Segmentation

Question 1

What is market segmentation?

Answer 1

Dividing a diverse market into smaller, more homogeneous groups based on shared characteristics.

Question 2

Why is market segmentation important?

Answer 2

It allows businesses to tailor their products and marketing strategies to specific customer needs.

Example: Pandora identified a mid-market segment for quality but affordable jewelry.

Question 3

Name two benefits of market segmentation.

Answer 3

Enhanced profitability and better targeting of communications.

Question 4

How can segmentation improve customer retention?

Answer 4

By creating tailored products that better meet customer needs.

Example: Coca-Cola creates products like Diet Coke and Coke Zero to appeal to health-conscious consumers.

Question 5

What are the five criteria for successful segmentation?

Answer 5

Effective, measurable, accessible, actionable, and profitable.

Question 6

Why must segments be measurable?

Answer 6

To understand their characteristics and design effective marketing strategies.

Example: Facebook used a mix of demographic and behavioral data to segment US voters into 14 groups.

Question 7

What are three main bases for segmenting consumer markets?

Answer 7

Behavioral, psychographic, and demographic segmentation.

Question 8

Give an example of behavioral segmentation.

Answer 8

Segmenting based on benefits sought, such as toothpaste offering whitening or cavity protection.

Example: Colgate developed specific products like Colgate Max Fresh (fresh breath) and Colgate Sparkling White (whitening).

Question 9

What is psychographic segmentation?

Answer 9

Dividing the market based on personality, lifestyle, or values.

Question 10

Why is psychographic segmentation valuable?

Answer 10

It aligns marketing strategies with consumer lifestyles or personalities.

Example: TAG Heuer markets luxury watches to status-conscious, trendsetting consumers.

Question 11

What is geographic segmentation?

Answer 11

Dividing the market by regions, climates, or urban vs. rural areas.

Question 12

Give an example of geographic segmentation in practice.

Answer 12

T-Mobile targeted small-to-medium businesses in the US using direct mail campaigns.

Question 13

What are the four generic targeting strategies?

Answer 13

Undifferentiated, differentiated, focused, and customized marketing.

Question 14

What is undifferentiated marketing?

Answer 14

A strategy that uses one product for the entire market.

Example: Coca-Cola’s original marketing strategy targeted a broad market with one product.

Question 15

What is differentiated marketing?

Answer 15

Creating distinct products or marketing mixes for different segments.

Question 16

Name a company that uses differentiated marketing.

Answer 16

Kellogg’s markets Special K to women and Bran Flakes to men.

Question 17

What is focused marketing?

Answer 17

Targeting one specific segment with a tailored strategy.

Question 18

Why might a company use focused marketing?

Answer 18

To dominate a niche market and reduce competition.

Example: Bose focuses on premium audio products for affluent customers.

Question 19

What is positioning?

Answer 19

Designing a product to occupy a distinct place in the customer’s mind.

Question 20

Why is positioning critical?

Answer 20

It ensures the product is associated with key benefits valued by the target market.

Example: Volvo is positioned as the safest car brand despite not always having superior safety ratings.

Question 21

What are the four criteria for successful positioning?

Answer 21

Clarity, consistency, credibility, and competitiveness.

Question 22

Why is consistency important in positioning?

Answer 22

It builds long-term brand recognition and trust.

Example: Apple’s consistent ‘Think Different’ campaign reinforces its innovative image.

Question 23

What is a perceptual map?

Answer 23

A visual representation of consumer perceptions of brands across key attributes.

Question 24

How are perceptual maps used?

Answer 24

To identify gaps in the market or reposition products.

Example: A perceptual map for breakfast cereals might show gaps for organic, high-protein options.

Question 25

What is repositioning?

Answer 25

Changing a product’s target market or perceived benefits.

Question 26

Name the four types of repositioning.

Answer 26

Image, product, intangible, and tangible repositioning.

Example: Lucozade repositioned from a drink for sick children to an energy drink for young adults.