
service. When this is impossible, benefit segmentation relies on proxy
variables like usage rates or brand loyalty.
Describe the three bases for segmenting industrial markets.
There are three bases
for industrial market segmentation. Geographic segmentation is commonly used in
concentrated industries. Customer&-based segmentation focuses on product
specifications of industrial buyers. Segmentation by end&-use application
is based on how industrial purchasers will use the
Identify the steps in the market segmentation process.
Market segmentation is
the division of large, heterogeneous markets into several relatively
homogeneous groups. The segmentation process follows a five&-step
sequence: identifying the bases on which to segment markets &- developing
user profiles for appropriate market segments; forecasting the overall market
potential for the relevant market segments; estimating market share; and
selecting specific market segments.
Explain how target market decision analysis can be used in segmenting
Target market decision
analysis is a useful tool in the market
segmentation process. It
involves identifying the specific characteristics of targeted market segments.
All bases for segmenting may be employed in target market decision analysis.
The approach can be used for both consumer and industrial markets.
Discuss the three alternative strategies for reaching target markets.
strategies exist for matching the firm's offerings to specific target markets.
Undifferentiated marketing refers to the strategy of producing only one product
and marketing it to the entire market with a single marketing mix.
Differentiated marketing refers to the strategy of producing numerous products,
each with its own marketing mix, designed to satisfy different segments of the
market. Concentrated marketing refers to the strategy of directing all of the
firm's marketing resources toward satisfying a small segment of the total