Marketing- Segmentation, Targeting And Positioning Flashcards
What is segmentation?
-segmentation is the process of splitting up the market into different groups of people with similar characteristics
What are some methods of segmentation ?
-demographic
-geographic
-income/ socio economic groups
-behavioural -e.g when they buy, how much they buy, brand loyalty? , what benefits do they want from the product
What is the mammoth supply company?
-they segment the yoghurt towards older men by providing big pots of yogurt that are super thick and for men
What is the value of segmentation?
-by segmenting a market, managers can understand what different groups want. Managers can then decide if they can need these needs and alter the product to meet the needs of their target segment
-it enables more focused and efficient marketing as promotion can be made relevant to that segment so money isn’t wasted promoting to the wrong people
-the more segments a business focuses on the more complex and expensive it become trying to meet all their needs, both in terms of altering products and promotion for each segment
What is targeting?
Targeting is when a business decides which segments it wants to focus on.
What segment will a business target?
One where there is:
-sufficient demand and potential growth
-there is potential profit
-it has the skills to compete and create a competitive advantage
-the brand fits with the target segment
What are the benefits of targeting?
-can focus resources on most profitable segments
-provides a better understanding of a market
-improved communication between buyer and seller
How did Aston Martin target customers?
-Aston Martin unveiled £158,000 SUV aimed at wealthy women
-targeted wealthy women with luxury SUV as 94% of its current customers are men
-they did this to attemp to reverse the 75% slide in its share price since the company floated last year
What is Niche Marketing?
Niche Marketing focuses on a particular small segment of the market e.g a clothes shop for tall people or the luxury cat hotel
What are the advantages and disadvantages of niche marketing?
Advantages:
-less competition- the firm is a big fish in a small pond, it doesn’t threaten other bigger businesses so they may not fight back
-clear focus - target particular customer (often easier to find and reach too)
-the firm builds up specialist skill and knowledge= market expertise
-can often charge a higher price: customers are prepared to pay for expertise so profit margins are often higher
-customers tend to be more loyal
Disadvantages:
-the niche market may be small and not provide big profits
-if the niche market grows then bigger businesses may be attracted to it
-lack of economies of scale so higher unit costs
-risk of over dependence on a single product or market -all eggs in one basket
What is mass marketing?
- a mass market approach aims to provide products that meet some of the needs of a large proportion of the market. Customer needs and wants are more general. It aims for more volume and has the potential for more revenue
What are the risks of mass marketing?
-investment required to be able to cater for these large volumes
-difficulties competing with other established businesses
-increasing numbers of much providers means customers turn to them looking for something that meets their needs more precisely. This results in reduced demand in the mass market
Niche vs mass marketing burgers?
- customers are starting to turn to niche premium burgers so there’s and increase market share for these due to change in taste of consumers so MC Donald’s is trying to improve to keep their market share as people care more about the product than they used to
What is positioning?
Positioning is how a firms products are perceived relative to their competitors
What is market mapping?
-market mapping plots how a product is perceived/ where it is positioned
Examples:
-Low price to high price low quality to good quality
-Healthy to unhealthy
-Simple /complex
What are the advantages and disadvantages of using market mapping?
Advantages:
-helps spot gaps in the market
-useful for analysing competitors
-encourages use of market research
Disadvantages:
-just because there’s a ‘gap’ doesn’t mean there is demand
-not a guarantee of success
-how reliable is the market research?
What does positioning depend on?
-the firms price
-the benefits it offers
-brand image
-level of service
-the combination of the above factors affect the firms competitiveness
What influences positioning?
-the strengths of the business e.g if it is very efficient or has high bargaining power over competitors they will have low costs so can be positioned at low price like Amazon, strengths could be innovation like Apple
-competitors - what they are offering will affect how a firm positions itself
-market conditions/ external influences - if the economy is in a recession more firms my offer lower price and lower benefits so positioning can change
What is an example of a firm the re-positioned?
-Mc vities re positioned to offer a larger range of biscuits - eg VIB’s
