3.3.3 Making marketing decisions: segmentation, targeting, positioning

Question 1

What is market segmentation?

Answer 1

Splits up a market into different segments to enable a business to better target its products to the relevant customers

Question 2

What are 4 advantages of market segmentation?

Answer 2

• Better matching of customer needs
• Enhanced profits for business
• Better opportunities for growth
• Retain more customers

Question 3

Why is better matching of customer needs an advantage of segmentation?

Answer 3

needs differ frequently so creating separate products for each segment makes sense

Question 4

Why are enhanced profits for business an advantage of segmentation?

Answer 4

Customers have different disposable incomes and they vary in how sensitive they are to price. By segmenting markets, businesses can raise average prices and subsequently enhance profits

Question 5

Why are better opportunities for growth an advantage of segmentation?

Answer 5

market segmentation can build sales (e.g. customers can be encouraged to “trade-up” after being sold an introductory, lower-priced product)

Question 6

Why is retaining more customers an advantage of segmentation?

Answer 6

by marketing products that appeal to customers at different stages of their life, a business can retain customers who might otherwise switch to competing products and brands

Question 7

Why would target market communication be an advantage of segmentation?

Answer 7

firms need to deliver their marketing message to a relevant customer audience. By segmenting markets, the target customer can be reached more often and at lower cost

Question 8

Why is a business gaining a share of the market segment an advantage of market segmentation?

Answer 8

through careful segmentation and targeting, businesses can often achieve competitive production and marketing costs and become the preferred choice of customers and distributors

Question 9

Draw a diagram showing the main bases of segmentation

Answer 9

Question 10

What is a target market?

Answer 10

the set of customers sharing common needs, wants, and expectations that a business tries to sell to

Question 11

What is the order of how a business gets to marketing to a customer?

Answer 11

Question 12

State some approaches to market targeting

Answer 12

• Mass marketing (undifferentiated)
• Segmented (differentiated)
• Concentrated (niche)

Question 13

Explain mass marketing as an approach to market targeting.

Answer 13

Business targets the WHOLE market, ignoring segments
Products focus on what customers need and want in common, not how they differ

Question 14

Explain segmented (differentiated) marketing as an approach to market targeting.

Answer 14

• Business target several market segments within the same market
• Products are designed and targeted at each segment
• Requires separate marketing plans and often different business units & product portfolios

Question 15

Explain concentrated (niche) marketing as an approach to market targeting.

Answer 15

• Business focuses narrowly on smaller segments or niches
• Aim is to achieve a strong market position (share) within those niches

Question 16

What are the two key decisions businesses need to make in order to use marketing to create value for customers?

Answer 16

• Decision 1 – choose which customers to serve
• Decision 2 – choose how to serve those customers

Question 17

Explain Decision 1 – choosing which customers to serve.

Answer 17

Businesses can do this through:
* Market segmentation (analysing the different parts of a market)
* Targeting (deciding with market segments to enter)

Question 18

Explain Decision 2 – choosing how to serve those customers

Answer 18

Businesses can do this through:
Product differentiation (what makes it difference from the competition)
Market positioning (how customers perceive the product)