Segmentation

Question 1

What is a Market?

Answer 1

A group of individuals/ organisations who have a need for certain products and the ability, willingness and authority to purchase such products.

Question 2

Types of Markets

Answer 2

Heterogeneous Markets

Homogenous Markets

Question 3

Heterogeneous Markets

Answer 3

Markets in which all customers have different requirements.

Question 4

Homogeneous Markets

Answer 4

Markets in which all customers have similar product needs, wants and sought benefits.

Question 5

Market Dynamics

Answer 5

Markets are now becoming more heterogeneous as consumers as seeking differentiation.
Marketers are driving towards segmenting more markets to provide a commercial advantage.

Question 6

What is Segmentation?

Answer 6

The process of dividing a market into distinct groups with distinct needs, who might require separate products or marketing mixes.

Question 7

Benefits to Segmentation

Answer 7

Customer analysis
Competitive analysis
Resource allocation
Strategic marketing planning

Question 8

Customer Analysis

Answer 8

Provides for a better understanding of consumer needs and behaviour and makes for a better product fit.

Question 9

Competitor Analysis

Answer 9

Provides for a better understanding of the competition by identifying and analysing the market segments that exist

Question 10

Resource Allocation

Answer 10

Provides for effective use of financial and other resources/

Question 11

Strategic Market Planning

Answer 11

provides for a better strategic vision and planning process to exploit opportunities in the marketplace.

Question 12

Ways of Segmenting

Answer 12

Geographic
Demographic
Psychographic
Behavioural

Question 13

Geographic

Answer 13

Country
Country Region
City
Population density - Urban, suburban, rural.

Question 14

Demographic

Answer 14

Age
Gender
Family size & Life cycle
Income
Occupation
Education
Religion
Race
Generation

Question 15

Demographic Disadvantages

Answer 15

People with the same demographic profile can have very different characteristics.

Question 16

Psychographics

Answer 16

Social class - upper, working
Lifestyle - achievers, innovators
Personality - Compulsive, outgoing
Values - Compassionate, materialistic.

Question 17

Behavioural

Answer 17

Occasions
Benefits - quality, convenience
User rates - non, light, medium
Loyalty status - none, medium
attitudes towards products, negative, enthusiastic

Question 18

Geodemographics

Answer 18

Combines many approaches of segmentation.
Based on postcode analysis.
Where we live is correlated with many aspects of buying behaviour.

Question 19

Criteria for Segmentation Effectiveness

Answer 19

Measurable - size, profiles
Substantial - Is it big enough?
Accessible- Can we get to them?
Differentiable - Are segments different?
Actionable - Can we implement?

Question 20

Levels of Segmentation

Answer 20

Undifferentiated
Differentiated
Concerntrated

Question 21

Undifferentiated

Answer 21

The least demanding approach.
Assumes the whole market is one homogenous unit with no significant differences between individuals.
Wide appeal, mass communication, mass distribution.
Low cost
Singles Marketing Mix
Economies of scales

Question 22

Differentiated

Answer 22

Market divided into segments
Each segment has a marketing mix
tailor offer to each segment
able to provide satisfaction
spreads risk over more than one segment.

Question 23

Concentrated

Answer 23

Concentration of resources in one segment makes for a strategically defendable position against generalists.
Focus on a single segment
Specialised approach
Niche marketing
One tailored marketing mix
Possibility of lower costs and some economy of scale.

Question 24

MOSAIC

Answer 24

Optimises the value of your customer and locations now and in the future.
Overlays segmentation variables.
Updated every year.
The latest classifies the UK consumers into 15 groups.

Question 25

Evaluation of Market Segments

Answer 25

Market segments need to be evaluated and ranked for possible targeting.
Evaluation is based on...
- Size of segment
- Growth prospects
- Profitability
- Competitive pressure
 - Fit with company objectives.