Market Segmentation and Strategy

Question 1

What is market segmentation?

Answer 1

Involves dividing a market into parts that reflect different customer needs and wants

Question 2

What is targeting?

Answer 2

Deciding with market segments to enter

Question 3

Wha is product differentiation?

Answer 3

What makes it different from the competition

Question 4

What is marketing positioning?

Answer 4

How customers perceive the product

Question 5

Segmentation is possible because in almost all markets there are differences in factors such as:

Answer 5

Customer needs and wants
How customers buy
Location of customers
Knowledge and experience of customers

Question 6

Demographic segmentation

Answer 6

Dividing a market into segments based on demographic variables such as age, gender, religion

Question 7

Income segment

Answer 7

Dividing markets based on how much they earn and profession

Question 8

Behavioural segment

Answer 8

Characterises subgroups based on what people are more likely to buy and behavioural patterns of the consumer

Question 9

Geographic segment

Answer 9

Defines market categories based on where people live

Question 10

Benefits of market segmentation

Answer 10

• least profitable and most profitable customers can be identified
• helps make the marketing mix more effective e.g better targeting of promotion
• focuses on resources on parts of a market where the business can succeed
• helps with new product development- focuses on needs of customer in the segment

Question 11

Drawbacks of market segmentation

Answer 11

• segmentation is an imprecise science- data about each market segment is not always available, up to date or reliable
• just because you can identify a segment doesn’t mean you can read your the customers in it