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29
races, tourers, commuters, and children. Because there are so many dif-
ferent kinds of riders, Raleigh builds many different kinds of bicycles.
Many other firms also use a multi-segment approach to market segmen-
tation.
For a firm to successfully use the concentration or multi-segment
approach to market segmentation, several requirements must be met:
1. Consumers’ needs for the product must be heterogeneous.
2. The segments must be identifiable and divisible.
3. The total market must be divided in a way that allows estimated
sales potential, costs, and profits of the segments to be compared.
4. At least one segment must have enough profit potential to jus-
tify developing and maintaining a special marketing strategy.
5. The firm must be able to reach the chosen market segment
with a particular market strategy.
Some segments may be difficult, if not impossible, to reach. For
example, it might be difficult to reach a market segment of 30 – to 40-
year-old males who are introverted and drive subcompact cars. No sta-
tistics are available on the market, and thus there is no way to reach it
Bases for Segmenting Markets. Businesses segment markets on
the basis of several variables:
1. Demographics – includes age, sex, race, ethnicity, income,
education, occupation, family size, family life cycle, religion, and social
class. These readily measured characteristics are often closely related to
customers’ product needs and purchasing behavior. For example, de-
odorants are often segmented by sex: Secret and Soft n’Dry for women;
Old Spice and Mennen for men.
2. Geographic factors – climate, terrain, natural resources, popu-
lation density, and subcultural values influence consumers’ needs and
product usage. Climate, for example, influences purchases of automo-
biles, heating and air conditioning equipment, and leisure activity
equipment.
3. Psychographics – personality characteristics, motives and life-
styles. Soft-drink marketers provide their products in several packages,
including two-liter bottles and case of cans, to satisfy different life-
styles and motives.
30
4. Behavioristic characteristics – how the consumer’s behavior
toward the product affects its use. For example, airline like Delta offer
frequent-flyer programs that reward customers who regularly fly on
their airlines with free trips and discounts on rental cars and lodging.
Developing a Marketing Mix
The second step in developing a marketing strategy is to create
and maintain a satisfying marketing mix. The marketing mix involves
four variables – product, promotion, price, and distribution – that the
marketer can manipulate to achieve specific goals within a dynamic
marketing environment. The buyer or the market is the central focus of
all marketing activities.
Product. A product – whether a good, a service, an idea, or some
combination – is a complex mix of tangible and intangible attributes
that provide satisfaction and benefits. A product has emotional and psy-
chological as well as physical characteristics and includes everything
that the buyer receives from an exchange. This definition includes sup-
porting services such as installation, guarantees, product information,
and promises of repair.
Products usually have both favorable and unfavorable attributes;
therefore, almost every purchase or exchange involves trade-offs as
consumers try to maximize their benefits and satisfaction and minimize
unfavorable attributes. A person concerned with quality and style may
decide a Mercedes Benz is the best car to buy. High standards of quality
and European styling are the positive attributes maximized. The cost of
repair and the limited supply of qualified mechanics may be unfavor-
able attributes. In view of the high quality of Mercedes, the consumer
may feel that the negative concerns are minimal and thus trade the
negative aspects of hard-to-find service for quality and style.
Price. Price represents the value placed on an object in an ex-
change. Almost anything of value can be assessed by a price. Because
financial price is the measure of value commonly used in an exchange,
it quantifies value and is the basis of most market exchanges.
Marketers view price as much more than a way of assessing value,
however. Price is a key element of the marketing mix because it relates
directly to the generation of revenue and is important in determining
profits. Additionally, the economic role of price is to allocate products
to market opportunities caused by increases or decreases in demand.
races, tourers, commuters, and children. Because there are so many dif- 4. Behavioristic characteristics – how the consumer’s behavior ferent kinds of riders, Raleigh builds many different kinds of bicycles. toward the product affects its use. For example, airline like Delta offer Many other firms also use a multi-segment approach to market segmen- frequent-flyer programs that reward customers who regularly fly on tation. their airlines with free trips and discounts on rental cars and lodging. For a firm to successfully use the concentration or multi-segment approach to market segmentation, several requirements must be met: Developing a Marketing Mix 1. Consumers’ needs for the product must be heterogeneous. The second step in developing a marketing strategy is to create 2. The segments must be identifiable and divisible. and maintain a satisfying marketing mix. The marketing mix involves 3. The total market must be divided in a way that allows estimated four variables – product, promotion, price, and distribution – that the sales potential, costs, and profits of the segments to be compared. marketer can manipulate to achieve specific goals within a dynamic 4. At least one segment must have enough profit potential to jus- marketing environment. The buyer or the market is the central focus of tify developing and maintaining a special marketing strategy. all marketing activities. 5. The firm must be able to reach the chosen market segment Product. A product – whether a good, a service, an idea, or some with a particular market strategy. combination – is a complex mix of tangible and intangible attributes Some segments may be difficult, if not impossible, to reach. For that provide satisfaction and benefits. A product has emotional and psy- example, it might be difficult to reach a market segment of 30 – to 40- chological as well as physical characteristics and includes everything year-old males who are introverted and drive subcompact cars. No sta- that the buyer receives from an exchange. This definition includes sup- tistics are available on the market, and thus there is no way to reach it porting services such as installation, guarantees, product information, and promises of repair. Bases for Segmenting Markets. Businesses segment markets on Products usually have both favorable and unfavorable attributes; the basis of several variables: therefore, almost every purchase or exchange involves trade-offs as 1. Demographics – includes age, sex, race, ethnicity, income, consumers try to maximize their benefits and satisfaction and minimize education, occupation, family size, family life cycle, religion, and social unfavorable attributes. A person concerned with quality and style may class. These readily measured characteristics are often closely related to decide a Mercedes Benz is the best car to buy. High standards of quality customers’ product needs and purchasing behavior. For example, de- and European styling are the positive attributes maximized. The cost of odorants are often segmented by sex: Secret and Soft n’Dry for women; repair and the limited supply of qualified mechanics may be unfavor- Old Spice and Mennen for men. able attributes. In view of the high quality of Mercedes, the consumer 2. Geographic factors – climate, terrain, natural resources, popu- may feel that the negative concerns are minimal and thus trade the lation density, and subcultural values influence consumers’ needs and negative aspects of hard-to-find service for quality and style. product usage. Climate, for example, influences purchases of automo- Price. Price represents the value placed on an object in an ex- biles, heating and air conditioning equipment, and leisure activity change. Almost anything of value can be assessed by a price. Because equipment. financial price is the measure of value commonly used in an exchange, 3. Psychographics – personality characteristics, motives and life- it quantifies value and is the basis of most market exchanges. styles. Soft-drink marketers provide their products in several packages, Marketers view price as much more than a way of assessing value, including two-liter bottles and case of cans, to satisfy different life- however. Price is a key element of the marketing mix because it relates styles and motives. directly to the generation of revenue and is important in determining profits. Additionally, the economic role of price is to allocate products to market opportunities caused by increases or decreases in demand. 29 30
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