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MKTG10001 > Market segmentation > Flashcards

Market segmentation Flashcards

1
Q

What is market segmentation?

A

Involves dividing a large market into smaller target markets, or customer groups with similar needs and/or desires who will respond in a similar way to product offerings and marketing initiatives.

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2
Q

What are the principles of market segmentation?

A
  • Fundamentally about optimising efficiency in resource use and allocation
  • Identifies opportunities for repositioning
  • Identifies opportunities for new products
  • Allow firms to effectively target and design products that better meet the needs and wants of all individuals in the segment, instead of making one product for each individual in the market.
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3
Q

What are the 3 types of customer needs analysis?

A
  1. existing needs
    2, latent needs
  2. incipient needs
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4
Q

What are existing needs?

A

short term, satisfactory solutions for these needs already exist, and opportunity for new products is limited.

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5
Q

What are latent needs?

A

unmet needs, consumers can articulate/express their needs via in-dept market research, there is opportunity for innovation

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6
Q

What are incipient needs?

A

unmet needs, consumers cannot articulate/express their needs or a solution, technological breakthroughs can drive markets

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7
Q

Which need does market segmentation help us organise?

A

existing needs

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8
Q

What are the 4 proxies variable for segments?

A
  1. demographics
  2. Geographics
  3. psychographics
  4. behavioural
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9
Q

What is an example of demographics?

A

socio-economic group, age, gender, family structure, income, race or ethnic identity

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10
Q

What is an example of geographic?

A

customer location, country, city, market density, language, climate, area, market size, population, region, metropolitan/rural

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11
Q

What is an example of psychographics?

A

values, attitudes, shared activities, interests and opinions, passions

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12
Q

What is an example of behavioural?

A

readiness to purhcase, rate of usage, benefits sought/problems solved, intent, occasion, buyer stage, lifecycle stage, engagement, product knowledge, early adopter, user status

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13
Q

What are the 3 benefits of segmentation?

A
  1. Optimise resource allocation
  2. Identify opportunities for repositioning
  3. Identify opportunities for new products
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14
Q

What are the 4 principles of effective segmentation?

A
  1. Homogenous
  2. Heterogeneous
  3. Profitable and substantial
  4. Operational (measurable, actionable, accessible)
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15
Q

What is a persona?

A

Persona focus on the ‘which’ (helps companies communicate their chosen segment effectively by humanising it)

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16
Q

What is a segmentation criteria?

A

Criteria use for segmentation should be based on the firm’s ability to identify segments for which different strategies should be pursued.

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17
Q

Firms segment markets based on what?

A
  1. benefits sought
    2, usage behaviour
  2. price sensitivity
  3. loyalty
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18
Q

What are the types of benefit sought?

A

Key value drivers or expectations – anything that can be added to a product that will increase its value to consumers’ and differentiate the product from its competitors):

  1. Product features (does it connect to wifi, does it have a camera?)
  2. Performance (does it enhance productivity, does it improve the quality of my life?)
  3. Reliability and credibility (is it safe to use, is it trustworthy?)
  4. Company and brand reputation (is the brand reputable, is it well-known among my peers?)
  5. Newness and uniqueness (are there already alternatives in the market, is it different, is it advanced, does it have any features that differentiate it from others, is it exclusive?)
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19
Q

What is targeting?

A

Involves the process of evaluating market segments for size and growth potential, attractiveness, and fit, and then choosing a particular segment towards which the firm decides to aim its marketing efforts and ultimately its product/service.

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20
Q

What are the 4 types of targeting?

A
  1. undifferentiated
  2. differentiated
  3. concentrated
  4. micro
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21
Q

What is undifferentiated targeting?

A

Appealing to a broad spectrum of people (mass market), employs a single marketing mix (4p’) to reach the max. number of consumers in that target market e.g. salt.

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22
Q

What is differentiated targeting?

A

Targets different market segments with specific marketing mixes designed esp. to meet those segments needs.

Developing on or more products for each of the several distinct segments and making sure these offerings are kept separate in the marketplace e.g. multivitamins based on gender-based market segments.

23
Q

What is concentrated targeting?

A

Focusing its efforts on offering one or products to a single market segment.

Only one marketing mix is developed, and it effective for small companies with limited resources.

Since the company has focused all their efforts on one market, the firm is at risk for failing if demand decreases (but their financial position will be strong if demand is strong).

More difficult to reposition and vulnerable to effects of changing conditions within that market.

24
Q

What is micro targeting?

A

Limit customers into very small segments or even as individuals.

Allow marketers to target their audience needs more specifically to a very finite number of customers or individuals (using data mining, algorithm, AI to search user’s personal and behavioural data).

This is used to develop a product/service that satisfies the specific requirements of the customer. Penetrates the market niche which can increase market share and leads to brand loyalty.

25
Q

What are the strategic considerations in targeting?

A
  1. Size and growth of the product life cycle (should evolve throughout PLC)
  2. Segment interrelationships or compatibility
  3. Competitive marketing strategies
  4. Degrees of fit
26
Q

What are Segment interrelationships or compatibility?

A

Segments may provide opportunities for economies of scope, the success in one segment may provide a platform for entering another.

27
Q

What are Competitive marketing strategies?

A

Firms must organise to serve segmented competitively, and should consider the segmentation approaches of competitors, and consider the markets not served by competitors.

