Market Segementation Flashcards
What is a market segment
- a group of customers that have similar set of characteristics
How can a market be segmented
- age
- gender
- income
- lifestyle
- level of education
-geographical - religion
Why do businesses need to market segment
As customers differ in :
- benefits they want
- amount able and willing to pay
- media they use
- quantities they buy
- how to promote product to increase sales
4 segmentation methods
- geographical
- demographic
- behavioural
- psychographic
Geographic
- customer location
- region
- urban/rural
Demographic
- age
- gender
- occupation
-socio-economic group
Behavioural
- rate of usage
- loyalty status
- readiness to purchase
Psychographic
- personality
- lifestyle
-attitude
-class
Benefits of market segmentation
- better matching of customer needs
- enhanced profits from business
- retained more customers
- target marketing communications
Better matching of customer needs
- customers needs differ
- creating separate products for each segment - customers more satisfied
Enhanced profits for business
- different customers vary in how sensitive they are to price- select appropriate price for each segment
Retain more customers
- by marketing products appeal to customers at different stages of life cycle - business retain customers who might otherwise switch to competitor
Target marketing communications
- business need to deliver their marketing message to relevant customers- segment can be reached more often at lower cost
Limits of segmentation
- increases costs- attempt to serve many segments - increases due to product variation
- promotions and distribution expenditures increase- separate program used for different market Segments
Market map
A grid that measures 2 different aspects of the brands or business within a market - identify marketing strategy of competitors in market
Purpose of market mapping
- shows how market is segmented
- identify gaps in market
- show where the sector is overcrowded
- to stop the producer form becoming over reliant on one sector
Market segmentation benefits
- firms can design and create good specifically aimed at the precise customer
- prices and profits will be higher by adding value for specific customers
- firms can target different segments with different products
Market segmentation disadvantages
- research and development and production cost is high
- promotional costs - high as different advertisements and promotions needed or different segments
Market positioning advantages
- helps spot gaps in the market
- allows firms to analyse their competitors
- suggests ways to create brand images and marketing techniques
Market positioning
- no guarantee of success if positioned in the wrong place
- requires market research to find out consumer opinion on each product
- needs careful selection of dimension / criteria used on the map
