Chapter 5: Market Segmentation and Segmentation Strategies

Question 1

Steps for needs-based market segmentation

Answer 1

1. What BENEFITS are customers
   seeking in solving a particular
   customer problem?
2. Group Customers into NEEDS-
   BASED segments.
3. Distinguish segments:
   * Demographics
   * Psychographics
   * Usage Behaviour

Question 2

Proper segmentation leads to the creation of an effective ______________

Answer 2

VALUE PROPOSITION

Question 3

___________, ____________ levels, and ___________ are keys to effective Needs-Based Segmentation

Answer 3

Features, Performance levels and Price

Question 4

Consumers have unlimited wants but ___________ places limits and forces choices

Answer 4

affordability

Question 5

needs-based segmentation

Answer 5

Offer product benefits that satisfy needs of different sets of target clients

Question 6

describe the demographic trap

Answer 6

Focusing too much or/ solely on demographics

• Income, Age, Education etc.
  – Demographics selected may or may not affect customer needs
  – Demographically identical does not necessarily translate to identical purchase

Question 7

What are the steps in segmentation? (7)

Answer 7

1. Needs Based Segmentation
   – Group clients based on needs and benefits
   sought
2. Segment Identification
   – Determine demographics, lifestyles + usage
   – Distinct, identifiable and actionable
3. Segment Attractiveness
   – Access, Market growth, Competitive industry
4. Segment Profitability
5. Segment Positioning
6. Segment Strategy “Acid Test”
7. Marketing Mix Strategy

Question 8

what are the components of segment profitability?

Answer 8

• Net Marketing Contribution
• Return on Sales
• Marketing ROI

Question 9

What needs to be changed in the process of segment positioning?

Answer 9

VALUE PROPOSITION
– VP includes all the key elements of the situation +
– Benefits the target customer is looking for

• Customized VP for each positioning strategy
  – deliver value to customers

Question 10

describe the segment acid test

Answer 10

Create “segment storyboards” to test the attractiveness of each segment’s positioning strategy.

Present groups of target consumers with Segment Storyboards
* Do the target consumers identify with the intended message?
* Modify the approach based on feedback from T.M.

Question 11

What are more segmentation strategies (7)

Answer 11

1. Mass Market
   – Generic Value Prop (Coke)
2. Large Market
   – Address one of the core customer needs (Chevy Truck)
3. Adjacent Segment
   Move into the next closest market (Slow build)
4. Multi- Segment
   Various segments distinguish the overall market
5. Small Segment
   Focus on a small segment often ignored by big firms
6. Niche
   Highly defined marketing effort aimed at a small group
7. Sub Segment Strategy
   Sub segmenting allows for a business to add value

Question 12

what are the forces that shape consumer market needs (3)

Answer 12

1. demographic influences
2. lifestyle influences
3. usage behaviours

Question 13

describe the marketing mix strategy component of the segmentation process

Answer 13

Expand segment positioning strategy to include all aspects of the marketing mix: product, price, promotion, place, and service

Question 14

what are the components of segment attractiveness

Answer 14

Using predetermined segment attractiveness criteria, determine the overall attractiveness of each segment.

Question 15

describe segment identification

Answer 15

For each needs-based segment, determine which demographics, life- styles, and usage behaviors make the segment distinct and identifiable (actionable).

Question 16

describe the grouping customers with needs-based segmentation

Answer 16

Group customers into segments based on similar needs and benefits sought by customer in solving a particular consumption problem.