What is the difference between a product-centric view and a customer-centric view?

product centric -- products are assets. firm tries to maximize profits from each transaction.

customer-centric -- customers are assets. firm tries to maximize profits from each customer over the customer's lifetime (defensive approach to marketing strategy)

What is the smallest group we can segment to?

Answer: An individual. We increasingly possess the ability to understand a multitude of consumers at the individual level and tailor offerings to them. This ability offers strategic and tactical advantages to the firm.

What are the the four caveats of segmentation?

1. majority fallacy

2. consumers vs decision makers

3. heterogeneity within segments (e.g. the "wealthy")

4. the true size of each segment (e.g. gas stations)

What is the majority fallacy?

If all competitors can identify the largest segments, the largest segments may be less profitable than smaller segments due to the high degree of competitive intensity

Once the decision to segment has been made, how should a firm decide which segments to pursue?

1. segment size, growth rate, profitability

2. competitive intensity within the segment

3. barriers to entry

4. company fit

--> basically an assessment of potential profitability net of costs

What factors should a firm consider before deciding to segment?

- are consumers heterogeneous?

- does market size justify sub-division?

- what philosophy of competition is the firm pursuing? (marketing, product, production)