3.3.3 Segmentation Targeting Postionujg Flashcards
(35 cards)
Define segmentation
Process of splitting up the market into different groups of people with similar characteristic
What are the methods of segmentation?
Demographic I.E characteristics of the people in the target population for example age, gender, do they have children?
Geographic I.e where consumers are based
Income/socio economic groups
Behavioural I.E what customers do for example when they buy how much they buy brand loyalty what benefit do they want from products?
Benefits of segmentation
By segmenting a market managers can understand what different groups want. Managers can then decide if they can meet needs and then all to the product to meet the needs of the segment
it enables more focused and efficient marketing – promotions can be made relevant to that segment. Money isn’t wasted promoting the wrong people investing in unwanted
features of the products.
What are disadvantages of segmentation?
The more segments a business focuses on, the more complex and expensive it becomes trying to meet all their needs, both in terms of altering products and promotion for each segment
Define targeting
When a business decides which segments it wants to focus on
What segments are chosen when targeting ?
There’s a sufficient demand potential growth
There’s potential profit
It has the skills to compete and create a competitive advantage
Brand fits with the targets segment eg high end shops and high
Benefits of targeting
Can focus resources on the most profitable segment
provides a better understanding of market
improve communication between buyer and seller
What’s case study on targeting
Aston Martin – unveiled first SUV to compete in luxury SUV market it was for women wanted to reverse 75% slide share price always been targeted at men (94% of market). They are segmenting to target wealthy women.
Define niche marketing
Fixing on particular segment of the market (usually very small) for example clothes shop for tall people
Advantages on niche marketing
Less competition and doesn’t threaten other bigger businesses so they may not fight back
Clear focus- target particular customers
The firm builds up specialist skill and knowledge equals market expertise
Can often charge a higher price: customers are prepared to pay for expertise so profit margins are often higher
Customer tend to be more loyal
Drawbacks of niche marketing
May be small and not provide big profits
If the niche grows then the bigger businesses will be attracted to it
Lack of economies of scale
Risk of over dependence in a single product or market
Define a mass market
Mass market approach aims to provide products that meet some of the needs of a large proportion of the market
Customers wants/needs more general
Aims for volume and there’s potential for more revenue
Risks of mass marketing
Investment required to be able to cater to fill these large volumes
Difficulties competing with other established businesses
Increasing number of niche provides means customers turn to them looking for something that meets their needs more precisely ,reducing demand in the mass market
Describe a case study for niche markets
Taste for burgers are changing and consumers are starting to turn to niche premium burgers and increase market share
The experience of the products with the markets changing so McDonald’s are going through a 10 year revamp – higher grade burgers, et cetera
What is positioning?
Having targeted a segment managers now consider the positioning of their business in the market for example how their products are perceived relative to their competitors
What can market mapping show
Market mapping plots how a product is perceived and where it’s position
What are the pros with market mapping ?
Helps spot gaps in the market
Useful for analysing competitors
Encourages use of market research
Cons of market mapping
Just becuase there’s a gap doesn’t mean there’s demand
Not a guarantee of success
How reliable is the market research ?
What does positioning depend on?
Firms price
Benefits it offers
Brand image
Level of service
How do these factors affect a firms competitiveness?
Higher price than rivals for example and similar benefits make it un competitive but better benefits and service could mean the firm is competitive even if it’s prices higher
How do the strengths of the business influence positioning?
If it’s very efficient or has bargaining power of suppliers and it will have low-cost to position itself as a low price firm for example Amazon
Or if innovation is it and the firm could focus on providing better benefits and competitive, e.g. Apple
How do competitors influence positioning?
What’s they are offering will affect how a firm positions itself.
It produce a market map to identify a gap
How do market conditions/external influences influence position?
If the economy is recovering, firms may decide to offer more benefits of their products as as incomes are rising so the positioning can change
What is the case study on repositioning?
McVities’s in June 2020 they launched very important biscuits and earlier in 2020. They gave the classic digestives and upgrade by combining the normal flavours of new nostalgic ones.
