Chapter 5 Flashcards
How does an insurance company meet customers needs?
identify unmet needs in existing markets and growth markets that arent’ being reached.
Define market segmentation
Companies divide large, diverse markets into smaller submarkets and identify groups of buyers who have the same needs and will likely respind similarly to marketing actions.
What questions are answered during marketing actions?
- what consumer needs are not being met
2 what benefits are consumers seeking
what is the purpose of market segments?
smaller groupings of customers whom share similar needs and preferences.
what is a single-variable segmentation?
uses only one characteristic such as income lev el, to segment a market
What are multivariable segmentations?
segmenting a market by a combination of variable, which may include income level, years of education, age or gender.
What are some keys to effective marketing segmentation?
- the company is able is identity customers who actually match the segment definitions, particularly when using behaviouristic criteria
- customers in segments have similar products needs and preferences or purchase products in similar wayd.
- the company is able to distinguisj the needs and behaviours of customers in the segments from thoe of customers in other segements
- The potential sales, costs, and profits for the segement are large enough to measure and compare with those for other potential market segments
- the profit profit porential for the segment is high enough to offset the expense a company
Define consumer market
a market that consist of individuals who buy products or services for personal or family use.
Define organizational markets
markets that consist of individuals or formal organizations that purchase and services for business purposes or for their constituents, such as employees or association memebers.
How do marketers obtain information about a person’s interrest and personal data?
- tracking their online action through web analytics
- purchasing consumer data from data aggregators
- conducting market research using focus groups and surverys
- tracking customer interactions through call center calls or customer correspondences
- reviewing purchase history records.
what is the purpose of a company shifting thorugh all this information? ir what are the characteristics they are looking for in this customer segements?
characteristics relevant to customer needs and behaviours and measurable or observable.
What are two risks associated with any form of segmentation?
- risk of drawing generalities (sterotypes) based on information that may not be true or accurate since it was based on limited knowledge. and 2. the risk of over segmenting a market or not segmenting a market enough to reach potential customers
What are the primary categories of consumer market segmentation?
- geographic,
- demographic
3 geodemograpghic - psychographic
- behavioristic
- benefit segmentation.
What is geographic segmentation?
this divides markets into segments based on regions,.
Needs based on area.
Differences in population and growth rate gives areas more or less market potential
What are the 3 advantages of Geographical segmentation?
- inexpensive
2 easy to preform - Easy for local sales force to relate to customers in their same geographic are
What are the disadvantages of geographic segmentation?
- geographic differences do not greatly influence customer needs and desires
2 may not adequately subdivide the markets to allow marketer to target viable potential customers.
Define demographic segmentation
segmentation based on the personal characteristics of poeple in the market such as age, income ,and life cycle stage, gender, marital status, house hold size, education, occupation, nationality and social class.
Which type of demographic segmentation are more useful in segmenting insurance markets?
exacples of age and life cycle stage affect insurance product types.
What are some advantages of demographic segmentation?
Relatively easy to identigy and measure
information about many demographics is inexpensive and easy to obtain from government, public and private sources.
What are some disadvantages of demographic segmentation?
May not adequately segment the market
May not capture the differing needs of market members
Define geodemographic segmentation
Combination of geographic and demographic characteristis which takes people who live in the same areas and further differentiates them according to demographic characteristics, such as income, or age.
What is a system developed by a variety of classification systems to help companies cluster neighborhoods and hourseholds for marketing purposes?
Nielsen PRIZM, which is a customer segmentation system that categorizes US households according to 66 demographically and behaviorally distinct types.
they provide info about attitudes that affect peeps decision making.
What are some advantages of geodemographic segmentation?
- segments can be refined to beyond the more basic demographic segemnt
- may improve customer perception of the company; targeted segments feel that the comapny understands their unique needs.
What are some disadvantages of geodemographic segmentation?
takes more time to develop segments than other segment types, so a company must commit to following this approach over time as peoples lives change and they fit into different segments.
define Psychographic Segmentation
divides consumer markets based on lifestyle and the outward display of individual psychological characteristics such as attitudes, beliefs, opinions, values, and interests.
Psychographic research calssifies US adults +18 into one of 8 consumer groups. These groups are motivated to purchase goods and services according to their what
- primary motivation (ideals, acheivements, self-expression) and 2. they level of resources (material, emotional, psychological, personable, intellectual, motivational).
What is a personas?
profile labels that represent a segment of a martket. Marketers use personas to better understand the interrest, activities and opinions of a customer segment and design a marketing mix for that person.
What can be determined by a company when creating a persona that matches the target markets needs, attitudes and other characteristics?
- products that satify needs
- message it should communicate to and the prodcuts should highlight the target market
- communication tools it should be using to reach the target
- districution channels it should be using.
What is an advantage of psychographic segmentation?
Give much deeper understanding of consumers than demographic or geographic segmentation information
What is a disadvantage of psychographic segmentation?
More difficult to measure the value of psychographic factors than geographic or demographic factors.
Define Behavioristic segmentation
Devides markets according to consumers’ behavior toward a product or company.
What do buyer characteristics are looked at when marketers use bahavioristic segmentations?
