Market Segmentation Flashcards
What is the basic idea behind segmentation?
Based on the idea that there are too many customers in the market as a whole and that Companies will perform better if they separate the market into groups, in the hope that they will act homogenously and respond in the same way to marketing stimuli.
What economic theory is market segmentation based on?
Market segmentation based on economic pricing theory, which suggested that discriminatory pricing could be used to maximise profits amongst different consumer groups
What are the four ways of segmenting a market?
Geographic, demographic, psychographic and behavioral segmentation.
What does segmentation allow the effective allocation of?
Resources including financial ones.
What does segmentation help with the understanding of? What does it make them focus on?
Customers. The customers who they have the best chance of satisfying.
What does a market consist of according to Weinstein, 2006?
A market consists of customers (actual and potential), needs, products, technologies and competitors.
What is one of the most difficult tasks that managers face?
How to define relevant and pre-segmented markets.
What are the potential pitfalls of market segmentation according to Weinstein, 2006?
A market definition too narrow limits potential opportunities; one too large leads to mass marketing thinking and can make an organization’s efforts and resources seem almost insignificant.
What are the stages in the market segmentation, targeting and positioning process?
Market Segmentation
• Identify bases for segmenting market
• Develop profiles of resulting segments
Market Targeting
• Develop measures of segment attractiveness
• Select the target segment(s)
Market Positioning
• Develop positioning for each segment
• Develop marketing mix for each segment
What are the benefits of segmentation?
Improves understanding of the customer base
Provides a clear classification of the customers
Enables the generation of a targeted product portfolio that responds to the needs of the market place
Helps gauge a company’s market position relative to the competition
Leads to the effective fine tuning of marketing strategies and competitive advantage if done well
What are the disadvantages of segmentation?
The market is so small that marketing to a portion of it is not profitable.
Heavy users make such a large proportion of the sales volume that they are only the relevant target.
The brand is the dominant brand in the market.
What are the segmentation variables?
Geographic segmentation – location
Demographic segmentation – information, such as age, gender, family size, income, education, religion, or ethnicity
Psychographic segmentation – variables, such as social class, personality, or their approach to life
Behavioural - targeted such as purchase occasions , benefits sought, user status, usage rate
Discuss geographic segmentation
Easy to define and measure but within geographic segments wide variety of needs and wants
What are the demographic segmentation factors?
Age
Race
Sex
Income
Occupation
Socio-economic status
Family structure
Dress size
