When you consider the functional areas of business—accounting, finance, management, marketing, and operations—marketing is the one you probably know the most about.
If everyone is responsible for marketing, can the average organization do without an official marketing department?
At the same time, you need to achieve organizational goals, such as profitability and growth.
The marketing concept puts the customer first: as your most important goal, satisfying the customer must be the goal of everyone in the organization. Declaring that you intend to develop products that satisfy customers and that everyone in your organization will focus on customers is easy. We’ll use Figure 9.3 "Marketing Strategy" as a blueprint for our discussion of target-market selection, and we’ll analyze the concept of the marketing mix in more detail in the next major section of the chapter. The next step in identifying a target market is to divide the entire market into smaller portions, or market segmentsGroup of potential customers with common characteristics that influence their buying decisions.—groups of potential customers with common characteristics that influence their buying decisions. Maybelline and Cover Girl use segmentation strategies to target their predominant consumers: women. Demographic segmentationProcess of dividing the market into groups based on such variables as age and income. Geographic segmentationProcess of dividing a market according to such variables as climate, region, and population density.—dividing a market according to such variables as climate, region, and population density (urban, suburban, small-town, or rural)—is also quite common.
Dividing consumers by such variables as attitude toward the product, user status, or usage rate is called behavioral segmentationProcess of dividing consumers by behavioral variables, such as attitude toward the product, user status, or usage rate.. Some companies segment consumers according to user status, distinguishing among nonusers, potential users, first-time users, and regular users of a product.
Psychographic segmentationProcess of classifying consumers on the basis of individual lifestyles as reflected in people’s interests, activities, attitudes, and values. Typically, marketers determine target markets by combining, or “clustering,” segmenting criteria. Marketing is a set of processes for creating, communicating, and delivering value to customers and for improving customer relationships. The philosophy of satisfying customers’ needs while meeting organizational profit goals is called the marketing concept and guides all of an organization’s marketing activities. To apply this approach, marketers need a marketing strategy—a plan for doing two things: selecting a target market and then implementing strategies for creating, pricing, promoting, and distributing products that satisfy customers’ needs. A target market is a specific group of consumers who are particularly interested in a product, would have access to it, and are able to buy it. To identify this group, marketers first identify the overall market for the product (from the consumer market, the industrial market, or both). Then, they divide the market into market segments—groups of customers with common characteristics that influence their buying decisions. If you were developing a marketing campaign for the Volkswagen Beetle, what group of consumers would you target? Developing a Marketing Strategy & the Benefits Market Segmentation Target Marketing Positioning Tailored and effective marketing activities Identify a.
Customer-Driven Marketing Strategy: Creating Value for Target Customers 7 Principles of Marketing. Content of the Lecture Definition of Market Segmentation Purpose of segmentation Types of segmentation Segmentation process Levels of segmentation.
7-1 Chapter 7 PRINCIPLES OF MARKETING Market Segmentation, Targeting, and Positioning for Competitive Advantage.
7-1 Chapter Seven Segmentation, Targeting and Positioning: Building the Right Relationships with the Right Customers with Duane Weaver. Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right Customers Chapter 8.
Customer-Driven Marketing Strategy Creating Value for Target Customers Chapter 7 Priciples of Marketing by Philip Kotler and Gary Armstrong PEARSON. Segmentation, Targeting, and Positioning Building the Right Relationships with the Right Customers Chapter 7. The Ins & Outs of Developing An Effective Marketing Plan Funded in part through a cooperative agreement with the U.S. After you segment buyers and develop a measure of consumer insight about them, you can begin to see those that have more potential.
Ita€™s not already swamped by competitors, or you have found a way to stand out in a crowd. Most firms tailor their offerings in one way or another to meet the needs of different segments of customers. Some firmsa€”especially smaller ones with limited resourcesa€”engage in concentrated marketing. MicrotargetingmicrotargetingThe process of gathering multiple sources of data available on people, everything from their tax and phone records to the catalogs they receive, so as to market to them., or narrowcasting, is a new effort to isolate markets and target them. Firms that compete in the global marketplace can use any combination of the segmenting strategies we discussed, or none at all. Most companies, however, tailor their offerings to some extent to meet the needs of different buyers around the world. Pizza Hut has franchises around the world, but is products, their packaging, and advertising are tailored to different markets. Sellers are increasingly targeting consumers in China, Russia, India, and Brazil because of their fast-growing middle classes. Other strategies for targeting markets abroad include acquiring (buying) foreign companies or companies with large market shares there.
Why might it be advantageous to create low-cost products for developing countries and then sell them in nations such as the United States?