28
Q

What are degrees of fit?

A

Should assess the company’s understanding of the segment and its compatibility with the company’s capabilities. So, the value firms wish to create for a segment must be in line with their capabilities.

29
Q

What is a brand?

A

Brand refers to a name, term, symbol or any other unique element of a product that identifies one company’s products and sets them apart from their competition.

30
Q

What are the characteristics of brands?

A
  • Brands are sources of immense value for firms and one of the few defensible sources of competitive advantage.
  • Brands help a firm ‘position’ its offering in the market. They are the means by which a firm’s offering achieves a strong position in consumer’s minds.
  • The best brands build an emotional connection with the consumer. Strong brands don’t just meet rational needs; they create an emotional reaction.
31
Q

What is positioning?

A

Positioning refers to the efforts of a firm to develop a set of offering characteristics that are intended to result in favourable and meaningful comparisons relative to competitors’ offerings, as well as the seller’s other offerings.

32
Q

What are the characteristics of positioning?

A
  • Involves the conscious effort of a seller to communicate the key elements of this framing to customers, and customers’ perception of these efforts.
  • Positioning guides marketing strategy by clarifying the brand’s core values
  • Repositioning is the process of redoing a product’s position to respond to marketplace changes
33
Q

What is brand equity?

A

Brand equity refers to the value of a brand to an organisation. The commercial value that derives from the consumer perception of the brand name of a particular product or service, rather than form the product or service itself.

34
Q

What kind of benefits do firms with strong brand equities are able to reap?

A
  1. Incremental attraction
  2. Cost advantage
  3. Sustainable price premium
35
Q

What does incremental attraction mean?

A

able to easily attract new customers, resist competitive activity, introduce line extensions, expand globally.

36
Q

What does cost advantage mean?

A

able to expend less on advertising due to increased brand awareness, lower advertising-sales ratio, channel leverage.

37
Q

What does sustainable price premium mean?

A

able to generate greater loyalty, capture a price premium lower price elasticity (loyal customers are more likely to purchase a firm’s products at any given market price – a premium price – because of the relatively large & positive position it fills in their evoked set)

38
Q

What are the 3 role of brands?

A
  1. Functional
  2. Risk reduction
  3. Pleasurable, altruistic
39
Q

What are functional roles?

A

Identification: the clearly seen, to make sense of the offer, to quickly identify sought after products
Risk reduction

40
Q

What are the types of risk reductions?

A
  1. Guarantee – to be sure of finding the same quality no matter where or when the product is purchased
  2. Optimisation – to be sure of buying the best in the product category from the best performer for a particular purpose
  3. Characterisation – to have confirmation of self image of the image presented by others. Brands say something about ourselves; they categories people
41
Q

What are the types of pleasurable roles?

A
  1. Continuity – satisfaction from intimacy and familiarity with the brand the consumer has consumed for years
  2. Hedonistic – satisfaction linked to the attractiveness of the brand, its logo, it communication
  3. Ethical – satisfaction linked to the responsible behaviour of the brand and its relationship to society
42
Q

What is a brand image?

A

Creating brand awareness, and the strength, favorability and uniqueness of associations. A strong brand image means that the brand is strong and favourable to consumers.

43
Q

What is brand awareness?

A

The likelihood that the brand can be recognised or recalled (depth of awareness) and the variety of purchase situations for which the brand comes to mind (breadth of awareness)

44
Q

What is strength of brand associations?

A

the extensiveness of brand information processing (brand attributes, brand benefits)

45
Q

What is favourability of brand associations?

A

the associations viewed as positive and capable of satisfying consumer needs (desirability, deliverability)

46
Q

What is uniqueness of brand associations?

A

The associations are not shared with competing brands (Unique Selling Proposition [USP] gives consumers a compelling reason why they should buy your brand) — will shape competition.

47
Q

What can a company with high brand equity indicate?

A

A company with high brand equity indicates the attractiveness and favourability of the brand relative to others. They are able to link the way the brand is perceived by consumers in a positive manner.

48
Q

What is brand identity?

A

Brand identity is the meaning, position and goals for the brand agreed upon and projected by the organisation. It begins with creating a cohesive organisational culture around the brand’s objectives (“what we stand for”, building a shared vision for the brand). So, brands require careful management, and this process starts from inside the firm.

49
Q

Does brand identity precede brand image?

A

Yes

50
Q

Where does brand associations come from?

A
  1. product-related attributes
  2. non-product related attributes
  3. ingredient branding
51
Q

What are the 3 types of product-related attributes?

A
  1. Function: intrinsic advantages e.g. basic motivations such as well-being and health
  2. Experiential: what it feels like to use product e.g. satisfy experiential needs such as sensory pleasure and cognitive stimulation
  3. Symbolic: extrinsic advantages, relate to underlying needs for social approval, personal expression, and out-directed self-esteem. Consumers may value the exclusivity or fashionability of a brand because of how it relates to their self-concept.
52
Q

What are non-product related attributes?

A

E.g. user & usage imagery, brand personality and feelings (who or what type of person might use the brand/product, communicates about lifestyle of user)

53
Q

What is ingredient branding?

A

The brand policy concerning a branded object of materials, components, or parts that represents a brand for the respective target group. Including one into the other (Samsung screen to Apple phone)

MKTG10001 (10 decks)

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