Segmentation Flashcards
Definition
Involves the division of a diverse market into number of smaller sub markets that have common features
The objective is to identify groups of customer with similar requirements so that they can be served effectively, while being of a sufficient size for the product or service to be supplied efficiently
Market segmentation is
Allows companies to enhance their profits and make best use of resources
Enables companies to examine growth opportunities and expand their product lines and range
Helps companies identify those segments in which they can most effectively compete in and helps develop strategies suited for that segment
Segmentation methods
1) behavioural segmentation: involves consumers behavioural such as benefits sought from the product and buying patterns
2) psychological segmentation: is the grouping of people according to their lifestyle and personality characteristics
3) profile segmentation : is the grouping of people in terms of demographic profile variables such as age and socio economic group so that marketers can communicate to them
Segmentation methods : consumer criteria
Behavioural : Benefits sought Purchase occasion Purchase behaviour Usage Perception,values , and beliefs
Psychographic :
Lifestyle
Personality
Profile :
Demographic
Socio economic
Geographic
Segmentation methods : organisational criteria
Organisational size Industry sector Geographic location Choice criteria Purchasing organisation
Criteria for successful segmentation
1) effective : segments should consist of customers whose needs are relatively homogenous within a segment , but significantly from those in another segment
2) measurable : must be able to identify the customers in the segment, and to understand their characteristics and behaviour patterns
3) accesible: company must be able to formulate effective marketing programs for the segments it identifies
4) actionable : the company must have the resources to exploit the opportunities identified through the segmentation scheme
5) profitable: segments must be large enough to be profitable to serve
Target marketing
Choice of specific segments to serve, and is a key element of marketing strategy
Done by: Evaluating target segment on the basis of: Segment size,growth,profitability Segment attractiveness Level of comp Substitute products Power of buyers Powerful suppliers
Assessing company objectives and resource
Target marketing strategies
Undifferentiated marketing :
A company decides to ignore market segment differences and to develop a single marketing mix for the whole market
Differentiated marketing:company decides to target several segments and develop a marketing mix for each one
Focused marketing : company decides to target one target segment with one marketing mix
Customised marketing : company decides to target individual customers and to develop different marketing mixes for each
Mass customisation: the opposite to mass production, which means that all products produced are customised to the predetermined needs of a specific customer
Differentiating industries
1)Volume industries
An industry characterised by few opportunities to create comp adv,
Each adv is huge and results in a high pay off(airlines)
2)Statement industries
An industry that produces commodities and is characterised by few opportunities to create comp advs, with each adv being small (steel,chemicals)
3)Fragmented industries
An Industry characterised by many opportunities to create comp advs, but each adv is small (restaurants)
4)Specialised industries
An industry where there are many opportunities for firms to create comp adv that are huge and give a high pay off (pharmaceutical)
Positioning
The choice of target market (where we wish to compete) and differential advantage (how we wish to compete)
The objective of positioning is to create and maintain a distinctive place in the market for a company and or its products
Key to successful positioning
1) clarity- the idea must be perfectly, both in terms of target market and differential advantage
2) Consistency-a consistent message is required to break through the clutter of messages that consumers face
3) Credibility-the selected differential advantage must be credible in the minds that of target customers
4) Competitiveness- the chosen differential advantage must possess a competitive edge. It should offer something of value to the customer, which the completion fails to supply
Perceptual mapping
Useful tool for determining the position of a brand and its competitors in the marketplace,based on consumer perceptions, its steps
1) identify a set competing brands
2) identify the important attributes consumer use when choosing between brands, based on qualitative research
3) conduct quantitative market research marketing research where consumers score each brand on all key attributes
4) plot brands on a two dimensional map
Repositioning (6)
Repositioning involves changing the target markets, differential advantage or both
Different methods and options include
Image repositioning
Product repositioning
Intangible repositioning
Tangible repositioning
