M2 - 11 Segmentation & Positioning

Question 1

How do you define your market offering as a marketer?

Answer 1

select What and for Whom

1) select what customers to serve
- segmentation: divide the total market into smaller segments.
- targeting: select the segment or segments to enter.

2) decide on a value proposition:
- differentiation: differentiate the market offering to create superior customer value.
- Positioning: Position the market offering in the minds of the target customer.

these two steps both help create value for the targeted customer.

Question 2

What is a segment?

Answer 2

A group of potential customers with one or more characteristics in common.

Question 3

describe an ideal market segment.

Answer 3

the ideal market segment is:
- Is internally homogeneous: people in the same segment prefer the same product Attributes.
- Is externally heterogeneous: people from different segments
have different Attribute preferences.
- Responds similarly to a market stimulus.
- Can be cost-efficiently reached, since its members behavior is alike.

Question 4

What are the segmenting variables in a consumer market?

Answer 4

1) geographic (region, country size, city size, density, climate…)
2) demographic (Age/life cycle stage - age, family size and family life cycle; gender; income - occupation, education)
3) psychological (social class, lifestyle, personality)
4) Behavioral (occasions - think of buying, actual purchase, usage; usage rate - light, medium, heavy users, paretto rule; Loyalty Status - RFM)

Question 5

What are the segmenting variables in a business market?

Answer 5

1) Demographics (Industry, Company Size, Location)
2) Operating Variables (Technology, Usage Level, Customer Capabilities)
3) Purchase approach (Function Organization, Power Structure, Existing Relationship, Purchase Policy and Criteria)
4) Situation Factors (Urgency, Specific Application, Size of order)
5) Personal Characteristics (Buyer-Seller Similarity, Attitudes towards risk, Loyalty)

Question 6

What are the qualities an effective segment should have?

Answer 6

(measureable)
1 - Accessible – Effectively Reached, to serve them
2 - Substantial – Large enough to make it profitable to serve them
3 - Differentiable - Distinguishable and respond differently to MK Programs
4 - Actionable – Effective Programs can be designed to attract and serve them

accd to book.

• 1 MEASURABLE - the size, purchasing power, and profiles of the segment must be measurable.
• 2 ACCESSIBLE - the market segments can be effectively reached and served. habits and patterns of segment must be noticeable/accessible
• 3 SUBSTANTIAL - the market segments are large or profitable enough to serve. a segment should be the largest possible homogeneous group worth pursuing.
• 4 DIFFERNTIABLE - the segments are conceptually distinguishable. ex. if men and women respond similarly to marketing efforts of soft drink companies, they do not constitute separate segments.
• 5 ACTIONABLE - effective programs can be designed for attracting and serving the segment.

Question 7

What steps should be taken when making a targeting decision?

Answer 7

1 - evaluate your market segements:
~ size and growth
~ structural attractiveness

2 - look at your business objectives and resources.

3 - make a decision on what segments you are going to serve.

options:
- mass marketing (no segmented offer=
- segmented marketing
- nice marketing
- micromarketing (local and individual (one to one, mass customization)

Question 8

how do marketers decide on a value proposition?

Answer 8

by differentiation and positioning.

differentiation - differentiate the market offering to create superior customer value.

positioning - position the market offering in the minds of target customer

Question 9

what must a marketer look at in order to differentiate the market?

Answer 9

1) attributes of your company
- look at relevance
- look at the value and/or exclusivity of your brand (negative or positive)

2) differences between your company and others.
- is your brand: important, distinctive, superior, communicable, hard to copy, affordable, and profitable?

3) benefits of your organizatiom (whats your competitive advantage)

Question 10

describe the attributes of market positioning?

Answer 10

• -> positioning is MULTIDIMENSIONAL
• many attributes are categorized into just two dimensions (orientation and price)

–> positioning is always relevant to other products/brands in the market, as well as the ideal brand.

~~ a positioning statement is a verbal description of these attributes ~~

Question 11

what must marketing plan positions distinguish?

Answer 11

Marketers plan positions that distinguish their products from competing brands and give them the greatest advantage in their target markets.

Question 12

What role does positioning play in creating strong brands?

Answer 12

the major brand strategy decisions involve brand positioning, brand name selection, brand sponsorship, and brand development.
- Brand Positioning = Placing the Brand in an exclusive (different from those of competitors’) place in Consumers’ minds. → Marketers need to position their brands clearly in target customers’ minds. They can position brands at any of three levels

1) Positioning on Product Attributes
2) Positioning on a Benefit
3) Positioning on Beliefs and Values

Question 13

define repositioning

Answer 13

Repositioning is the task of implementing a major change the target market’s perception of the product’s key benefits and features, relative to the offerings of competitive products. This is sometimes a challenge, particularly for well-established or strongly branded products.
- Firms may consider repositioning a product due to declining performance or due to major shifts in the environment.

Question 14

define brand equity

Answer 14

Brand Equity = Positive differential effect that knowing the Brand name has on Customer response to the Product or Service. …or how much more are Customers willing to pay for my Brand

Question 15

Define RFM

Answer 15

‘Recency, Frequency, Monetary Value - RFM’

DEFINITION of ‘Recency, Frequency, Monetary Value - RFM’ A marketing analysis tool used to identify a firm’s best customers by measuring certain factors. The RFM model is based on three quantitative factors:

1) Recency - How recently a customer has made a purchase
2) Frequency - How often a customer makes a purchase
3) Monetary Value - How much money a customer spends on purchases

RFM analysis is based on the marketing axiom that “80% of your business comes from 20% of your customers.”

