Module 6

Question 1

Segmentation

Answer 1

The process of dividing a broad consumer market into subsets of consumers who have common needs, wants, or characteristics, and selecting one or more segments to target with a distinct marketing strategy.

Example: In the context of opening a bike store, segmentation involves identifying different types of bikers such as mountain bikers, competitive bikers, and recreational bikers, and understanding their unique preferences and needs.

Question 2

Target Markets

Answer 2

Specific groups of potential customers toward which a business directs its marketing efforts. These groups are identified through segmentation and are chosen based on factors such as their attractiveness and compatibility with the business’s offerings.

Example: After segmenting the market for the bike store, the target market might be determined to be mountain bikers due to their high interest in quality bikes and accessories.

Question 3

Positioning

Answer 3

The process of establishing a distinctive place for a product or service in the minds of the target customers, relative to competing products or services. It involves creating a unique value proposition and communicating it effectively to the target market.

Example: In the bike store context, positioning might involve offering specialized mountain biking gear and promoting the store as the go-to destination for serious mountain bikers.

Question 4

Differentiation

Answer 4

The process of distinguishing a product or service from others in the market by highlighting its unique features, benefits, or attributes that set it apart. Differentiation aims to make the product or service more attractive to the target market.

Example: The bike store can differentiate itself by offering personalized fitting services, exclusive product lines, or expert advice tailored to the needs of mountain bikers.

Question 5

Market Segmentation

Answer 5

The process of dividing a heterogeneous market into smaller, more homogeneous groups of consumers who have similar needs, characteristics, or behaviors. This allows companies to tailor their marketing efforts more effectively to specific segments.

Example: In the bike store context, market segmentation involves identifying different types of bikers such as mountain bikers, competitive bikers, and recreational bikers, and understanding their unique preferences and needs.

Example: A clothing retailer may segment its market based on factors such as age, gender, income level, and fashion preferences to target different customer segments with customized product offerings and marketing messages

Question 6

Market Segmentation Strategies

Answer 6

Approaches used by marketers to divide a market into distinct segments based on various variables such as geographic, demographic, psychographic, and behavioral factors. These strategies help identify target markets and tailor marketing efforts accordingly.

Example: The bike store could use demographic segmentation to target customers based on factors such as age, gender, income, and occupation.

Question 7

Segmentation Variables in Consumer Markets

Answer 7

Geographic
* Where does the segment live and work?
Demographic
* What is the census-type information on the segment?
Psychographic
* What are the prevailing attitudes, values, interests, habits, and approaches to life that this segment shares?
Behaviouristic
* How does this segment use and interact with the product?

Question 8

Segmentation Variables

Answer 8

Geographic: nation, province, region, city, neighborhood – can also segment by climate and density (urban vs rural)

Demographic: Age, gender, income, education, occupation, family life cycle, household size, expenditure patterns, religion and ethnic origin

Psychographic: Lifestyle, social class, personality, AIO (Attitudes, Interests, Opinions)

Behavioristic: usage rate, loyalty benefits sought (found out by asking consumers)

Question 9

Brand Loyalty

Answer 9

The extent to which a consumer consistently chooses a particular brand over others in the market. Brand loyalty is often influenced by positive attitudes toward the brand, repeated purchases, and resistance to switching to competitors.

Example: Marketers aim to cultivate brand loyalty among consumers by offering quality products, excellent customer service, and loyalty programs that incentivize repeat purchases.

Question 10

Target Market

Answer 10

The specific group of existing and/or potential consumers to which marketers direct their efforts. An appropriate target market meets criteria such as accessibility, measurability, profitability, responsiveness, stability, and uniqueness.

Example: In the context of a bike store, the target market might be identified as avid mountain bikers who live in urban areas and have a high disposable income.

Question 11

Target

Answer 11

Accessible – can be reached and served

Actionable – can be communicated with
pretending that only some golf club companies make golf clubs for left handed people, is it really possible to market left handed golf clubs to only left handed people? There is no magazine just for left handed people, they don’t differ from the rest of the population on any other characteristics …

Measurable – need to be able to identify who the group is
Profitable – sales potential – already discussed
Responsive - will react to marketing activities
If we try to market diapers straight to the babies, we aren’t going to get much of a reaction.

