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| Market segmentation is the process of identifying groups of people with certain shared characteristics within a broad product market and aggregating these groups into larger market segments according to their mutual interest in the product's utility. From these segments, companies can then select a target market. Marketers use a number of methods to identify behavioral groups and segment markets. The most common are behavioristic, geographic, demographic, and psychographic. Business markets are often segmented in the same way as consumer markets. They may also be grouped by business purchasing procedures, NAICS code, or market concentration. In the target marketing process, companies designate specific segments to target and develop their mix of marketing activities. The product concept is the consumer's perception of the product as a bundle of utilitarian and symbolic need-satisfying values. Every company can add, subtract, or modify four major elements in its marketing program to achieve a desired marketing mix. These elements are product, price, distribution (place), and communications (promotion)—the 4Ps. The product element includes the way the product is designed and classified, positioned, branded, and packaged. Just as humans pass through a life cycle, so do products—and product categories. The stage of a product's life cycle may determine how it is advertised. To satisfy the variety of consumer tastes and achieve competitive advantages, marketers build differences into their products. Even the product's package is part of the product concept. The concept may also be developed through unique positioning against competing products. Price refers to what and how a customer pays for a product. Companies use many common pricing strategies. Some products compete on the basis of price, but many do not. Distribution refers to how the product is placed at the disposal of the customer: where the product is distributed, how it is bought, and how it is sold. Companies may use direct or indirect methods of distribution. Consumer goods manufacturers use several types of distribution strategies. Communications refers to all marketing-related communications between the seller and the buyer. Tools of the communications element include personal selling, advertising, direct marketing, public relations activities, collateral materials, and sales promotion. Marketers try to integrate all their marketing communications programs for greater effectiveness and consistency. |