After all, as a consumer and target of all sorts of advertising messages, you’ve been on the receiving end of marketing initiatives for most of your life.


Not necessarily: most organizations have marketing departments in which individuals are actively involved in some marketing-related activity—product design and development, pricing, promotion, sales, and distribution.
This basic philosophy—satisfying customer needs while meeting organizational goals—is called the marketing conceptBasic philosophy of satisfying customer needs while meeting organizational goals., and when it’s effectively applied, it guides all of an organization’s marketing activities.
But this doesn’t mean that you ignore the bottom line; if you want to survive and grow, you need to make some profit. It would be nice if everybody in the marketplace was interested in your product, but if you tried to sell it to everybody, you’d spread your resources too thin.
First, they usually identify the overall market for their product—the individuals or organizations that need a product and are able to buy it. A farmer, for example, might sell blueberries to individuals on the consumer market and, on the industrial market, to bakeries that will use them to make muffins and pies. Climate is crucial for many products: try selling snow shovels in Hawaii or above-ground pools in Alaska. As exhilarating as urban life can be, for example, it’s a hassle to parallel park on crowded city streets. Companies selling technology-based products might segment the market according to different levels of receptiveness to technology.
7-1 principles of MARKETING Chapter 7 Market Segmentation, Targeting, and Positioning for Competitive Advantage. For example, the middle class of India is growing rapidly, making it a very attractive market for consumer products companies.
Accessibility, or the lack of it, could include geographic accessibility, political and legal barriers, technological barriers, or social barriers.
Consider TerraCycle, which has made its mark by selling organic products in recycled packages. Mass marketing is also efficient because you dona€™t have to tailor any part of the offering for different groups of consumers, which is more work and costs more money.
Because these organizations dona€™t have all their eggs in one basket, they are less vulnerable to competition. A microcosm of the targeting strategies used in global markets is shown in FigureA 5.9, a€?Targeting Strategies Used in Global Marketsa€?. To tap the Indian market, Kraft made a bid to buy the candymaker Cadbury, which controls about one-third of Indiaa€™s chocolate market. What you probably don’t appreciate, however, is the extent to which marketing focuses on providing value to the customer. It’s easy to see how the person who decides what movies to show is involved in marketing: he or she selects the product to be sold. As specialists in identifying and satisfying customer needs, members of the marketing department manage—plan, organize, direct, and control—the organization’s overall marketing efforts. What you’re looking for is the proper balance between the commitments to customer satisfaction and company survival. You need to identify a specific group of consumers who should be particularly interested in your product, who would have access to it, and who have the means to buy it. Age, for example, will be of interest to marketers who develop products for children, retailers who cater to teenagers, colleges that recruit students, and assisted-living facilities that promote services among the elderly.
Thus, Toyota engineers have developed a product especially for city dwellers (at least in Japan).
Credit-card companies use this approach when they offer promotional gifts to college students in order to induce them to get their first card.
However, because the countrya€™s population is so large (nearly 1.5 billion people), more cars are sold in China than in Europe (and in the United States, depending upon the month). People under thirty make up the majority of the Indian population, fueling the demand for a€?Bollywooda€? (Indian-made) films. However, after the marketplace became crowded with competitors, IBM sold the product line to a Chinese company called Lenovo.
For example, to overcome geographic barriers, the consumer products company Unilever hires women in third-world countries to distribute the companya€™s products to rural consumers who lack access to stores. Fertilizer made from worm excrement and sold in discarded plastic beverage bottles is just one of its products.
For example, the growing number of people too old to travel have the option of moving into one of Marriotta€™s a€?Senior Living Servicesa€? facilities, which cater to retirees who need certain types of care. If youa€™re a seller of a metal like iron ore, you might sell the same product across the entire world via a metals broker.
Mattel has created thousands of different Barbie offerings designed to appeal to all kinds of people in different countries. Companies tailor products not only for different countries but also for different customers in different countries.
Likewise, to compete against Corona beer, the Dutch brewer Heineken recently purchased Mexicoa€™s Femsa, which makes the beer brands Dos Equis, Tecate, and Sol.[105] However, some countries dona€™t allow foreign firms to buy domestic firms. A multisegment marketing strategy can allow a company to respond to demographic and other changes in markets, including economic downturns. According to the American Marketing Association, marketingSet of processes for creating, communicating, and delivering value to customers and for improving customer relationships. It’s even easier to see how the person who puts ads in the newspaper works in marketing: he or she is in charge of advertising—making people aware of the product and getting them to buy it.
Consider the case of Medtronic, a manufacturer of medical devices, such as pacemakers and defibrillators.
