Chapter #5: Market Segmentation Strategies Flashcards
Why is it important for marketers to understand millennials as a market segment?
Currently aged 18 - 24 years - large segment (where lots of money is spent)
Setting the trends for many other segments
At what point should we look at consumer needs for needs based segmentation?
IT should be the first step in the process
How does needs based segmentation work?
Customer needs correlated with segment identity
Problems that need to be solved (needs) and then demographics, usage behaviour and psychographics
What are demographic influencers in market segmentation?
Age Income Martial status Education Occupation
What are lifestyle influencers in market segmentation?
Attitudes Values Activities Interests Political Views
What are usage behaviour in market segmentation?
Quantity Time of use Personal Social Frequency
What are business to business customer needs?
Firm demographics (average of all staff)
Company Culture
Usage behaviours
What are examples of firm demographics in B2B market segmentation?
Number of employees Sales volume Number of office locations Years in business Financial situation
What are examples of company culture in B2B market segmentation?
Business sophistication Growth orientation Innovativeness Technology Decision making
What are examples of usage behaviours in B2B market segmentation?
Application Quantity Time of purchase Frequency of purchase Users
What are the two main types of small business market segments?
Growth orientated entrepreneurs
Cost focused sustainers
What are the attributes of “Growth focused entrepreneurs” SME segment?
Core business need - a way to invest and grow
Firm demographics - Medium sized, sophisticated, higher education, changing financial plan
Purchase behaviour - products that enhance productivity, high revenue per customer, willing to buy value added solution
Value proposition - solution that will help you grow your business
What are the attributes of “Cost focused sustainers” SME segment?
Core business need - ways to continue and save
Firm demographics - Small # of employees, less sophisticated, lower in education, limited or no financial plan
Purchase behaviour, products that lower cost, lower cost revenue per customer, confused by value added solutions
Value proposition, solution that save your business money
What is the process to develop a needs based market segment?
- Segment by needs and benefits
- Segment identification (demographics, lifestyles and usage behaviour)
- Segment attractiveness
- Segment profitability
- Segment positioning (create a value proposition and price positioning strategy)
- Segment strategy (acid test) - create segment storyboards to test the attractiveness of each segment positioning strategy)
- Marketing Mix Strategy - 4 Ps
How do we determine segment attractiveness?
Assess:
Market demand
Competitive Intensity
Market access
How do we measure market demand (to determine segment attractiveness)?
Market size
Growth rate
Market potential
How do we measure competitive intensity (to determine segment attractiveness)?
Number of companies
Ease of entry
Substitutes
How do we measure market access (to determine segment attractiveness)?
Customer familiarity
Channel access
Company fit
Why do we perform an acid test?
Take content (for segmentation, take storyboards) to users and ask them if they would use it, whether they would be prepared to purchase it and for how much - generally whether it resonates
Why would a bank use different segmentation strategies?
To differentiate themselves in the market and appeal to different users with different needs.
Why would a business implement an adjacent segment strategy?
To pursue new growth after reaching saturation point with segment A.
What was the logic o Toyota’s adjacent segment strategy that started in 1957 at the low end of the price-quality market?
Market penetration upon entry.
When they started no one knew who they were. Started at the low end of the market and move up.
When would a business go after only a small segment?/the smallest segment?
When they have limited resources and capabilities (e.g. regional bank example)
What are sub-segment strategies?
When a target audience further segments a core segment based on their unique needs.
What is the role of customer relationship marketing?
To develop a long term customer relationship that benefits the customer and the company
What are the three levels of customer relationship marketing?
Mass personalisation
Mass customisation
Customer relationship management
What is an example of mass personalisation?
Airline Mileage Programs
What is an example of mass customisation?
Car manufacturers
What is an example of relationship marketing?
Financial services, insurance brokers
Why is it important for businesses to have a database?
To have enough data to know a customer’s needs, buying behaviour and product preferences.
What is mass personalisation?
Recognises a customer by name, needs and buying behaviour
What is mass customisation?
Allows a company to offer customers in the same segment different product-price configurations
Marketing mix is customised to the individual customer
What are the four steps to a customer relationship management program?
1) Qualify current customers based on attractive levels of potential customer value and company value
2) Understand individual customer needs, product preferences and usage behaviours
3) Create individualised customer solutions based on the customer’s unique needs and alter touchpoints to serve in building and sustaining the relationship
4) Track customer experiences and satisfaction to ensure loyalty is achieved