- usage rates: Light, M, H
- status: nonuser, ex user,
- loyalty
- readiness for purchase
- preferred method of purchase
- risk tolerance
What are some advantages of bahavioristic segmentation?
- for existing customers, the company has some information about hx.
- past behaviour is often a good predictor for future bahaviour
- general information about behavior patterns of customer groups if available from a variety of commercial sources, but privacy laws may prevent some info sharing
What are some disadvantages of behavioristic segmentation
- May cost more to obtain information
- difficult for insurers to accurately gauge customer behavior and use it effectively segment systems.
- difficult to collect behavioristic information for insurance products,
Define Benefit Segmentation
a way to segment markets by the benefits customers seek sfrom a product or service. In benefit segmentations, the variables used to segment consumers into groups are the consumers product needs.
How would a life insurance product act as a benefit/statisfy a need?
- tax/estate planning
- survivorship planning
- retirement planning
- business continuity
- College education funding.
What are some advantages to Benefit segmentation?
- had the potential to boost product sales by marketing the same products to various groups
- effective way to market products with unique features
- customer-focused
What are some disadvantages of benefit segmentation?
- overuse may discourage exploration of new opportunities and product innovations.
- messaging about benefits can b e confusing if an insurers tries to address to many benefits in one message
- can be difficult to differentiate from competitors that offer similar products.
Define Firmographics
these are all the characteristics that marketers use to segemnet the organizational market. Insurance companies segment organizational markets into smaller divisions based on the geographic, demographic, and behavioral characteristics of potential buyers.
What are the divided sub-catergories of geographic segmentation in organizational markets?
- country
- region
- state or province
- city
- postal code
- legal boundaries
What is segmentation by inductry?
this focuses on the type of business activity that an organization engages in, such as technology, manufacturing, agriculture, financial services, government, or entertainment.
How does one catergorizes demographic cahracteristics of organizational markets
- indutry
- or type of organization (corporation, partnership, sole proprietorship, for-profit, not-for profit)
- Size of organization/group
- type of group (single-employer, multiple-employer, debtor-creditor, affinity
What are the categories of bahavioralistic characteristics in an organizational market?
- benefits sought
- patterns of usage
- products of preference.
What is segmentation by legal form?
companies select one of 3 legal forms: corporation, partnership or sole proprietorship. Business can also be sub divided to for profit or not-profit. Each type of business has distinct needs for financial services… segmented by legal form
Define segmentation by size of group
Insurance companies often divide into
- small group (<100 members) 2. Medium group (101-499 members)
- Larger group (500+)
- As size increases, so foes the benefits to these buyers needs. Comapnies usually offer more standardized benefits to smaller groups.
Define segmentation by type of group
4 primary groups make up the organizational market for financial products and services.
- single-employer group -
- multiple-employer groups
- Debtor-creditor groups
- affinity groups -
define multiple-employer groups
- two or more employers at same industry
- two or more labour unions
- one or more employers and one or more labour unions
Define affinity groups
formed when individuals with common needs interrests, and characteristics communicate regularly with eachother. civic groups, professional associations, and social organiztiona
True or False. Like consumer markets, organizational markets can be segmented based on their purchase behavior which includes usage rates, risk tolerances, ad buyer readiness?
true.
What is the advantage of target marketing?
a comapny evaluates opportunities, determines a target marketing strategy and then selects one or more segments, called target markets that they pursue.
Why do Marketers evaluate potential markets ?
To determine whic of them would offer greatest 1) size and growth potential, 2) attractiveness and 3) compatibility with company goals.
What is market attractiveness?
aggressive competition within a market can limit ability to promote and price products. Companies should only enter segments they have or can ghain a competitive advantage or offer superior value.
What are the 3 primary types of target marketing strategies?
- undifferentiated marketing
- differentiated marketing
- concentrated marketing
define undifferentiated marketing?
A strategy that targets the entire market and designs a single marketing mix. Used by companies that offer only one product or service to entire market
Define differentiated marketing
A strategy that targets a single market segment. Used by companies with several versions of a product to different market segments.
Define concentrated marketing
A strategy that targets a single market segment. Used by companies that develop expertise in and understnading of one segment of a total market.
The particular target marketing stategy a company adopts depends on what 4 major factors?
- company resources
- product form or desgin variability
- market variability
- stage in the products life cycle.
Who from an insurance comapany targets organizational market segments?
employer groups and small businesses
In the United States, multiple-employer groups can take 1 or what 3 forms?
- negotiated trusteeship (Taft-Hartley Group). results from a collective-bargaining agreement between one or more unions and employers of union members.
- voluntary trade association: association of individuals employers that work in similar industries and have common business interest.
- multiple-employer welfare agreement (MEWA) formed when small employers band together to offer group insurance and other benefits to their employees.
What are some basic insurance needs that are shared among small businesses?
- protecting business agaisnt potential loss if key person dies.
- preventing liquidation of the business d/t estate tax burden when KP dies
- .preserving a disabled owners’ interrest in a business by facilitating funding for a buyout
- improving the credit rating and general financial stability of a business with creditor protection
- providing a source of emergency funds
- providing a variety of health, life, disability, and retirement benefits to employees to keep key employees
