Market Segmentation and Strategic Targeting Flashcards
A marketing term that refers to aggregating prospective buyers into groups or segments with common needs and who respond similarly to a marketing action
Market segmentation
enables
companies to target different categories of consumers who perceive the full
value of certain products and services differently from one another.
Market segmentation
three criteria to identify different market
segments:
- Homogeneity
- Distinction
- Reaction
common needs within a segment
Homogeneity
being unique from other groups
Distinction
a similar response to the market
Reaction
The objective of market
segmentation
MINIMIZE RISK by determining which products have
the best chances of gaining a share of a target market
determining
the BEST WAY TO DELIVER the products to the market.
five common types of market segmentation
Demographic Segmentation
Firmographic
Geographic
Behavioral
Psychographic
is one of the simple, common methods of market
segmentation.
It involves breaking the market into
age, income, gender, race, education, or occupation.
Demographic segmentation
Under what market segmentation is this kind of example?
Example: The market segmentation strategy for a new video game console
may reveal that most users are young males with disposable income.
Demographic segmentation
is the same concept as demographic
segmentation.
this strategy looks at
organizations and looks at a company’s number of employees, number of
customers, number of offices, or annual revenue.
Firmographic Segmentation
Under what market segmentation is this kind of example?
Example:
A corporate software provider may approach a multinational firm
with a more diverse, customizable suite while approaching smaller companies
with a fixed fee, more simple product.
Firmographic Segmentation
is technically a SUBSET of demographic
segmentation.
This approach groups customers by PHYSICAL LOCATION,
assuming that people within a given area may have similar
needs.
Geographic segmentation
Under what market segmentation is this kind of example?
Example: A clothing retailer may display more raingear in their Pacific
Northwest locations compared to their Southwest locations.
Geographic segmentation
relies heavily on market data, consumer actions, and
decision-making patterns of customers. Based on how they have previously interacted with markets.
spending habits
Behavioral segmentation
Under what market segmentation is this kind of example?
Example: Millennial consumers traditionally buy more craft beer, while older
generations are traditionally more likely to buy national brands.
Behavioral segmentation
Often the most difficult market segmentation approach
strives to classify consumers based on their lifestyle,
personality, opinions, and interests.
psychographic
segmentation
Under what market segmentation is this kind of example?
Example: A fitness apparel company may target individuals based on their
interest in playing or watching a variety of sports.
Psychographic segmentation
Benefits of Market Segmentation
Increased resource efficiency.
Stronger brand image.
Greater potential for brand loyalty.
Stronger market differentiation.
Better targeted digital advertising.
Limitations of Market Segmentation
Higher upfront marketing expenses.
Increased product line complexity. Greater risk of misassumptions. Higher reliance on reliable data.
