3.3 Making marketing decisions: segmentation, targeting and positioning

Question 1

Market segmentation

Answer 1

Market segmentation is dividing the market into identifiable sub-markets, each with its own customer characteristics.

Question 2

Market targeting

Answer 2

Market targeting is deciding which segment a business wants to operate in.

Question 3

Market positioning

Answer 3

Market positioning is where a particular brand stands in relation to other brands in the market.

Question 4

Segmentation

Answer 4

Segmentation breaks down the market into clearly definable groups.

Question 5

Targeting

Answer 5

Which groups the product will be aimed at.
- Niche marketing
- Mass marketing

Question 6

Positioning

Answer 6

How the product will be positioned within the target market.

Question 7

Benefits of STP

Answer 7

• Marketing will be more effective
• Can be directed specifically at the target group
• Resources will be used more effectively as a result of targeting
• Sales and market share may increase as a result of the clear focus of marketing

Question 8

Drawbacks of STP

Answer 8

• Business may overlook a potentially profitable segment
• Any changes in taste and fashion could be overlooked

Question 9

Influences on choosing a target market and positioning

Answer 9

• Nature of the product
• Competition - avoid areas of the market that are highly competitive
• The consumer

Question 10

Niche marketing

Answer 10

Niche marketing is when businesses identify and satisfy the demands of small segments of a target market.

Question 11

Mass marketing

Answer 11

Mass marketing is when businesses aim their products at most of the available market

Question 12

Advantages of niche marketing

Answer 12

• First company to identify a niche market can often gain a dominant market position
• Niche markets are often highly profitable - can charge premium prices

Question 13

Disadvantages of niche marketing

Answer 13

• Sales may be relatively low, cannot spread fixed overheads over sales to attain acceptable profit margins
• Niche market may attract new competition - less attractive to companies who first discovered the market

Question 14

Advantages of mass marketing

Answer 14

• Less need for market research - entire market is targeted
• Indicates a business is focused on high volume of sales - allows economies of scale
• Smaller product range = higher operational efficiency = lower CPU

Question 15

Disadvantages of mass marketing

Answer 15

• Avoided segments
• Less able to meet everyone’s needs