6.2 Market Segmentation

Question 1

What is the function of market segmentation?

Answer 1

Through market segmentation, companies divide large, diverse markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs.

Question 2

What are the four important segmentation topics we will be covering in this chapter?

Answer 2

four important segmentation topics:

• Segmenting consumer markets
• Segmenting business markets
• Segmenting international markets
• The requirements for effective segmentation

Question 3

What are the major variables used to segment the consumer market?

Answer 3

The major:
Geographic
Demographic
Psychographic
Behavioural variables

Question 4

Table 6.1 Major Segmentation Variables for Consumer Markets

Answer 4

Question 5

Definition of Geographic Segmentation

Answer 5

Geographic segmentation:

Dividing a market into different geographical units, such as nations, regions, provinces, cities, or even neighbourhoods.

Question 6

What is hyperlocal social marketing?

Answer 6

The surge in digital and mobile technology has caused a corresponding surge in hyperlocal social marketing—location-based targeting to consumers in local communities or neighbourhoods using digital and social media.

Question 7

Definition of Demographic Segmentation

Answer 7

Demographic segmentation:

Dividing the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation.

Question 8

Why are demographic factors the most popular bases for segmenting customer groups?

Answer 8

One reason is that consumer needs, wants, and usage rates often vary closely with demographic variables. Another is that demographic variables are easier to measure than most other types of variables.

Question 9

Definition of Age and life-cycle segmentation.

Answer 9

Age and life-cycle segmentation:

Dividing a market into different age and life-cycle groups.

Question 10

Definition of Gender segmentation

Answer 10

Gender segmentation:

Dividing a market into different segments based on gender.

Question 11

Definition of Income segmentation.

Answer 11

Income segmentation:

Dividing a market into different income segments.

Question 12

Definition of Psychographic segmentation

Answer 12

Psychographic segmentation:

Dividing a market into different segments based on lifestyle or personality characteristics.

Question 13

Definition of Behavioural segmentation

Answer 13

Behavioural segmentation:

Dividing a market into segments based on consumer knowledge, attitudes, uses of a product, or responses to a product.

Question 14

Definition of Occasion segmentation.

Answer 14

Occasion segmentation:

Dividing the market into segments according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item.

Question 15

Definition of Benefit segmentation

Answer 15

Benefit segmentation:

Dividing the market into segments according to the different benefits that consumers seek from the product.

Question 16

What are the different user status groups that markets can be segmented into?

Answer 16

Markets can be segmented into
nonusers,
ex-users,
potential users,
first-time users, and
regular users of a product.

Marketers want to reinforce and retain regular users, attract targeted nonusers, and reinvigorate relationships with ex-users. Included in the potential users group are consumers facing life-stage changes—such as new parents and newlyweds—who can be turned into heavy users.

Question 17

What are the different usage rates a market can be segmented into?

Answer 17

Markets can also be segmented into light, medium, and heavy product users.

Heavy users are often a small percentage of the market but account for a high percentage of total consumption.

Question 18

What are the different kidns of loyalty status that a market can be segmented into?

Answer 18

Market can also be segmented by consumer loyalty. Consumers can be loyal to brands (Tide), stores (Canadian Tire), and companies (Apple).

Buyers can be divided into groups according to their degree of loyalty.

Some consumers are completely loyal—they buy one brand all the time and can’t wait to tell others about it.

Question 19

What can a company learn by analyzing loyalty patterns in the market?

Answer 19

A company can learn a lot by analyzing loyalty patterns in its market.

It should start by studying its own loyal customers. Highly loyal customers can be a real asset. They often promote the brand through personal word of mouth and social media. Instead of just marketing to loyal customers, companies should engage them fully and make them partners in building the brand and telling the brand story.

In contrast, by studying its less-loyal buyers, a company can detect which brands are most competitive with its own. By looking at customers who are shifting away from its brand, the company can learn about its marketing weaknesses and take actions to correct them.

Question 20

Do marketers limit their sementation or use multiple?

Answer 20

Marketers rarely limit their segmentation analysis to only one or a few variables. Rather, they often use multiple segmentation bases in an effort to identify smaller, better-defined target groups.

Question 21

What are some business information serves that provide multivariable sementation data?

Answer 21

Several business information services—such as Nielsen, Acxiom, Esri, and Experian—provide multivariable segmentation systems that merge geographic, demographic, lifestyle, and behavioural data to help companies segment their markets down to postal codes, neighbourhoods, and even households.

Question 22

What are the benifits of using multivariable segmentation data?

Answer 22

Personicx and other such systems can help marketers to segment people and locations into marketable groups of like-minded consumers. Such rich segmentation provides a powerful tool for marketers of all kinds. It can help companies identify and better understand key customer segments, reach them more efficiently, and tailor market offerings and messages to their specific needs.

Question 23

What are the segmentation variables that consumer and business markets share?

Answer 23

Consumer and business marketers use many of the same variables to segment their markets. Business buyers can be segmented geographically, demographically (industry, company size), or by benefits sought, user status, usage rate, and loyalty status.

Question 24

What are the segmentation variables that are unique to the buisness market?

Answer 24

business marketers also use some additional variables, such as:

Customer operating characteristics
Purchasing approaches
Situational factors
Personal characteristics

Question 25

How do firms segment by geographic location?

Answer 25

Geographic location, grouping countries by regions such as Western Europe, the Pacific Rim, South Asia, or Africa.

Geographic segmentation assumes that nations close to one another will have many common traits and behaviours.

Although this is sometimes the case, there are many exceptions.

Question 26

What are the economic factors that a country can be segmented by?

Answer 26

World markets can also be segmented based on economic factors.

Countries might be grouped by population income levels or by their overall level of economic development.

A country’s economic structure shapes its population’s product and service needs and therefore the marketing opportunities it offers.

Question 27

What are the political and leagle factors that a country can be segmented by?

Answer 27

Countries can also be segmented by political and legal factors such as the type and stability of government, receptivity to foreign firms, monetary regulations, and amount of bureaucracy.

Question 28

What are some of the cultural factors that a country can be segmented by?

Answer 28

Cultural factors can also be used, grouping markets according to common languages, religions, values and attitudes, customs, and behavioural patterns.

Question 29

What are the different factors that a Country can be segmented by?

Answer 29

• Geography
• Economic
• Political and legal
• Cultural

Question 30

Definition of Intermarket (cross-market) segmentation.

Answer 30

Intermarket (cross-market) segmentation:

Forming segments of consumers who have similar needs and buying behaviours even though they are located in different countrie

Question 31

To be useful, market segments must be…

Answer 31

Measurable - The size, purchasing power, and profiles of the segments can be measured.

Accesable - The market segments can be effectively reached and served.

Substantual - The market segments are large or profitable enough to serve. A segment should be the largest possible homogeneous group worth pursuing with a tailored marketing program.

Differentiable - The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs.

Actionable - Effective programs can be designed for attracting and serving the segments.