Segmentation, targeting and positioning Flashcards
What is market segmentation?
Dividing a market into different parts that reflect customer wants and needs.
What are the 4 traditional ways of segmenting a market?
Demographic, Income, Behavioural, Geographical
What is a demographic segment?
Dividing a market based on age, gender, religion, nationality
What is an income segment?
lower incomes, medium incomes, higher
What is a behavioural segment?
how customers use or respond to a product
What is a geographical segment?
Dividing a market based on location, nations, cities, regions
What are the benefits of market segmentation?
Helps product and market development
Allows businesses to grow in certain markets
Focuses resources where a business can succeed
What are the drawbacks of market segementation?
Not always reliable
Markets are fast changing
What is a niche market?
Smaller segment of a larger market
What is a mass market?
Business sells into the largest part of the market
What are the features of a mass market?
Customers are the majority
Potential to economies of scale
Needs more general
What are the features of a niche market?
Less potential for economies of scale
Needs more targeted
What are the features of targeting a niche market?
Less competition
Build up specialist knowledge
Loyal customers
What are the disadvantages of targeting a niche market?
Lack of economies of scale
Risk of over dependence on one product, vulnerable to change
What are the 3 kinds of target market?
Mass market, Segmented, concentrated
How do you analyse market position?
With a market map
What axis may be used for a market map?
price, quality, volume
What are the benefits of a market map?
Highlights gaps in the market, useful for analysing competitors, encourages market research
What are the drawbacks of a market map?
Gap doesn’t indicate demand, might not always be successful, market research not always reliable
How can positioning provide a competitive advantage?
Offer more or less depending on gap in market e.g., cheaper alternative or high end service
What is product differentiation?
Creating a distinct difference in your product
Why is product differentiation good?
Compete, build a brand with added value
