Try to facilitate exchange using 4P's

Smaller the market the more precisely marketers can meet needs w/4P's

Larger the market the more economical use of resources and more profit potential

Whose needs (group of consumers) do marketers try to meet? Marketers try to determine what size group is appropriate, but a large group-a variety of people, maybe not meet anyone's needs exactly.

market of potential consumers, separate into groups w/common needs in a particular area, who will respond similarly to the marketing mix.

ie. Super Bowl party, people gather in clicks, groups form one side for Giant fans (target), other side Patriot fans (target). Position product to both target groups. 

1. Provide potential for increased profits-be large enough to make it worthwhile to separate out due to increased profit potential for company

99.9% of teenagers have a lot of discretionary income and spend it all.

2. Similar needs within segment

3. Difference of needs between segments respond to the marketing mix differently than other segments (music)

4. Be reachable w/marketing mix-can we get our promotion, product to the target segment (Amish).

5. Simplicity and cost effectiveness of assigning people to segments (1. be describable/identifiable-key identifying characteristics of people in the segment, who are they, where are they, how many?) (2. be able to cost effectively assign to segments, ie. wiggles age group 1-5)

Benefit-devide population based on benefits sought (toothpaste: white teeth, fresh breath, few cavitites)

Ice cream: exotic taste Ben/Jerry's, super premium at lower price Breyers, good quality/value store brand.

Always segmenting based on common benefits sought-we look for variables which may be correlated w/similar benefits sought.

Geographic-by region-people in a region may have similar benefits sought (grits is a regional product)

Demographics-age, income, sex, occupation. Males watch wrestling, women soap operas, Mercedes high income.

Lifestyle-Sanka Coffee-active lifestyles, Reebok originally targeted women who work, but must do research to determine these.

Usage-Blue collar males drink most of beer

20/80 rule-20% of customers consume 80% of products (profitable for 20% if everyone else is targeting 80%.

May have to choose between segments by:

Size and growth potential for segment

Competition for segment

Fit of product and market w/our current line of products

Relative responsiveness of segment to marketing mix variables (cose vs. response)

ie. On-line education, large growth potential, competition is that everyone can get in, fit traditionally U of I on-ground school.

The place a product occupies in a consumer's mind, relative to competing products

ie. Avis "tries harder", Japaneese cares are higher quality, a radio station is "easy listening"

Find out where we are, relative to competition (perceptual map), Determine where we want to be (how we can gain a sustainable differential advantage, Use 4P's to move to that position.

ie. axis (price verticle/quality horizontal). move from low quality over to the right for low price/high quality.

How to get there

offer longest warranty in the business-better quality.

Marketers divide consumers into potential target markets (segments) w/similar needs.

Marketers pick the best segment to target

Marketers position their product to fit the needs of the segment.