Market segmantation and targeting/positioning

Question 1

Socioeconomic segmentation: (6)

Answer 1

1. Higher managerial, administrative or professionals
2. Intermediate managerial, administrative or professionals
3. supervisors, clerical and junior managerial, administrative or professionals
4. Skilled manual workers
5. Semi and unskilled manual workers
6. Casual labour

Question 2

Behavioural segmentation: (4)

Answer 2

1. When they buy
2. How much they buy
3. Brand loyalty
4. The benefit they want from the product

Question 3

The value of segmentation (6)

Answer 3

1. Understanding what different groups of customers want instead of treating everyone the same
2. Different groups have different requirements and priorities and managers strive to understand them
3. Identifying a segment enables more efficient and focused marketing
4. The more segments a business decides to focus on -> the more complex it gets
5. Every time the market is segmented again the potential market might be getting smaller and the production runs may be reducing -> might make it unprofitable
6. Balance between customer needs with what is practical, efficient and profitable

Question 4

Influences on choosing the target market (2)

Answer 4

1. There is a sufficient demand and potential profit to justify the investment
2. It has the ability to be competitive and gain sales

Question 5

Steps in market segmentation (3)

Answer 5

Segmentation -> targeting -> positioning

Question 6

Niche marketing benefits (2)

Answer 6

1. The value of niche marketing is that by focusing on a niche it may be possible to compete within a bigger market such as fashion or media, without directly challenging the bigger businesses and therefore not being seen as a threat by them.
2. By concentrating on a niche market, a business identifying a clear segment that is usually relatively small and where they are not likely to be challenged by the bigger businesses that could undercut them.

Question 7

Niche marketing drawbacks (2)

Answer 7

1. The danger of doing so is that big businesses might respond aggressively.
2. A niche market might not be particularly big and the business will be vulnerable to loosing a few customers; the profits could be relatively low. If the niche does grow and become more popular thus will attract bigger businesses in because they can see potential profits. Over time the niche could move into mainstream.

Question 8

Mass marketing -

Answer 8

• aims for volume by trying to develop products that will meet some of the needs of large numbers in the market. This will involve more customers and potentially higher revenue and returns

Question 9

How to be successful in mass marketing (2)

Answer 9

1. Promotional techniques to reach more customers
2. Potentially more competition as businesses fight in the relatively large market; businesses will therefore consider where to position themselves within the mass market

Question 10

Mass marketing problem

Answer 10

The risk of targeting mass markets are the level of investment required and the potential difficulties competing against other businesses already in this market. Setting up to compete against established high street banks, petrol stations or soft drinks producers could be difficult as they will fight harder to retain their customers, with potentially high level of resources to fight with. Reduced demand in mass market as the number of niche businesses had increased and customers are looking for something that meets their needs more precisely.

Question 11

Positioning -

Answer 11

• identifies the benefit and price combination of a product relative to competitors

Question 12

Segmentation -

Answer 12

• the process of identifying different groups of similar needs

Question 13

Demographic segmentation -

Answer 13

• refers to the characteristic of the people in the target population

Question 14

Geographic segmentation -

Answer 14

• the method of segmentation groups needs and wants based on the geographical area in which customers are based

Question 15

Income segmentation -

Answer 15

• segmentation based on the level of consumer income

Question 16

Behavioural segmentation -

Answer 16

• focuses on what customers actually do

Question 17

Target market -

Answer 17

• choosing which segment to focus on

Question 18

Mass market def -

Answer 18

• aims to provide products that meet some of the needs of a large proportion of the market

Question 19

Niche market def -

Answer 19

• if a business decides to focus on a specific segment of the market

Question 20

Types of market segmentation (4)

Answer 20

1. Demographic
2. Geographic
3. Income
4. Behavioural

Question 21

Positioning depends on (4) + conclusion

Answer 21

1. Price
2. Benefits it offers
3. It’s brand image
4. The level of service it provides
   => the combination of benefits and price relative to other businesses will determine the competitiveness of a firm’s offering

Question 22

Influences on positioning (3)

Answer 22

1. Strength of the business - some are more efficient, some have better bargaining powers with suppliers, innovation etc
2. Competitors - if they choose to target a market gap the business must have the necessary strength to do this well
3. Market conditions - PEST-C conditions