• larger groupings of potential customers to smaller groupings of potential customers
• more heterogenous to more homogenous potential customers
• huge masses of customers that are less alike to smaller groupings that are more alike

Why should firms engage in Market segmentation?

What's a Market

• Geography -nations,states cites...
• Demographics - age, gender,family size, occupation,religion, race (this base is used a lot because of its "ease of measure"
• Psychographics- dividing buyers into diff groups based on social class, life style (Activies, Interest, Opinions), or personality characteristics
• Behavioral Segmentation-dividing buyes based on their level of knowlege about products, their attitudes toward products, their usage rates with respect to certain product

• M easurable (size, purchasing power & customer profiles associated with the market segment must be measurable)
• A ccessible (segments must exist within the effective and efficient reach of firms and their marketing mix efforts)
• S ubstantial (Large and profitable enough)
• D ifferentiable (does the segment respond in and identifiably diff way than other segments to my firms mktg mix efforts?)
• A ctionable (firm must design effective marketing mix programs that are designed for and attractive to members of the segment)

• Current Size & future growth prospects
• Structural Attractiveness ( in relation to the existence of - powerful competitors, potential substitue prod., powerful suppliers/ vendors)
• Degress to which firms objectives and resoures available line up with the requirement to pursue this segment

• Targeting very broadly - no segments (called undifferentiated (or mass) mktg
• Target narrowly - One segment (concentrated/niche mktg approach)
• Targeting extremely narrowly (is called Micro-marketing)eg Loch-heed Martin which produces missles for US army
• Differentiated Targeting approach - multiple segments

• Use the concentrated/niche mktg approach when resources are limited
• when variablitiy among competitiors products is low (such as steel) them employ the undifferentiated mktg approach. brand new products should also use this approach
• mature products should puruse the differentiated target approach

• Customer intimacy - which is relationship based
• Product Leadership - which technologically based
• Cost Leadership- which is resource advantage based

1. through the outright acquisition- buy an entire company, or rights to a patent, or license
2. through new product development- dev. of original products, prod improvements, modifications

1. "Creativity"- creativity entails seeing or experiencing that same things as everybody else and thinking about something new that has value
2. Planning
3. Execution

Determinant

• Relative advantage over existing products
• complexity (the ease with which products can be used)
• Compatibilty (with the existing ways users do things, with their attitudes, beliefs, likes etc)
• the amount of Value the new prod provides as compared to other alternative solutions
• divisbility- the ease with which a new prod may be tried out on a limited basis

• The concept test- to determine whether the intended user is likely to either need or want the product
• the Product Use test- to determine whether the product developed actually satisfies that need or want
• The Market test - to det whether our firm has in place an effective mktg plan that will function to commercialize new prod successfully

refers to an overall process whereby an invention is transformed into a commercialized product that be sold profitably.

*there are more inventions than innovations

• stage 1 : begins with New Product Strategy- ID'ing mktg and mtkging opportunites
• stage 2 involves Concept Generation
• stage 3 involves Concept/Idea/Project Evaluation
• stage 4 involves Development
• Stage 5 Launch (or commercialization)

• Introduction stage - goal should be to develop awarness. (few competitors, high prices)
• growth stage - more competition, more product varities, struggle to gain/maintain market share, promotion of differentiation
• Maturity - Much competition, maintain brand loyalty, defend price, defend share
• Decline- VCR's, milkmen, handwritten letters

• the "core benefit"- what the customer is really buying
• The "Actual Product"- features, design, quality, brand, packaging
• The "Augumented product"- any additional serives attached to or associated with the actual product

How do brands help sellers?

• Send messages
• Tell stories
• Make promises
• exist as living entities with which customers cn have relationships
• exist in the minds of customers
• Brand loyalty

Defined and measured as the extent to which customers are willing to pay more for this particular branded product as opposed to another branded product from the same category- based on the power of the brand that has been built for and is associated with the product