16 Questions
What are the major steps in designing a customer-driven marketing strategy?
Market segmentation, targeting, differentiation, and positioning
What did Best Buy do to serve its 'Angel' customers?
Developed better service and stocked more items of interest to them
Why did Best Buy delete 'Demon' customers from marketing lists?
To reduce costs associated with serving 'Demon' customers
What prompted Best Buy to reexamine its segmentation strategy and positioning strategies?
Changes in consumer behavior
Which of the following is NOT a major base for segmenting consumer and business markets?
Product color options
How do firms identify attractive market segments and choose a market-targeting strategy?
By evaluating the size, growth, and profit potential of each segment
What is the process of dividing a market into smaller segments with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes?
Segmentation
Which of the following is NOT a key variable for market segmentation?
Economic
What does demographic segmentation primarily focus on?
Age, gender, family size
What type of segmentation involves dividing a market into different groups based on social class, lifestyle, or personality characteristics?
Psychographic segmentation
Which variable is used to identify and target the affluent for luxury goods?
Income
What does behavioral segmentation primarily focus on?
Occasions and benefits sought
Which type of segmentation addresses the fact that consumer needs and wants change with age?
Demographic segmentation
What process involves avoiding stereotypes in promotions based on age and promoting positive messages when marketing to mature consumers?
Positioning
What variable can offer new opportunities when neglected gender segments are targeted?
Gender
What is the first step in designing a customer-driven marketing strategy?
Segmentation
Study Notes
- Customer-driven marketing strategy involves major steps: market segmentation, targeting, differentiation, and positioning.
- Market segmentation: dividing a market into smaller groups with distinct needs or characteristics, often using variables such as geographic, demographic, psychographic, and behavioral.
- Geographic segmentation: dividing a market by nations, regions, states, counties, cities, and neighborhoods.
- Demographic segmentation: dividing a market based on demographics like age, gender, family size, income, occupation, education, race, religion, generation, and nationality. Age and life-cycle stage address the changing needs of consumers with age.
- Psychographic segmentation: dividing a market based on social class, lifestyle, or personality characteristics. Behavioral segmentation: dividing buyers into groups based on consumer knowledge, attitudes, uses, or responses to a product.
- Firms use segmentation to identify attractive market segments and choose a market-targeting strategy. Companies differentiate and position their products for maximum competitive advantage.
- Best Buy adopted a customer-centric strategy, segmenting customers into "Angels" and "Demon" shoppers, and focusing on Angels' shopping preferences and needs.
- Angels accounted for 20% of customers and generated bulk of profits, while Demons were extreme bargain hunters. Best Buy deleted Demons from marketing lists, reduced promotions that attracted them, and established a loyalty program for Angels.
- Targeting strategies include undifferentiated, differentiated, concentrated, and selective targeting. Firms should consider market size, market growth, competition, and firm strategy when choosing a targeting strategy.
Test your understanding of designing a customer-driven marketing strategy, market segmentation, targeting, differentiation, and positioning. This quiz covers the major bases for segmenting consumer and business markets and how firms identify attractive market segments and choose a market-targeting strategy.
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