Chapter 6: Segmentation, Targeting & Positioning Flashcards
Name the two market categories
- Consumer markets: this market consist of purchasers and household members who intend to consume or benefit from the purchased products.
- Business markets: this market consists of people or groups that purchase a specific kind of product for one of three purposes, namely reselling, direct use in producing other products or use in general daily operations
What is a market segment
It is a subgroup of people or organisation within a larger market.
What is market segmentation
It is the process of dividing the total market for a particular product or category into relatively homogeneous(same) groups.
Name the market segmentation approaches
- Mass marketing
- Differentiated marketing
- Niche marketing
- One-on-one marketing
Explain mass marketing (undifferentiated)
This approach implies no market segmentation whatsoever, it contains the entire market.
Explain differentiated marketing
Firms use some form of segmentation by dividing the total market into groups of customers with relatively similar needs, then develop a marketing program that appeals to one or more of these segments
Explain niche marketing (concentrated)
Firms focus their marketing efforts on one small, well defined market segment or niche with a unique set of needs
Explain one on one marketing
Used when a firm creates a unique product or marketing program for each customer in the target segments. It is commonly used in business markets.
What is the criteria for effective market segmentation
- Identifiable and measurable: the characteristics of the members in the segment must be easily identifiable. Data about the segment based on location, age etc. must be available
- Substantial: the segment must be large and profitable enough to make it worthwhile for the firm to pursue
- Accessible: the segment must be accessible in terms of communication and distribution. The organisation must be able to reach its targeted segment.
- Responsive to marketing: the segment must respond to the firms marketing effort, including changes to the marketing program overtime
- Viable and sustainable: the segment must meet the basic criteria for effective exchange between buyer and seller.
What are the bases for market segmentation (pg 179)
- Demographic segmentation - age, gender, income, occupation, education
- Geographic segmentation - city or rural area, national region, world region, market size & density, climate
- Psychographic segmentation - personality, motive, lifestyle, geodemographics
- Behaviouristic segmentation - product category, brand, loyalty, price point, distribution outlet
- needs and benefits segmentation - functional benefits, psychological benefits, relationship and process benefits
Explain target market
It is a group of people for whom the organization designs, implements, and maintains a marketing mix with the intention to meet the needs of that group
What is the criteria for selecting target markets
- attractive in terms of profitability
- best fit between customers needs and the firms resources
- size of the segment
- ability and willingness of consumers in the segment to buy the product or service
Name the target market selection approaches
- undifferentiated targeting
- differentiated targeting
- concentrated targeting
Explain undifferentiated targeting
It is also refered to as mass marketing/targeting and is only used by large firms with the capabilities and resources to execute it
Advantages are potential savings on productction and marketing costs
Disadvantages are 1. unimaginative product offerings 2. firm is more vulnerable to competition
Explain differentiated targeting
It is also referred to as selective targeting or multi segment and is used by firms with multiple capabilities in many different product categories
Advantages are 1.greater financial success 2.economies of scale in production and marketing
Disadvantages are 1.high costs 2.cannibalization
Explain concentrated targeting
It is implemented when a firm selects a market niche for targeting its marketing effects. It is used when the firm’s capabilities are closely linked to the needs of a single market segment. The firm may be product specialists or market specialists.
Advantages are 1.stronger positioning 2.better able to compete with larger firms 3.better able to meet the needs of a narrowly defined segment
Disadvantages are 1.segments are too small or changing 2.large competitors may market to niche segments more effectively
Explain product specialization
It is used when a firm’s expertise in a product category can be leveraged across many markets segments
Explain market specialization
Is used when a firm has intimate knowledge and expertise in one market, allowing them to offer customized marketing programs
What are the various approaches to behavioral segmentation (pg 183)
> product category segmentation - this approach is based on product attributes or features such as economy, medium-sized and prestige cars
> brand segmentation: this approach is used when a marketer of luxury goods and services chooses a narrow form of segmentation as an appropriate market to target
> product category user segmentation: this approach is based on whether a consumer is a heavy, medium, light or nonproduct category user, for example a mother shopping for her family may be regarded as a heavy user of personal care products
> rate of new product adaptation: this approach is used for segmentation purposes consumers are categorized into 5 groups they are 1.innovators 2.early adopters 3.early majority 4.late majority 5.laggards or non-adopters
> loyalty segmentation: this approach is based on brand loyalty behavior and particular attention is usually paid to identify the most loyal segments of an existing customer market. Pareto 80/20 principle is applied (80% of a firms revenue is often from 20% of its most loyal customers)
> price point segmentation: it is based on charging a premium price for a product, providing value for money based on the price charged or providing cheap products
> distribution outlet segmentation: this approach uses the type of distribution outlet (for example, boutiques or online shopping) that is frequented by different groups of consumers
What is the state of buyer readiness
How aware the consumer is of the product and how certain they are to buy it
What are the 5 stages of buyer readiness
- being aware
- informed
- interested
- desiring the product and
- having some intent to purchase
a person not aware of a product may be seen as a non-product category user
What attitudes influence the state of buyer readiness
1.enthusiastic 2.positive 3.indifferent 4.negative and 5.hostile
What are four groups associated with brand loyalty status
- hardcore loyals: consumers who buy one brand all the time
- split loyals: consumers who are loyal to two or three brands
- shifting loyals: consumers who regularly shift loyalty from one brand to another
- switchers: consumers who show no loyalty to any brand
What are the five situation characteristics that influence purchasing behavior
> physical surroundings: physical environment of the outlet
> social surroundings: shopping as a social event
> temporal perspective: time needed to make the purchase
> task definition: the purpose of the purchase such as for personal use or as a gift
> pre-purchase attitude: different moods at the time of purchase
