Segmentation, targeting, positioning Flashcards
What is market segmentation?
Process of dividing potential customers into different groups based on characteristics like age, gender, income and more
Choosing market mix
When choosing the product, geographic, promotional and price segmentation can help a business to understand its customers’ needs and wants
For example, Next provides clothing aimed at infants and toddlers using its Next Kids range
Choosing promotion
Advertising in a newspaper probably is not the best way to target teenage girls, but a teenage magazine like Bliss might be
Segmenting a market can give businesses ideas about how best to promote their products
What is market mapping?
Process to identify a gap in the market by looking at what competitors offer
Variables customers can be segmented based on
Income - Luxury products need to be aimed at people who earn a certain amount of money
Location - Customers’ wants and needs often change based upon where they live or where they are born
Age - Business unlikely to advertise mobility scooters to young people
Gender - Boohoo primarily targets females, less effective to target males
Mass market
Mass market tries to make products and/or services for all consumers
Mass market will be larger and the types of products will be more generalised
E.g. Fast food like McDonalds
Niche markets
Appeals to much smaller segment
Small than mass market
Provides products/services which focus on a specialist want or need
E.g. Healthy fast food like Leon
Benefits of mass markets
+ Having more customers
+ Benefitting from economies of scale (due to higher output levels)
+ Can build a strong market presence
Disadvantages of mass market
- Higher levels of competition
- Lower profit margins
Advantages of niche markets
Less competition Specific market Can develop specific expertise Higher profit margins Customer loyalty
Disadvantages of niche markets
No economies of scale
Vulnerability because they have an undiverse product portfolio
