Mkting Segmentation Flashcards
What is marketing segmentation?
- Refers to the identifying of different segments within a market and targeting different pdts and svcs to the segments
- focus on customers, aligned with the mkting concept
- involves research and analysis of the entire market to ascertain specific consumer groups
What are the benefits of market segmentation?
- define target market more precisely. Design and produce goods aimed at these groups -> increased sales
- identify market gap-> gain market share and customer loyalty
- use differentiated marketing strategies for different target groups -> minimise wastage -> impt during recession
- good for sme to focus on one or two mkt segments -> improve competitiveness
What are the limitations of market segmentation?
- research and development and production costs might be high as a result of marketing several different product variations -> undermine profit
- promotional costs might be high as different advertisements and promotions might be needed for different segments -> businesses might not benefit from marketing eos
- production and inventory holding costs might be higher than for the option of just producing and stocking one undifferentiated product -> undermine profit -> diff products may require different storage conditions eg level of humidity, temp settings
- by focusing on one or two limited market segments there is a danger that excessive specialisation could lead to problems if consumers in those segments change their purchasing habits significantly -> higher risks
What are the different bases for market segmentation?
Geographical, demographic and behavioural segmentation
What are the demographic variables and behavioural variables?
Demographic: age, gender and income
Behavioural: occasion, benefits, user status and loyalty
What is market targeting?
Once firm identified its market segment opportunities, it must decide how many and which ones to target based on attractiveness and company objectives and resources.
Attractiveness of the segments depends on the threats:
-threats of intense segment rivalry
-threats of new entrants
-threats of substitute products
-threats of buyers’ growing bargaining power
-threat of suppliers’ growing bargaining power
What is mass marketing?
- ignores segment differences
- selling the same products to the whole market with no attempt to target groups with it
- mass distribution and mass communications
What are the advantages of mass marketing?
- largest potential market, more profits
- lower COP (EOS)
- single marketing campaign for whole market
- fewer risks as change in tastes and preferences of one consumer group has minimal impact on the whole
- narrow product range also reduce cost of R&D
What are the disadvantages of mass marketing?
- fierce competition from existing competitors
- lack of focus -> ineffective marketing campaign
- perceived to be Low status products
What is niche marketing?
- identifying and exploiting a small segment of a larger market by developing products to suit it
- targets a specific and well-defined market segment
What are the advantages of niche marketing?
- Better marketing focus
- deep knowledge of segment’s needs -> deliver first-rate customer service -> customer loyalty
- premium pricing -> high profit margin
- benefits small firms
- status and image
What are the disadvantages of niche marketing?
- limits the number of customers
- no to little EOS
- change of consumers’ tastes and preferences lead to rapid sales decline
- May attract new entrants -> more competition
What is the criteria in target market selection?
- Potential sales, costs and profits -> refers to the rate of growth in the segment eg growth of gaming segment or decline of table Soccer
- Alignment with biz objectives and availability of resources -> align with vision and mission eg biz may lack the financial resources and tech capabilities to enter into the growing organic market
- Competition in the market -> higher competition, less attractive -> more promotion funds needed
What is market positioning?
-refers to the activities a biz undertakes to create a perception of its products in the eyes of the target market
3 stages of mkt positioning:
- identify competitive advantages of the product in question
- decide on which aspects of these strengths should be marketed
- Implement the desired positioning by using the appropriate marketing mix
What is perceptual map?
- visual representations of consumer perceptions and preferences
- it provides quantitative pictures of market situations and the way consumers view different products, svcs and brands along various dimensions
- visual tool that shows customer perceptions of a product or brand in relation to others in the market
- reveals holes or openings that suggest unmet consumer needs and marketing opportunities
- before deciding on developing or launching a pdt, businesses use this tool to analyse where their new products would stand in relation to rivals