This group is your target marketSpecific group of customers who should be interested in your product, have access to it, and have the means to buy it., and you’ll aim your marketing efforts at its members. The wedding industry, which markets goods and services to singles who will probably get married in the near future, is interested in trends in marital status. The Japanese version of the Prius, Toyota’s hybrid gas-electric car, can automatically parallel park itself.


For each of these products, identify at least five segmentation characteristics that you’d use in developing a profile of your customers. It wouldna€™t be a good idea for TerraCycle to open up a polluting, coal-fired power plant, no matter how profitable the market for the service might be. If a competitor comes along and offers these groups a product (or products) that better meet their needs, you will lose business.
A multisegment strategy can also help you weather an economic downturn by allowing customers to trade up or down among your brands and products. Concentrated marketing can be a risky strategy because you really do have all of your eggs in one basket.
Microtargeting involves gathering all kinds of data available on peoplea€”everything from their tax and phone records to the catalogs they receive. The broker would worry about communicating with customers around the world and devising different marketing campaigns for each of them. For example, Procter & Gamblea€™s China division now offers products designed for different local market segments in that country. But what about the ticket seller and the person behind the counter who gets the popcorn and soda? The company boasts more than 50 percent of the market in cardiac devices and is considered the industry standard setter.
Gender and ethnic background are important to TV networks in targeting different audiences.
Because the Hummer can go off-road and performs well on rugged terrain, geography could also be a factor. Explain the segmentation category into which each characteristic falls—demographic, geographic, behavioral, or psychographic. Suppose you take a pay cut and cana€™t afford to stay at Marriotta€™s Ritz-Carlton hotels anymore.
Brazilians are extremely looks-conscious and increasingly able to afford cosmetic products as well as plastic surgery.[103] So attractive are these countries that firms are changing how they develop goods and services, too.
Other regulatory and cultural barriers sometimes prevent foreign firms from a€?invadinga€? a country.
Everyone in the organization understands that defects are intolerable in products that are designed to keep people alive. Income—a socioeconomic factor—is clearly important: Hummers are expensive to buy, maintain, and run. Boone Pickens, an oil tycoon who is attempting to develop and profit from the wind-power market.
A room at a JW Marriotta€”the most luxurious of the Marriott-brand hotels but cheaper than the Ritza€”is available to you.
Traditionally, many North American auto parts makers have supplied parts exclusively to auto manufacturers. For a fee, Acxiom can provide you with a list of Hispanic consumers who own two pets, have caller ID, drive a sedan, buy certain personal care products, subscribe to certain television cable channels, read specified magazines, and whose income and education are within a given range.[101] Clearly, microtargeting has ethical implications. IKEA, the Swedish home-furnishings maker, eventually left Russia because it found it too hard to do business there. Microtargeting, or narrowcasting, is a new, effort to a€?super targeta€? consumers by gathering all kinds of data available on peoplea€”everything from their tax and phone records to the catalogs they receive. Thus, committing employees to the goal of zero defects is vital to both Medtronic’s customer base and its bottom line.
If you’re selling yachts, you’ll want to find people with lots of money; so income is an important variable. If you prefer to sit on your couch and watch TV, you might show up on the radar screen of a TiVo provider.
As for psychographics, potential Hummer owners could be people who value prestige and the material rewards of success.
A multisegment strategy can also help you deal with the product life cycle issues discussed in ChapterA 2, Strategic Planning. But when General Motors, Ford, Chrysler, and other auto companies experienced a slump in sales following the recession that began in 2008, the auto parts makers found themselves in trouble.
Data privacy issues will be discussed more in ChapterA 14, Customer Satisfaction, Loyalty, and Empowerment. Firms that compete in the global marketplace can use any combination of these segmenting strategies or none at all. Absolutely: the purpose of every job in the theater is satisfying customer needs, and as we’ve seen, identifying and satisfying customer needs is what marketing is all about. If you’re the publisher of Nurses magazine, you want to reach people in the nursing profession.
Now, says Govindarahan, companies are creating low-cost products to capture large markets in developing countries and then selling them in developed countries. Having saturated other markets, the hamburger chain is hoping to continue to grow by opening hundreds of new stores in the country.
If you’re thrifty and uncomfortable with debt, Citibank might want to issue you a debit card. Acera€™s $250 laptop and General Electrica€™s ultrainexpensive $1,000 electrocardiogram device are examples. Firms are creating low-cost products to capture large markets in developing countries such as these and then selling the products in developed countries.
Other strategies for targeting markets abroad include acquiring foreign companies or forming partnerships with them.



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