Segmentation

Question 1

What 4 types of segmentation is there?

Answer 1

• Demographic segmentation
• Geographic segmentation
• Income segmentation
• Behavioural segmentation

Question 2

What is demographic segmentation?

Answer 2

This method groups needs and wants based on characteristics of the people in the target population.

e.g
• Age
• Gender

The clothes women are interested in are typically different to men.

Question 3

What is geographic segmentation?

Answer 3

This method groups needs and wants based on the geographical area in which customers are based.

e.g

The types of houses required in Iceland and Nigeria will be different due to climate conditions.

Question 4

What is income segmentation?

Answer 4

This method of segmentation groups peoples needs and wants based on their income.

e.g

• High income interested in investing
Low income interested in borrowing

Question 5

What is behavioural segmentation?

Answer 5

This method of segmentation groups needs and wants based on customers actions.

e.g

• When they buy
• How much they buy
• Brand loyalty
• The benefit they want from the product

Question 6

Why would a business choose to target a segment of a market?

Answer 6

Managers can understand what different groups want rather than treat all customers as the same.

Question 7

Segmentation definition

Answer 7

Segmentation occurs when similar customers needs and wants are grouped within a market.

Question 8

Market segments definition

Answer 8

Market segments are the groups of similar needs and wants within a market.

Question 9

Targeting definition

Answer 9

Targeting occurs when a business decides which segments it wants to operate in.

Question 10

What influences a businesses decision on choosing the target market?

Answer 10

A business will target segments where it thinks:

• There is sufficient demand and potential profit to justify the investment.

• Has the ability to be competitive and gain sales.
- Do requirements of the target segment match the skills and competences of the business.

Question 11

What is niche marketing?

Answer 11

Niche marketing focuses on a particular segment of the market.

Question 12

What is a mass market?

Answer 12

A mass market approach aims to provide products that meet some of the needs of a large proportion of the market.

Question 13

What is positioning?

Answer 13

Positioning identifies the benefit and price combination of a product relative to competitors.

Question 14

What are the influences on the positioning of a product?

Answer 14

• The strengths of the business
• Competitors
• Market conditions

Question 15

The positioning of a product relative to competitors depends on the following factors…?

Answer 15

• It’s price
• The benefits it offers
• It’s brand image
• The level of service it provides

Question 16

What are the pros of niche marketing?

Answer 16

• Less competition
• Clear focus
• Builds up specialist skills and knowledge
• Can often charge a higher price
• Profit margins often higher
• Customers tend to be more loyal

Question 17

What are the cons of niche marketing?

Answer 17

• Lack of economies of scale
• Risk of over dependence on a single product or market
• Likely to attract competition if successful
• Vulnerable to market changes

Question 18

What are the pros of mass marketing?

Answer 18

• Cost efficiency
• Large scope
• Increased sales
• Brand awareness
• Variety in channels
• Time efficient

Question 19

What are the cons of mass marketing?

Answer 19

• Customer experience
• Inefficient for small businesses
• Competition