Ch. 6 - Segmentation, Targeting, and Positioning

Question 1

Why is there so much variety in the products available to consumers?

Answer 1

Different varieties of different products make people happy. There is not 1 optimal product since people have different preferences.

Question 2

What was Howard Moskowitz’s contribution to marketing?

Answer 2

He emphasized the importance of diversity in products. Instead of looking for one optimal product, he looked for clusters of data indicating a preference for certain products.

Question 3

Market Segmentation

Answer 3

Dividing the total market into smaller, distinct, relatively homogeneous groups who respond similarly to marketing strategies. Different marketing mixes used for different segments

Question 4

What are the different forms of market segmentation?

Answer 4

• Undifferentiated Marketing
• Differentiated Marketing
• Concentrated Marketing
• Micro Marketing

Question 5

Undifferentiated Marketing

Answer 5

Focus is on common needs of consumers (mass marketing)

Question 6

Differentiated Marketing

Answer 6

Firm targets several segments (based on clusters of consumers), designs separate offers for each.

Question 7

Concentrated Marketing

Answer 7

Firm acquires a large share of one segment (aim to be the biggest player in one segment.

Question 8

Micro Marketing

Answer 8

Customizing offer to the tastes of specific individuals or locations

Question 9

What are the different variables companies use to segment the market (segmentation variables)?

Answer 9

• Demographic
• Geographic
• Psychographic
• Behavioural/product-usage

Question 10

Demographic Segmentation

Answer 10

Dividing consumer groups according to personal characteristics (e.g. gender, age, income, occupation, religion, generation, and more)

Question 11

Geographic Segmentation

Answer 11

Dividing market into groups based on location or environment (e.g. country, province, city, density, climate)

Question 12

Psychographic Segmentation

Answer 12

Dividing the market based on people’s shared attitudes and behaviour, personality, lifestyles, hobbies, and interests

Question 13

Lifestyle

Answer 13

People’s decisions about how to live their daily lives, including family, job, social, and consumer activities

Question 14

Behavioural Segmentation

Answer 14

Dividing a consumer population into homogeneous groups based on their knowledge, attitude, use, or response to a product

Question 15

How can companies engage in behavioural segmentation?

Answer 15

Companies can study:
- Purchase occasion for buyers
- Benefits people seek when they buy
- User status
- Usage rates (how often is a product used)
- Loyalty

Question 16

The Segmentation Process

Answer 16

After a company has segmented the market, they must:
1. Develop a profile for each segment
2. Evaluate each segment
3. Select specific market segment(s) (target marketing)

Question 17

What criteria do companies use to evaluate each segment of the market?

Answer 17

• Size & growth rate
• Attractiveness
• Company objectives & resources

Question 18

Size & Growth Rate (Segment Criteria)

Answer 18

Evaluate the current size of the segment and determine if the segment will grow or shrink over time and by how much.

Question 19

Attractiveness (Segment Criteria)

Answer 19

Determine if your customers can access your product and that they will buy enough to make your product profitable

Question 20

What do companies need to do after segmenting the market and picking a target?

Answer 20

1. Decide what differentiates them from their competition and what makes them unique
2. Choose one or some of these differences to focus on (1-2 key differences)

Question 21

How can companies differentiate their product from their competitors?

Answer 21

• Position product away from or against competitors
• Product Differentiation
• Branding/benefits offered
• Other factors such as services, channels, and people

Question 22

How can companies position their product away from or against their competitors?

Answer 22

They can position the product against something consumers already know, but away from the leader to differentiate (useful if the company knows that they are not a leader)

Question 23

How can companies differentiate their product using product attributes?

Answer 23

• Lower price than their competitors
  OR
• Higher quality compared to their competitors

Question 24

Positioning

Answer 24

The way the product is defined by consumers on important attributes; the place the product occupies in consumers’ minds relative to competing products

Question 25

Perceptual Map (Positioning Map)

Answer 25

Graph showing consumers’ current perceptions of competing products

Question 26

What is the objective of a perceptual map?

Answer 26

To understand how your product is positioned vs competing products in consumers’ minds

Question 27

How are perceptual map attributes determined (x and y-axis)?

Answer 27

Focus groups and managers’ judgments (most important attribute on x-axis, second most important on y-axis)

Question 28

What 5 things does a perceptual map tell us?

Answer 28

1. What consumers’ current reality is
2. Who is your competition
3. What segments are being served
4. If you modified a product (or its perception) who you take share from
5. If you developed a new product, what segment to target and what consumers do not want

Question 29

True or False: New products or new features can change perceptions and ideal points

Answer 29

True

Question 30

Ideal Point

Answer 30

Point on perceptual map representing what consumers want (based on criteria used)

Question 31

What 4 things can perceptual maps be used for?

Answer 31

You can use perceptual maps to:
- Move a brand closer to ideal point of a target segment
- Introduce a new brand near the target segment’s ideal point
- Shift ideal point by introducing new attributes or by changing the importance of other attributes
- Repositioning

Question 32

Repositioning

Answer 32

Changing the position of a product in consumers’ minds relative to the positions of competing products

Question 33

Give an example of repositioning

Answer 33

E.g. Changing your product packaging from playful (targeting children) to mature (targeting adults)