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Bronis Verhage
ISBN: 9789001818661
http://www.marketingfundamentals.noordhoff.nl
© 2017 Noordhoff Uitgevers bv
GLOSSARY
Chapter 6 Market segmentation and positioning
Market From a marketing perspective: customers - groups of people or organizations
with similar needs and wants that firms can satisfy with their products or services.
Market arena A market, broadly defined, in which companies compete – regardless of
the industry in which they operate – that satisfy the same need or whose products
fulfill the same function.
Generic need satisfaction The notion that a company’s market and competition
should be defined by overall customer experience instead of specific products or
services; thus, a movie theatre competes with night clubs, restaurants and other
establishments with a similar recreational function.
Potential market Estimate of a product’s maximum possible sales in the entire
market if all suppliers would have an optimal marketing strategy; in other words, the
effective demand plus the potential demand (Market potential).
Effective demand Total number of products currently sold or – in the case of durable
goods – purchased by customers in the past.
Potential demand The number of products over and above current sales that
suppliers could sell between them, assuming they have an optimal marketing mix.
Repeat purchase Subsequent purchase of a product after a buyer’s first purchase,
indicating that he is becoming brand loyal.
Durable consumer goods Products (such as bikes) that consumers use for a relatively
long period of time.
Initial demand Demand from first-time buyers who never purchased the product
before.
Replacement demand Demand from those who already own the product, but
purchase a new one to replace it.
Additional demand Demand from customers who already own the product and buy
another one to use it in addition to the existing product.
Ma rk eti n g Fu n da m e n tal s, An In t e rn ati o n al P e r sp e ctiv e
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Bronis Verhage
http://www.marketingfundamentals.noordhoff.nl
ISBN: 9789001818661
© 2017 Noordhoff Uitgevers bv
Extended demand The sum total of the initial demand plus the additional demand for
a particular product during a period of time.
Total demand The sum total of the extended demand plus the replacement demand.
Product differentiation In the context of a product range: Offering several products
that differ in style, quality, price or another product attribute, primarily to attract
buyers who are looking for variation (Differentiation).
Market segmentation Dividing the total heterogeneous market for a product – based
on demographic, geographic, psychographic or behavioural criteria – into smaller,
homogeneous market segments of buyers who have similar needs and wants or
respond in a same way to a distinct marketing strategy (Segmentation)
Safety stock Extra inventory that a company keeps on hand as a safety cushion in case
the demand for a product exceeds the sales forecast.
Cannibalization The loss of sales by a company in its established product after
launching a new, usually lower priced, version of the product that – since buyers
perceive it as a substitute – steals some of the sales of the original item.
Segmentation conditions Requirements for effective market segmentation, such as
the measurability, size and accessibility of the segments, and the feasibility of the
strategy.
Segmentation criteria Consumer characteristics – such as demographic, geographic,
psychographic or behavioural variables – that can be used to subdivide the aggregate
market into more homogeneous subsets of buyers or market segments,.
Demographic market segmentation Dividing the total market into subgroups based
on demographic consumer data such as income, social class, age, stage in the family
life cycle, gender, ethnic background, and education.
Heavy user A consumer who uses a considerably larger amount of a particular
product than the average level of consumption of all buyers of this product.
Ethnic pattern Attitudinal and behavioural characteristics of members of an ethnic
group – that is a minority in a larger society – having racial, religious, linguistic, cultural
or other traits in common.
Ma rk eti n g Fu n da m e n tal s, An In t e rn ati o n al P e r sp e ctiv e
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Bronis Verhage
http://www.marketingfundamentals.noordhoff.nl
ISBN: 9789001818661
© 2017 Noordhoff Uitgevers bv
Geodemographic segmentation Segmentation of consumers based on a combination
of geographic and demographic data by clustering potential customers in
neighborhoods or zip code areas based on consumer behaviour and lifestyle data.
Geographic segmentation Segmenting business and consumer markets based on
geographic criteria, such as nations, provinces, cities, neighbourhoods, market size,
population density, or climate in order to better tailor the marketing strategy to the
preferences in various regions.
Psychographic market segmentation Dividing markets into segments based on
consumers’ lifestyle, attitudes, interests and personality characteristics.
Personality characteristics Someone’s tendency to respond in a consistent and
characteristic (e.g. ambitious or aggressive) way to stimuli from his environment as a
way of coping with perceived reality.
Lifestyle segmentation Market segmentation based on how groups of people – given
their underlying values, attitudes, opinions and behaviour patterns – conduct their
lives.
Benefit segmentation A form of psychographic segmentation in which markets are
defined in terms of the benefits that people seek from the product, and then
segmented based on consumer preferences for specific product characteristics
(Benefits-sought segmentation).
Behavioural segmentation Subdividing the aggregate market into segments based on
people’s product usage rate, degree of brand loyalty, and willingness to buy.
Light user Consumer who uses significantly less of a particular product in a certain
time period than the average level of consumption of all buyers of that product.
Brand loyalty The degree to which a customer will keep buying the same brand,
regardless of modifications in the marketing mix or the alternatives offered by rivals.
Marketing proposition A carefully tailored marketing mix to target a specific market
segment upon market entry
Homogeneous products Products that buyers view as identical, such as milk, sugar,
bananas and metals, making price their primary choice criterion.
Ma rk eti n g Fu n da m e n tal s, An In t e rn ati o n al P e r sp e ctiv e
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Bronis Verhage
http://www.marketingfundamentals.noordhoff.nl
ISBN: 9789001818661
© 2017 Noordhoff Uitgevers bv
Heterogeneous products Products such as clothing and cars that buyers perceive as
being different from one another.
Undifferentiated marketing Targeting strategy used when a company goes after the
whole market with the same product and a marketing strategy with mass appeal,
hoping to achieve economies of scale and keep costs at a minimum.
Concentrated marketing Targeting strategy in which a firm – with the same marketing
mix – focuses on only one or a few markets, hoping to gain a large share of these
segments.
Niche strategy A company that – as a ‘nicher’ – concentrates on only one market
segment that is of minor interest to major rivals, hoping to avoid a competitive fight.
Market leader A company holding the largest share of a certain market segment,
thanks to economies of scale in production, promotion, and distribution.
Differentiated marketing Targeting strategy in which a company tries to reach the
entire market (or the greatest possible part of it) by developing a unique, tailored
marketing mix for each of the segments it operates in.
Target market selection Choosing the segment(s) of buyers that the company defines
as its market, and for which it develops specific marketing activities.
Positioning Creating a clear, powerful and consistent image for the company’s
products – relative to those of competitors – that should occupy a prominent position
in the customer’s mind.
Perceptual map A graph showing how (potential) customers perceive competing
brands in a product category along two or more dimensions (e.g. cheap/inexpensive
and progressive/conservative), usually important product attributes (Product
positioning map).
Instrumental product characteristics Product features (such as the design or
technology used) that – since they satisfy the buyer’s functional needs – are sometimes
used in the positioning strategy.
Expressive product characteristics Symbolic product features – such as the emotional
meaning of a brand – that meet the buyer’s need to express his lifestyle (e.g. status) or
personality (e.g. ambition), often used as a positioning theme.
Ma rk eti n g Fu n da m e n tal s, An In t e rn ati o n al P e r sp e ctiv e
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Bronis Verhage
http://www.marketingfundamentals.noordhoff.nl
ISBN: 9789001818661
© 2017 Noordhoff Uitgevers bv
Repositioning Attempt to create a new image in the customer’s mind for an existing
brand through a combination of advertising and other marketing activities.
Ma rk eti n g Fu n da m e n tal s, An In t e rn ati o n al P e r sp e ctiv e
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