Discussion Question chapter 3

Purpose and Benefits of Segmentation

In order to understand the purpose and benefits of segmentation, it’s helpful to step back momentarily and look at markets as a whole and how segments help us understand a market. A market is a group of potential buyers with needs and wants, as well as the purchasing power to satisfy those needs and wants. These buyers might be individuals, groups, businesses, or organizations. The “total market” constitutes all the potential customers for a given product. Potential customers share a common problem or business need that your product can address, and they share other characteristics as well.

In order for a market to exist, the following five criteria must be met:

1. There must be a true need and/or want for the product, service, or idea; this need may be recognized, unrecognized, or latent.


2. The person/organization must have the ability to pay for the product via means acceptable to the marketer.


3. The person/organization must be willing to buy the product.


4. The person/organization must have the authority to buy the product.


5. The total number of people/organizations meeting the previous criteria must be large enough to be profitable for the marketer.

If these criteria aren’t met, there probably isn’t a viable market for your product(s).

Think about this... What are some things that a person/organization can do to prevent this from happening?

2-3 paragraph response for the post.

CHAPTER 3: SEGMENTATION AND TARGETING WHY IT MATTERS: SEGMENTATION AND TARGETING Why learn about segmentation and targeting? Suppose you have just accepted a product marketing job with a technology company called Chumber. You’re excited about the company and the team you’ll be working with. Chumber’s main product is an automated, fully online system for checking the references of job candidates and getting feedback from coworkers about their professional skills. After a morning orientation session and a product demonstration on the first day, your boss gives you your first assignment: spend a half day doing research. Then come back to her with recommendations about whom Chumber should be targeting in its sales and marketing activities, and why. After you give your boss a puzzled look, she adds, “Don’t look so worried. I already know who I think we should be targeting. But with you coming in fresh, I’d like to hear what you think. We can probably learn something from each other!” As you sit down at your new desk, the wheels start turning in your head. Q: What problem is Chumber’s product solving? A: The hassle of checking references for job candidates and finding out who is really a good fit. Q: Who has this problem? A: Companies that hire people. You recognize that this is a business-to-business marketing challenge, not a business-to-consumer issue. But “companies that hire people” covers a lot of ground. How effective will Chumber be if you try marketing and selling to every company in the world? And within any given company, which people would be most interested in using this product? The question of whom to target is a foundational part of any marketing activity. Marketers use the tools of segmentation and targeting to answer this question. Segmentation helps you understand your market and divide it into groups that share common needs and characteristics. Targeting helps you figure out which of these groups to focus on in your sales and marketing activities. As you work through this module, you will learn about segmentation, targeting, and how they work. You will also learn how these tools help you shape the marketing mix to reach your target audiences effectively. Licensing & Attributions CC licensed content, Original · Why It Matters: Segmentation and Targeting. Provided by: Lumen Learning. License: CC BY: Attribution INTRODUCTION TO THE PURPOSE OF SEGMENTATION AND TARGETING What you’ll learn to do: explain the purpose of segmentation and targeting in marketing Segmentation and targeting are essential building blocks of marketing because they help marketers answer a basic question: Who am I trying to reach? If you can’t answer this question with a reasonable amount of certainty and detail, your marketing efforts will probably not have much impact. You’ll spend a lot of time and money with little to show for it because you’re not choosing marketing tactics that fit your audience. However, when you know your target audience, you can make smart decisions about your marketing activities: why they need your product, where and how to get their attention, what to say to generate interest, and what types of offers will attract them. In this module, first we will focus on why segmentation and targeting are so important. Then we will discuss how to conduct segmentation and targeting and use these tools to guide marketing activity.Licensing & Attributions CC licensed content, Original · Outcome: Segmentation and Targeting Rationale. Provided by: Lumen Learning. License: CC BY: Attribution THE PURPOSE OF MARKET SEGMENTATION AND TARGETING Learning Objectives · Explain the purpose of segmentation and targeting in marketing What Is Market Segmentation All About? Segmentation helps marketers answer the following set of fundamental questions: 1. To whom should I be marketing? 2. Why them? 3. How can I reach them most effectively? Because marketers have finite resources, they have to make decisions about how and where to focus their efforts. Market segmentation provides useful information about prospective customers to guide these decisions and to ensure that marketing activities are more buyer focused. Market segmentation is the process of splitting buyers into distinct, measurable groups that share similar wants and needs. Once different segments are identified, marketers determine which target segments to focus on to support corporate strategy and growth. For example, suppose your company produces high- performance athletic clothing. The market segmentation first identifies everyone with an interest in and need for this type of clothing. Then it identifies groups within the market that share common needs. These could include groups associated with different sports, levels of athletic activity, brand loyalty, fashion consciousness, price sensitivity, etc. As a marketer, you analyze the groups to determine which ones you want to focus on and why. Defining a Market In order to understand the purpose and benefits of segmentation, it’s helpful to step back momentarily and look at markets as a whole and how segments help us understand a market. A market is a group of potential buyers with needs and wants, as well as the purchasing power to satisfy those needs and wants. These buyers might be individuals, groups, businesses, or organizations. The “total market” constitutes all the potential customers for a given product. Potential customers share a common problem or business need that your product can address, and they share other characteristics as well. In order for a market to exist, the following five criteria must be met: 1. There must be a true need and/or want for the product, service, or idea; this need may be recognized, unrecognized, or latent. 