Stable – will be around for a long enough time
fads come and go, and so do the fans of those fads … if we try to market to these quick changing groups, it will be difficult, especially given the time taken to develop new products, campaigns, etc.

Unique – different from other segments on relevant characteristics
right-handed and left handed people are no different when it comes to marketing pizza, so this would not be a unique way to segment the pizza market

Question 12

Consumer Profile/Persona

Answer 12

A fictional representation of a target market segment based on synthesized data and common characteristics. Consumer profiles/personas often include details such as demographics, psychographics, behaviors, and preferences to create a narrative that helps marketers understand and relate to their target audience.

Example: The bike store might develop a persona named “Outdoor Enthusiast Emily,” who is in her mid-30s, lives in the suburbs, enjoys outdoor activities, and values high-quality, durable biking gear.

Question 13

STEPS IN MARKET SEGMENTATION

Answer 13

1. Identify consumer/customer needs and common characteristics in the market
2. Cluster common consumer/customer variables to create meaningful market segments
3. Estimate size and feasibility of each segment
4. Identify the segment(s) to be targeted
5. Take action with marketing programs to reach the segment(s)
6. Monitor and evaluate the success of these programs compared with objectives

Question 14

Product Positioning

Answer 14

§ The impression of the product you want to establish in consumers’ minds relative to their needs and the competition

§ Positioning is all about making sure that the product sticks out in the consumers’ mind – it’s different in ways that are valued by consumers and therefore it’s meeting consumers’ needs better than the competition.

§ Sets you apart from the competitions

Question 15

If positioning is to be unique, what differences are worth promoting?

Answer 15

§ Important to the consumer
§ Distinctive from the competition
§ Superior to the competition
§ Can be communicated to consumers
§ Difficult to copy by competitors
§ Affordable for consumers
§ Profitable for the company

Question 16

Positioning statement

Answer 16

To (target segment and need) our (brand) is a (concept or product) that (point of difference).

Question 17

A product can be positioned on:

Answer 17

§ Benefits provided or
(e.g., health benefits)
- Head & Shoulders “relieves irritation, controls oiliness, removes flakes”

§ Product attributes or
-e.g., KFC is “Finger Lickin’ Good”

§ Price or
/quality (or value)
- West Jet is “No frill, low-fare, air travel in Canada”

§ Against the competition
- ING Direct is “The UNmortgage, save your money”

Question 18

Positioning Map

Answer 18

A visual representation used in marketing to illustrate how consumers perceive brands or products relative to each other based on key attributes or factors important to the target market. In a positioning map, the x-axis (Product Design) and y-axis (Customer Service) typically represent different attributes, and each brand or product is plotted accordingly.

Example: In a furniture store example, the attributes of product design and customer service might be plotted on the x-axis and y-axis respectively to create a positioning map that helps identify where the store stands relative to competitors in terms of these attributes.

*image 1

Question 19

Consumer Perception

Answer 19

The way in which consumers perceive and interpret information about products or brands, which influences their purchasing decisions and behaviors. Consumer perception is subjective and can be influenced by various factors such as advertising, word-of-mouth, and personal experiences.

Example: A furniture store might conduct market research to understand how consumers perceive the store’s product design and customer service compared to competitors, and use this information to adjust its positioning strategy accordingly.

Question 20

Market Segmentation

Answer 20

Aggregate prospective buyers into groups that have common needs and respond similarly to marketing programs

Question 21

Targeting

Answer 21

• Evaluate attractiveness of each segment
• Select one or more segments to target with marketing efforts (4 P’s)

The selection of specific customer groups or segments identified through segmentation as the focus of a company’s marketing efforts. Targeting involves evaluating the attractiveness of different market segments and choosing the most profitable or strategically important segments to prioritize.

