Key Marketing Concepts: Segmentation, Targeting & Customer Value

Posted on Apr 4, 2025 in Marketing

Understanding Demarketing

According to Kotler and Armstrong, demarketing is marketing aimed at reducing demand temporarily or permanently. Its goal is not to eliminate demand entirely, but rather to reduce or shift it.

For example: To reduce demand for space on congested tracks in Washington D.C., the city’s municipal authorities set up a web page encouraging regular users to share vehicles or use public transport.

Corporate Purchasing Insights

Kotler and Armstrong identify several types of corporate purchasing situations:

  • Modified Rebuy
  • New Task Buy
  • Straight Rebuy

A straight rebuy is a business buying situation where the buyer routinely reorders something without any modifications, based on past purchases.

Market Targeting Strategies

For defining a target market and evaluating segment attractiveness, Kotler and Armstrong discuss several strategies:

  • Undifferentiated (Mass) Marketing: A market-coverage strategy where a company decides to ignore market segment differences and targets the whole market with one offer.
  • Differentiated (Segmented) Marketing: A market-coverage strategy where a company decides to target several market segments and designs separate offers for each.
  • Concentrated (Niche) Marketing: A market-coverage strategy where a company goes after a large share of one or a few segments or niches.
  • Micromarketing: The practice of tailoring products and marketing programs to suit the tastes of specific individuals and local customer segments.

Strategic Marketing Planning Stages

The stages of strategic marketing planning for a company include:

  1. Defining the company mission
  2. Setting company objectives and goals
  3. Designing the business portfolio
  4. Planning marketing and other functional strategies

Bases for Market Segmentation

Common segmentation variables include:

  • Geographic
  • Demographic
  • Psychographic
  • Behavioral

Key Marketing Definitions

Customer Lifetime Value

Losing a customer means losing the entire stream of purchases that customer would make over a lifetime of patronage. This concept corresponds to customer lifetime value.

Product/Market Expansion Grid

This is a portfolio-planning tool for identifying company growth opportunities through:

  • Market Penetration
  • Market Development
  • Product Development
  • Diversification

Market Segmentation

Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs. This concept corresponds to market segmentation.

Complex Buying Behavior

This occurs when a buyer exhibits high involvement in a purchase and perceives significant differences among brands.

Characteristics of Corporate Purchasing

Key characteristics include:

  • The market structure and demand
  • The nature of the buying unit
  • The types of decisions and the decision process involved

Cognitive Dissonance

Buyer discomfort caused by post-purchase conflict. This concept corresponds to cognitive dissonance.

Customer Equity

The total combined customer lifetime values of all of the company’s current and potential customers.

Segmentation, Targeting, and Positioning (STP)

The three stages are market segmentation, target selection, and positioning. Activities involved in market segmentation include:

  • Identifying bases (variables) for segmenting the market
  • Developing profiles of resulting segments

Requirements for Effective Segmentation

To be useful, market segments must be:

  • Measurable: The size, purchasing power, and profiles can be measured.
  • Accessible: The segments can be effectively reached and served.
  • Substantial: The segments are large or profitable enough to serve.
  • Differentiable: The segments are conceptually distinguishable and respond differently.
  • Actionable: Effective programs can be designed for attracting and serving the segments.

Marketing Concept Statements (True/False Markers)

(Note: The following reflects markers from the original document, not necessarily verified facts.)

Marked as True (V):

  • V: A “star” product is one that has had enough market share.
  • V: For marketing activities.
  • V: Mission is a formal statement of purpose.
  • V: On the basis of market economy.
  • V: Create, benefit, product or service that represents.
  • V: Marketing is the social process, aimed at satisfying.

Marked as False (F):

  • F: Marketing management is the social process and management.
  • F: One of the best ways to increase “customer share”.
  • F: Matrix of growth of market share.
  • F: Portfolio business is all business.
  • F: Marketing a mixture of art and science of selecting.
  • F: The risk of handling marketing.
  • F: The evolution of marketing through history.
  • F: The marketing has three popular acceptances.
  • F: The essential role of marketing in the economy.
  • F: Are essential functions of operational marketing.