2. The person/organization must have the ability to pay for the product via means acceptable to the marketer. 3. The person/organization must be willing to buy the product. 4. The person/organization must have the authority to buy the product. 5. The total number of people/organizations meeting the previous criteria must be large enough to be profitable for the marketer. If these criteria aren’t met, there probably isn’t a viable market for your product(s). Segments within a Market Markets are generally large entities that require significant investment to serve effectively. In fact, markets may be so large that it isn’t feasible for a marketing organization to market their products effectively to all potential customers at the same time. A product provider might ask, “Given that my product will not be needed or wanted by all people in the market, and given that my organization has certain strengths and weaknesses, which target group(s) should I focus on?” The answer to this question comes through market segmentation. Segmentation is a twofold process that includes: 1. Identifying and classifying people into homogeneous groupings, called segments 2. Determining which of these segments are viable target markets. In essence, the marketing objectives of segmentation are: · To improve an organization’s understanding of who their prospective customers are and how to serve them · To reduce risk in deciding where, when, how, and to whom a product, service, or brand will be marketed · To increase marketing efficiency by directing effort toward designated segment(s) in ways that are consistent with that segment’s characteristics While, in theory, there may be “ideal” market segments for any given product, in reality, every organization engaged in a market will develop different ways of imagining market segments and create product differentiation strategies to exploit those segments. With a refined understanding of market segments, companies can differentiate their products to fit the needs of a particular segment. They can also use segmentation analysis to identify and create competitive advantages with their target audiences. A deeper understanding of their target audiences can guide marketers’ choices in how they develop and promote products, how their products are delivered and priced, and so forth. Focusing on the Target Market It is rare that any single product will be an ideal fit for every member of an entire market. For example, no single shampoo is perfect for everyone on the planet. No single printer or cleaning service is ideal for every organization in the world. Buyers have different sets of needs. Segmentation acknowledges that different people and groups have different needs. Successful marketers use segmentation to figure out which groups (or segments) within the market are the best fit for the products they offer. These groups constitute their target market. The target market should include only those segments of a market that are both profitable to serve and likely to be receptive to the products a company provides. Time, money, and effort spent on marketing will be most effective when it focuses on these target audiences. When organizations don’t identify a target market, they dilute the impact of their marketing resources because they are spending money and effort trying to attract people who are unlikely ever to become profitable customers. Check Your Understanding Answer the question(s) below to see how well you understand the topics covered in this outcome. This short quiz does not count toward your grade in the class, and you can retake it an unlimited number of times. Use this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section. Visit this page in your course online to check your understanding.Licensing & Attributions CC licensed content, Original · What Is Market Segmentation All About?, Focusing on the Target Market. Authored by: Lumen Learning. License: CC BY: Attribution · Revision and adaptation. Authored by: Lumen Learning. License: CC BY: Attribution · Sample Market Segmentation (Chart). Authored by: Lumen Learning. License: CC BY: Attribution CC licensed content, Shared previously · Introducing Marketing, Chapter 2: Understanding and Approaching the Market. Authored by: John Burnett. Provided by: Global Text. Located at: http://solr.bccampus.ca:8001/bcc/file/ ddbe3343-9796-4801-a0cb-7af7b02e3191/1/Core%20Concepts%20of%20Marketing.pdf. License: CC BY: Attribution · The Importance of Market Segmentation. Provided by: Boundless. Located at: https://www.boundless.com/marketing/textbooks/alternative-to-marketing-2014-17th-william-m-pride-ferrell-1133939252-9781133939252/ consumer-marketing-segmentation-targeting-and-positioning-6/market-segmentation-targeting-and-positioning-47/the-importance-of-market-segmentation-211-4063/. License: CC BY-SA: Attribution-ShareAlike · 2014 US Open (Tennis) - Tournament - Dustin Brown. Authored by: Steven Pisano. Located at: https://www.flickr.com/photos/stevenpisano/15140591721/. License: CC BY: Attribution INTRODUCTION TO COMMON SEGMENTATION APPROACHES What you’ll learn to do: describe common segmentation approaches The next section of this module walks through several common approaches to market segmentation. Some approaches will probably seem familiar, or even obvious—like segmenting by gender or income level—but others, like “psychographic” segmentation, may not. These methods are common because they provide useful guidance to marketers about how to identify and reach prospective buyers. It’s important to remember that there may be more than one “right” way to segment a market. Certainly there are more-effective and less-effective approaches for different products or services. Sometimes a segmentation strategy is effective for a while, but then something shifts and a new approach is needed. In that way, segmentation is like a compass for marketers: when your position or direction changes, you revisit market segmentation to fine-tune where you’re heading and how to get there. Different segmentation approaches applied individually or together help refine a marketer’s understanding of the target market.Licensing & Attributions CC licensed content, Original ·