Example: After segmenting the market, a cosmetics company may choose to target young urban professionals with high disposable incomes who are interested in premium skincare products

Question 22

Positioning

Answer 22

Understand the impression that you want to establish in consumers’ minds – it needs to meet their needs and be unique from the

“Segmentation, targeting, and product positioning are fundamental concepts that are central to how marketers run their businesses and market their products.”

Example: An energy drink brand may position itself as the choice for extreme sports enthusiasts by emphasizing its high caffeine content and bold flavors, setting it apart from competitors positioned as mainstream beverages

Question 23

SHAPEWEAR… FOR MEN

Answer 23

§ The hottest trend in the shapewear industry (estimated to reach $7 billion in sales by 2030) is garments designed specifically for men (often referred to as compression wear)
-“Spanx” for men

• SPANX was founded in 2000, providing products for women. Despite this early focus, scans by the company led to seizing an opportunity –serving men. SPANX began producing male underwear in 2010

Question 24

Target Market Profiles

Answer 24

Detailed descriptions of the characteristics, preferences, and behaviors of the target market segments identified through segmentation. Target market profiles help marketers understand their customers better and tailor marketing strategies to meet their specific needs effectively.

Example: A tech company may create target market profiles for different segments such as tech-savvy millennials, business professionals, and older adults to guide product development and marketing efforts.

Question 25

Seth Godin

Answer 25

“Everyone is not your customer.” - Seth Godin
Consumers have a range of needs, and no product can satisfy everyone. Companies have limited resources and must be strategic in how they allocate time and money to communicating with potential and current customers.

Question 26

Define market segmentation

Answer 26

A market segment is a piece of the market. Market segmentation involves aggregating prospective buyers into groups that have common needs and who respond similarly to marketing programs. They are similar in their consumption behavior, attitudes, and target market profiles.

Question 27

What are the two broad segments of the market?

Answer 27

In thinking about the entire market, it can be divided into two broad but distinct segments.

The consumer market is the aggregate group of individual consumers who purchase products (goods and services) for personal use.

The business market is the aggregate group of companies and organizations who purchase products for business use. Both segments can be further divided based on different segmentation strategies and variables.

Question 28

What are the four key variables for consumer segmentation?

Answer 28

The consumer market can be segmented using four key variables:

geographics: Geographic segmentation is useful when marketing a product that may only be useful in specific climates (e.g. snow blowers) or where values or culture differs based on city or country.

demographics: Demographic segmentation is most commonly used, likely because much of the information is widely available from census and marketing research data. This type of segmentation data is easy to use, identify, and measure

psychographics: Psychographic segmentation is based on individual lifestyles and personalities. Profiles are developed based on how individuals answer questions about their activities, interests, and opinions

behavioristics (also called behavioral): Behavioristic segmentation allows marketers to focus on how consumers use a product, what benefits they receive, and their level of engagement or loyalty.

Question 29

What is a target market? And criteria for choosing an appropriate target market?

Answer 29

A target market is defined as the specific group of existing and/or potential consumers to which marketers direct their marketing efforts.

It is important that marketers choose an appropriate target market that is: accessible and actionable, measurable, profitable or substantial, responsive, stable, and unique or differentiable.

Question 30

How can a target market profile be developed?

Answer 30

A target market profile can be developed using the four key segmentation variables: geographics, demographics, psychographics, and behavioristics. It can take the form of a persona or another form such as a collage. Creating a profile helps us to get in the minds of consumers and understand them on a deeper level.

Question 31

What are personas in marketing?

Answer 31

Personas (also known as consumer profiles) take target market data and simplify and synthesize it, adding a few fictional details such as name and image, so that human traits and characteristics become memorable for marketers.

Personas bring target market data alive in one-paragraph descriptions or snapshots of a typical consumer. They are character descriptions of a typical customer in the form of fictional character narrative, complete with images that capture the personalities, values, attitudes, beliefs, demographics, and expected interactions of a typical user with a brand.

Question 32

What is segmentation analytics?

