Making marketing decisions: segmentation, targeting, positioning

Question 1

Advantage of market segmentation

Answer 1

-Helps to better understand the company’s target market including its characteristics, needs and wants
–Allows a firm to better design their marketing mix to increase sales and market share
Helps them to build a strong brand identity and establish loyalty
-Helps a firm to plan new suitable products to meet their chosen market segments

Question 2

Disadvantages of market segmentation

Answer 2

Firms can find it difficult to identify the most important segments for a product.
Constant research is needed to keep up to date with consumer tastes and anticipate consumer taste changes.
Products may become too specific to one market segment not catering to the tastes of others thereby reducing sales.
Companies may ignore potentially lucrative segments.
Firms may find it difficult to reach their chosen market segment, for example, younger audiences not reading as much physical print and streaming television and films online means avoiding traditional advertising channels.

Question 3

Examples of market segmentation

Answer 3

• demographic (age gender)
• income
• location

Question 4

examples of market targeting

Answer 4

Concentrated marketing – A product is aimed at a very well defined and specific market segment (niche). It allows firms to focus and avoids the need for mass production.
Differentiated marketing – Targeting several different market segments with different products.
Undifferentiated marketing – Targeting the whole mass market with one product.
-Product proliferation – When a firm sell a range of products aimed at different markets. For example Volkswagen motor company owns a range of different brands including Audi, Bentley,
-Market positioning – Where a firm’s products/services are in a market in relation to its rivals. A firm will do this based on factors such as price, value, quality, product use, features, etc.
It will aim to create a unique selling point (USP) to provide it with a comparative advantage

Question 5

Niche marketing is?

Answer 5

when firms target a product or service at a small segment of a larger market.

Question 6

advantages of niche market

Answer 6

It allows firms to tailor their product/services to a particular type of customer and their tastes.
-smaller consumer groups in a niche market, firms are able to build better, more direct relationships and get to know their wants and needs more specifically. For example, Hornby model railways, Porsche cars.

Question 7

disadvantages niche market

Answer 7

• it does limit the potential sales and market size.
• If larger rivals spot a successful niche they may decide to enter the market making competition more intense
• if a market may be particularly volatile

Question 8

mass marketing is

Answer 8

a strategy of selling goods with mass appeal and promoting them to all types of customer. For example, Esso, BP, Shell, Heinz Baked beans, Hovis.

Question 9

disadvantages of mass marketing

Answer 9

-However this approach provides the firm with less potential for targeting specific consumer groups and adapting their products to their tastes.
Products must appeal to a wide range of consumers so firms are unable to easily add value by tailoring products to consumers specific tastes. This results in lower prices having to be charged.
-very competitive,loads of mass marketing firms.hard to get into

Question 10

advantages of mass marketinh

Answer 10

-Large-scale production and economies of scale may be possible. —Unit costs can be kept lower helping to push prices down.
High barriers to entry may mean decreased competition for already established firms.