MOD 6 - CH 9 Flashcards
What is the first step in the segmentation process?
The first step is to establish the overall strategy or objectives, ensuring that the segmentation strategy aligns with the firm’s mission, goals, and SWOT analysis (strengths, weaknesses, opportunities, and threats).
What are the methods used to segment a market?
The methods include geographic segmentation, demographic segmentation, psychographic segmentation, benefit segmentation, and behavioral segmentation.
What is psychographic segmentation?
Psychographic segmentation divides consumers based on their lifestyles, self-concept, and self-values, focusing on how they describe themselves and their motivations.
What is benefit segmentation?
Benefit segmentation divides the market based on the specific benefits that consumers seek from a product or service.
What is behavioral segmentation?
Behavioral segmentation divides consumers based on how they use the product or service, such as by occasion or loyalty.
What is occasion segmentation?
Occasion segmentation groups consumers based on when they purchase or consume a product, such as snacks marketed differently for individual consumption versus parties.
What is loyalty segmentation?
Loyalty segmentation focuses on retaining loyal customers who regularly choose the firm’s products over competitors, often using reward programs to enhance customer retention.
What is geodemographic segmentation?
Geodemographic segmentation combines geographic, demographic, and lifestyle characteristics to classify consumers, based on the idea that people in the same area tend to have similar preferences and behaviors.
What is market basket analysis?
Market basket analysis is a technique used to find associations between products that customers often purchase together, helping firms segment based on behavior and preferences.
How can firms use multiple segmentation methods?
Firms often combine different methods, like demographics, geography, and behavioral data, to create more effective marketing strategies that target specific customer needs and characteristics.
What is the third step in the market segmentation process?
The third step is to evaluate the attractiveness of various segments to determine whether they are worth pursuing.
What criteria do marketers use to evaluate segment attractiveness?
Marketers evaluate segments based on five criteria: Identifiable, Substantial, Reachable, Responsive, and Profitable.
What does it mean for a segment to be substantial?
A segment is substantial if it is large enough to generate sufficient profits and support the marketing efforts. If the segment is too small or has low buying power, it is not worth pursuing.
How does responsiveness affect segment attractiveness?
A segment must respond positively and similarly to a firm’s offering for the strategy to be effective. If the segment doesn’t align with the company’s strengths, it should not be targeted.
What factors contribute to a segment’s profitability?
Profitability is assessed based on market growth, competitiveness, and access. Factors like segment size, adoption rates, purchase behavior, profit margin, and fixed costs also determine profitability.
What is the formula to calculate segment profitability?
Segment profitability = (Segment size × Segment adoption percentage × Purchase behavior × Profit margin percentage) − Fixed costs.
What is the difference between an undifferentiated and differentiated targeting strategy?
An undifferentiated strategy targets the entire market with the same offering, while a differentiated strategy targets multiple segments with tailored offerings for each.
What is the fourth step in the STP process?
The fourth step is to select a target market by evaluating the attractiveness of the market and aligning it with the firm’s capabilities.
What is an undifferentiated targeting strategy (mass marketing)?
An undifferentiated targeting strategy treats the entire market as one homogeneous group, offering the same product to everyone with little or no differentiation.
What is a differentiated targeting strategy?
A differentiated targeting strategy involves targeting several market segments with different offerings for each segment, catering to diverse customer needs.
How does a differentiated targeting strategy reduce business risk?
By diversifying offerings across multiple segments, businesses can offset losses in one segment with gains in another, reducing overall risk.
What is a concentrated targeting strategy?
A concentrated targeting strategy focuses all marketing efforts on a single, primary target market, often allowing for more efficient use of resources.
How can start-ups benefit from a concentrated targeting strategy?
Start-ups can focus their limited resources on a specific market segment, making their marketing efforts more effective and efficient, like Newton Running, which targets forefoot runners.
What is micromarketing (one-to-one marketing)?
Micromarketing is an extreme form of segmentation where a product or service is tailored to the individual needs or preferences of each customer.