Question 16

define Pareto principle

Answer 16

The Pareto principle (also known as the 80–20 rule, the law of the vital few, and the principle of factor sparsity)[1] states that, for many events, roughly 80% of the effects come from 20% of the causes
Essentially, Pareto showed that approximately 80% of the land in Italy was owned by 20% of the population; Pareto developed the principle by observing that 20% of the peapods in his garden contained 80% of the peas

Question 17

define market segment

Answer 17

dividing a market into smaller segments with distinct needs, characteristics, or behavior that might require a separate marketing strategies or mixes.

Question 18

define behavioral segmentation in a consumer market

Answer 18

dividing the market into segments based on consumer knowledge, attitude, usage, or response to a product. (ex: benefit sought segment, usage rate segment)

Question 19

What are the requirements for effective segmentation?

Answer 19

to be useful, market targets/segments must be:

• 1 MEASURABLE - the size, purchasing power, and profiles of the segment must be measurable.
• 2 ACCESSIBLE - the market segments can be effectively reached and served. habits and patterns of segment must be noticeable/accessible
• 3 SUBSTANTIAL - the market segments are large or profitable enough to serve. a segment should be the largest possible homogeneous group worth pursuing.
• 4 DIFFERNTIABLE - the segments are conceptually distinguishable. ex. if men and women respond similarly to marketing efforts of soft drink companies, they do not constitute separate segments.
• 5 ACTIONABLE - effective programs can be designed for attracting and serving the segment.

1 - Accessible – Effectively Reached, to serve them
2 - Substantial – Large enough to make it profitable to serve them
3 - Differentiable - Distinguishable and respond differently to MK Programs
4 - Actionable – Effective Programs can be designed to attract and serve them

Question 20

Describe how marketers move from the segmentation process to the targeting process.

Answer 20

market segmentation reveals a firms market segment oppertunities. now the firm must evaluate the various segments and decide how many and which it can best serve in order to select target segments.

Question 21

describe an undifferentiated marketing targeting strategy.

Answer 21

Undifferentiated targeting occurs when the marketer ignores the apparent segment differences that exist within the market and uses a marketing strategy that is intended to appeal to as many people as possible. In essence, the market is viewed as a homogeneous aggregate. By reaching the largest audience possible, exposure to the product is maximized. In theory, this would directly correlate with a larger number of sales or buy in to the product.

• This is a possible approach for large global companies that have strong offerings, (such as Apple with their iPad, which could be considered an example of modern day mass-marketing)
• Quite suitable for generic markets (where the product is a commodity)

Question 22

describe a differentiated marketing targeting strategy.

Answer 22

A differentiated marketing strategy targets different market segments with specific marketing mixes designed especially to meet those segments’ needs. Each mix includes a product, price, placement and promotional program customized specifically for a particular segment.

• A good approach from firms who have assets/capabilities that can be leveraged into other target markets (opportunity to grow)
• A necessary approach where there is a diversity of consumer needs across market segments

Question 23

describe a concentrated (niche) marketing targeting strategy.

Answer 23

Concentrated marketing occurs when a business concentrates its marketing effort on one or a handful of segments.

• The ability to specialize to this degree has the advantage of allowing a company to focus its resources on meeting the needs of a single, well-defined and well-understood market, which makes it more competitive against larger companies.
• On the downside, a concentrated marketing strategy can pigeonhole a company into a single product and market and leave it vulnerable to the effects of changing conditions within that market.

Question 24

describe a micro marketing marketing targeting strategy.

Answer 24

tailoring products and marketing programs to the needs and wants of specific individuals and locations. (local marketing/individual marketing)

Question 25

describe what happens after marketers decide which segments of the market to target.

Answer 25

the company must decide on a value proposition- how it will create differentiated value for targeted segments and what pòsitions it wants to occupy in those segments. a products position is the way a product is defined by consumers on important attributes (brands).

Question 26

what is a positioning map?

Answer 26

marketers prepare a positioning map in planning their differentiation and positioning strategies in order to show consumer perceptions of their brands versus competing products on important buying dimensions. (example: is the brand considered a luxury or performance brand by customers?)

Question 27

what different ways can a company differentiate itself from others in the consumers mind?

Answer 27

a market offer can be differentiated along the lines of: 
1 - product - features, performance
2- service - delivery
3 - channels - performance 
4 - people - better employees 
5 - image - brand image

Question 28

define value proposition

Answer 28

the full positioning of a brand - the full mix of benefits on which it is positioned.

Question 29

define shopping products

Answer 29

Shopping products are less frequently purchased consumer products and services that customers compare carefully on suitability, quality, price, and style. When buying shopping products and services, consumers spend much time and effort in gathering information and making comparisons.

Examples include furniture, clothing, used cars, major appliances, and hotel and airline services. Shopping products marketers usually distribute their products through fewer outlets but provide deeper sales support to help customers in their comparison efforts

Question 30

define Customer-perceived value .

Answer 30

Customer-perceived value = The customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers.