7: Segmenting, Targeting and Positioning

Question 1

What is a market segment?

Answer 1

A market segment consist of a group of customers who share a similar set of needs and wants.

Question 2

Which segment preferences do we have?

Answer 2

• Homogeneous preferences: when consumers want same things.
• Diffused preferences: when consumers want different things.
• Clustered preferences: reveal natural segments from groups with shared preferences.

Question 3

Why do companies segment the market?

Answer 3

• Heterogeneous needs and preferences
• Different buying power and Customer Lifetime Value
• Individualized consumer behavior
• Make communication more effective

Question 4

What are the bases for segmenting consumer markets?

Answer 4

• Geographic segmentation
• Demographic segmentation
• Psychographic segmentation (based on traits, values or lifestyles)
• Behavioral segmentation

Question 5

What is the goal of a cluster analysis?

Answer 5

• To classify objects according to similarity; form homogeneous groups (clusters) that are different from other clusters.

Question 6

What are the characteristics of effective segmentation?

Answer 6

Segments that are

• measurable
• substantial
• accessible
• differentiable
• actionable

Question 7

How do we characterize attractive segments?

Answer 7

Segments that…

• are influenced positively (and not threatened) by the five forces.
• include customers with high Customer Lifetime Value
• are loyal to the company

Question 8

Mention the five patterns of target market selection

Answer 8

• Single-segment concentration
• Product specialization
• Market specialization
• Selective specialization
• Full market coverage

Question 9

What is positioning?

Answer 9

Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market.
Goal: Sustained competitive advantage

Question 10

What are the prerequisites for a successful positioning?

Answer 10

• Understand the decision-making processes of the market segment
• Identify industry and market competitors, as well as strategic groups

Question 11

What is the difference between 1) Points-of-difference associations and 2) Points-of-parity associations?

Answer 11

1) Attributes or benefits consumers strongly associate with a brand, positively evaluate and believe they could not find to the same extent with a competitive brand.
2) Associations that are not necessarily unique to the brand but may be shared with other brands.

Question 12

What are the characteristics of Points-of-difference associations?

Answer 12

They are

• relevant
• distincts
• believable
• feasible
• communicable
• sustainable

Question 13

What is the goal of a laddering?

Answer 13

To identify attributes perceived by customers and determine the degree to which they relate to benefits (= perceived consequences) and values; the method is based on means-end theory.

Question 14

Which questions should a company ask, in order to understand the dimensions along which target customers perceive offerings and how they view the company’s offering relative to competitive offers?

Answer 14

• How do customers view the brand?
• Which brands do customers perceive to be the closest competitors?
• What market offering and company attributes are most responsible for these perceived differences?

Question 15

What market research method is used to map similarities and differences between offerings in a positioning analysis?

Answer 15

• The positioning map

- The multidimensional scaling approach

Question 16

Recap: Can you explain..

• Why companies segment markets?
• What segmentation criteria are, and how they differ from each other (e.g., in terms of getting access to information, ability to predict buying behavior?)
• What market research method is used to identify target groups?
• How companies select attractive segments to be targeted, and what marketing metric helps evaluate the attractiveness of segments?
• How companies position their offerings to satisfy the needs of certain target groups?
• What market research method is used to map similarities of (and differences between) offerings in a positioning analysis?

Answer 16

;-)