3.3 Segmentation, Targeting + positioning

Question 1

What is market segmentation?

Answer 1

Dividing the market into groups in which customers share common characteristics.

Common characteristics can include demographics, lifestyle, and geographic location.

Question 2

List the factors used in market segmentation.

Answer 2

• Gender
• Demographics (social class)
• Income (disposable)
• Age
• Location/geographical
• Lifestyle

These factors help in understanding the needs of specific groups of customers.

Question 3

What is a potential downside of small segment size in market segmentation?

Answer 3

Segment size may be too small to be profitable (not enough customers).

This can lead to opportunity loss by missing other potential customers.

Question 4

What is the purpose of market targeting?

Answer 4

Deciding which segment a business wants to sell to and how.

This involves understanding the nature of the product, level of competition, and consumer needs.

Question 5

What influences market targeting decisions?

Answer 5

• The nature of the product (quality level or use)
• Level of competition (saturation of market)
• Consumer needs and wants

These factors help businesses identify their unique selling proposition (USP).

Question 6

True or False: Mass targeting involves targeting a smaller specialist group of customers.

Answer 6

False.

Mass targeting focuses on the whole market, while niche targeting focuses on smaller, specialized groups.

Question 7

What are the characteristics of mass targeting?

Answer 7

• Targets the whole market
• Lots of competition
• Utilizes mass media
• Enables bulk buying

Mass targeting aims for a larger customer base but faces higher competition.

Question 8

What is niche targeting?

Answer 8

Targeting a smaller specialist group of customers.

Examples include specialized products like toothpaste for smokers or sports equipment.

Question 9

What are the advantages of niche targeting?

Answer 9

• High revenue potential
• High market share
• Economies of scale
• Helps brand awareness

Niche targeting can lead to higher profits but often requires a higher initial investment.

Question 10

What is a downside of niche targeting?

Answer 10

• More competition and price competition
• Higher costs
• Risk of generic products

While niche markets can be profitable, they also come with increased competition.

Question 11

Fill in the blank: Market segmentation helps to _______ a product or service.

Answer 11

[differentiate]

Differentiation is key to establishing a unique selling proposition (USP).