Chapter 3 Flashcards
Why is market segmentation essential?
In the modern, diverse countries, there is no standard consumer and thus we cannot use mass marketing for most scenarios. Different groups of people will have different wants and needs and if you try market the same way to everyone, you may please no one. Despite the high costs of research, production, advertising and distribution for segmented and targeted strategies, the firm will still be more profitable as head-on competition is avoided via the usage of a unique value proposition.
To be an effective target, a market segment should be:
- Identifiable – must be able to identify common/shared needs or characteristics. Can be easy (race) or difficult (done via questionnaire)
- Sizeable – must be enough consumers to make the process profitable
- Stable or growing – lifestyles or consumption patters
- Accessible – must be able to advertise to target in economical way
- Aligned with company’s objectives and resources
What is hybrid segmentation
usage of attributes from two or more segmentation bases to better understand segment.
List the consumer-rooted segmentation bases
- Demographic
- Geographic
- Living standard measures
- Personality traits
- Lifestyles
- Socio-cultural values and beliefs
Expand upon the demographic segmentation base
Core of all segmentations because:
- Easiest and most precise way to classify people
- Cost-effective because secondary data exists
- Business opportunities arise when people shift categories
- Many consumption behaviours directly linked to demographics
Variables:
• Age – investing strategies
• Gender – specific but more blurred now
• Life stage – marriage, household characteristics and members
• Income, education, occupation (social class)
Expand upon the geographic segmentation base
• People who live close to one another are likely to have similar financial means, tastes, lifestyles
Expand upon the Living standards measure segmentation base
It is a marketing segmentation index and tool that profiles SA market into relatively homogeneous groups using a set of differentiators. It uses differentiators that group according to living standards – criteria such as degree of urbanisation, ownership of cars/assets. Essentially measures wealth not income.
Expand upon the Personality traits segmentation base
Consumers may be guarded or unaware of personality influences.
A personality test can determine ones personality and use it for segmentation.
Consumer innovator – someone who perceives less risk when trying new things. They must be targeted during introduction of product. They tend to score highly on exhibition which leads to word of mouth
Expand upon the Lifestyles traits segmentation base
Consists of activities, interests, and opinions (AIOS
Interests and opinions are cognitive constructs which can be measured by survey but not evidence based.
Psychographic study – battery of statements accompanied by Likert scales where respondents indicate level of agree/disagreement
Demographics indicate needs and ability to buy products, where lifestyle explains purchase decisions they make when buying options available to them
Two views on a post-retirement lifestyle:
1. New start – unrewarding work life, more freedom
2. Continuation of lifestyle – no drastic change
Expand upon the Socio-cultural values and beliefs segmentation base
Segment by culture as people from the same background share beliefs
Cross-cultural/global – often need to adapt products or messaging in other countries
List the consumption-rooted segmentation bases
- Usage rate segmentation
- Usage situation segmentation
- Benefit segmentation
- Brand loyalty
Expand upon the Usage rate segmentation base
Group of heavy users account for disproportionately large % of consumption thus target these users. Expensive to target heavy users, some prefer to spend less to target medium and light. Non-users may be of value (prospective vs persistent).
Expand upon the Usage situation segmentation base
Segment by special occasion or situations. Work trips, Christmas, weekend or weekday, events
Expand upon the Benefit segmentation base
Benefits sought by consumers represent consumer needs
Exaggerate different benefits to different consumers
Expand upon the brand loyalty segmentation base
Two components:
1. Behaviour – frequency and consistency of buying a brand
2. Attitude – feelings of commitment towards the brand
Frequency award programmes popular
Can be active or passive relationship