Answer 32

Segmentation analytics involve utilizing research companies to provide the data needed to help tailor messages and products to meet consumers’ needs. These companies, such as Environics, Pitney Bowes, and SuperDemographics, detail demographic, psychographic, and behavioral consumer information by postal code and provide interactive software for detailed analyses.

Question 33

What is product positioning?

Answer 33

Product positioning is the impression of a branded product in consumers’ minds relative to their needs and also in contrast to the competition. Marketers create positioning statements to outline the positioning of a product and then manage the marketing mix to meet this image.

Question 34

When do companies reposition products?

Answer 34

Companies reposition products when long-term consumer attitudes and interests have changed.

Question 35

What are the three basic factors in product positioning?

Answer 35

1. Image: products are often positioned as leaders, contenders, or rebels in the market, also taking on roles such as trusted, prestigious, or thrifty.
2. Product Attributes: products with features that differentiate them from the competition are often positioned on this platform, bringing their product claims to the forefront.
3. Price: products with similar brand power and little product differentiation position themselves on a price platform.

Question 36

What is a positioning statement?

Answer 36

A positioning statement is a formalized statement that identifies the image a branded product represents in the market and what sets it apart from the competition. Effective positioning statements are simple, clear, and focused.

Question 37

What are the four elements of a positioning statement?

Answer 37

1. The target market and need.
2. The branded product name.
3. The category in which the product competes.
4. The brand’s unique attributes and benefits (what sets the product apart from the competition and meets customer needs).

Question 38

What is the format for constructing a positioning statement?

Answer 38

A positioning statement should be constructed using the following format: “For (target segment and need), the (brand) is a (concept or product) that (point of difference/product benefit).”

For example, a positioning statement for the Apple Watch might look something like this: “For always online, socially connected Millennials, the Apple Watch is a whole new kind of conversation that not only helps you send and receive messages but lets you express yourself in new, fun and more personal ways.”

Question 39

What are positioning/perceptual maps used for?

Answer 39

Positioning/perceptual maps are visual representations of how products, product groups, or categories are positioned in the market. They are used by marketers to identify gaps in the market and to review the competitive nature of the market and can be used to identify new product opportunities.

Question 40

What are the steps to create a positioning/perceptual map?

Answer 40

1. Choose two attributes that are important to target consumers.
2. Determine the range of choices for each attribute (opposites).
3. Plot the opposites for one attribute on the x-axis and the opposites for the other attribute on the y-axis.
4. Determine where competitors rank on these attributes and plot them on the map.
5. Determine where your company ranks on these attributes and plot it on the map.

Question 41

What is the purpose of a positioning map?

Answer 41

A positioning map is a visual representation of how a product compares to competitors’ products in the eyes of consumers. The map can also illustrate where there are gaps in offerings and where there may be ‘space’ for a company to reposition their product in order to satisfy a new customer segment or meet an unmet need.

Question 42

What are the advantages of a segment marketing approach to market segmentation?

Answer 42

The advantages of segment marketing are that products and programs are designed to appeal to specific market segments and meet specific consumer needs. Being competitive in the market should result in sales and profits.

Question 43

Market segmentation involves aggregating prospective buyers into groups that have two key characteristics. What are they?

Answer 43

Market segmentation involves aggregating prospective buyers into groups that
a) have common needs and
b) who respond similarly to marketing programs.

Question 44

What are the disadvantages of individualized market segmentation?

Answer 44

Individualized marketing can be costly, and time consuming.

Question 45

What is the difference between psychographics and behaviouristics?

Answer 45

Psychographics focus on consumer attitudes to life, their values, personalities, general interests, opinions, and activities. Behaviouristics are concerned with how and why consumers use a product, why it is purchased, desired product benefits, how often it is purchased and used, and the degree of brand loyalty.

Question 46

What is product positioning and what is the purpose of a positioning statement?

Answer 46

Product positioning is the image of a product from a consumer perspective relative to the competition. A positioning statement formalizes the product’s positioning and serves as a point of reference when creating marketing programs for the product.

Question 47

Why do marketers use positioning maps?

Answer 47

Positioning maps are used to identify gaps in the market for potential new products and to highlight the competitive nature of the market.