Mark 6

Question 1

What is Market Segmentation

Answer 1

The identification of individuals or organizations with similar characteristics that have significant implications for the determination of marketing strategy.

• Involves the division of a diverse market into a number of smaller submarkets that have common features
• The objective is to identify groups of potential customers with similar requirements
• Market segmentation provides a commercially viable method of serving customer needs
• Segmentation is at the heart of strategic marketing

Question 2

What are the benefits of market segmentation

Answer 2

Question 3

State the different ways in which segmentation of customer markets is categorised

Answer 3

1. Behaviour: Benefits, purchase occasion, purchase behaviour, usage and perception and beliefs.
2. Psychographic: Lifestyle and personality
3. Profile: Demographic, socio-economic and geographic

Question 4

Present the different levels of the ACORN classification system

Answer 4

Question 5

Discuss segmentation of organisational markets

Answer 5

Organizational markets, in contrast to consumer markets, tend to be characterized by a relatively small number of buyers. Some of the most useful bases for segmenting organizational markets are:

• Organizational size:
• Industry
• Geographic location
• Choice criteria
• Purchasing Organization

Question 6

What is the criteria for successful segmentation

Answer 6

Effective: The segments identified should consist of customers whose needs are relatively similar but slightly different from other segments.

Measurable: Must be able to identify customers within a segment along with their behaviours and characteristics.

Accessible: The Company should be able to effectively use the information acquired from the segment to create marketing programmes.

Actionable: The company must have the resources to act on the opportunities identified through the segmentation scheme.

Profitable: The segment must be large enough to be profitable if invested in.

Question 7

Identify the different target market strategies

Answer 7

Undifferentiated marketing: a company develops a single marketing mix for the whole market

Differentiated marketing: a company develops specific marketing mixes to appeal to all or some of the segments

Focused marketing: a company develops a single marketing mix aimed at one target (niche) market

Customized marketing: a company develops a discrete marketing mix for each customer

Question 8

Define positioning

Answer 8

The act of designing the company’s offering so that it occupies a meaningful and distinct position in the target consumers mind. Effective positioning is the act of linking products and services to the solutions that consumers seek.

Question 9

Discuss the creation of a Perceptual map

Answer 9

The perceptual map is a useful tool for determining the position of a brand in the marketplace. The key steps in producing a perceptual map are:

• Identify a set of competing brands
• Identify the important attributes consumers use when choosing between brands
• Conduct quantitative marketing research where consumers score each brand on all key attributes
• Plot brands on a two-dimensional map

Question 10

Define Repositioning

Answer 10

Frequently,perhaps because of changing customer tasted or poor sales performance, a product or service will need to be repositioned.

Repositioning involves changing:

• the target markets
• the differential advantage
• or both

Question 11

How do you develop a positioning strategy

Answer 11

Deciding what position to occupy in the market requires consideration of three variables:

The customers – what attributes matter to them

The competitors – a differential advantage that ideally cannot be easily matched

The company – unique sustainable attributes