STP: Market Segmentation

Question 1

What is STP?

Answer 1

-segmentation, target and positioning

Question 2

What is segmentation?

Answer 2

1. Identifying characteristics to divide the market into

2. Gathering a profile of its consumers in each one of these segments

Question 3

How do customers differ?

Answer 3

• benefits they want
• amount they are able or willing to pay
• media (e.g. TV, Newspapers, magazines) they see
• quantities they buy
• time and place that they buy

Question 4

How can a business divide the market?

Answer 4

• a business can divide market into smaller segments to provide more relevant products and services
• segment can be defined as a part of a market that exists to serve a certain group

Demographic segmentation -divided by personal characteristics
Geographic segmentation - divided by location

Question 5

What is demographic segmentation?

Answer 5

-gender
-age
-social class
-life cycle stage
-lifestyle
-income
Social class can be divided into:
A- upper middle
B- middle
C1- lower middle
C2- skilled working
D- working
E- lower

Question 6

What is geographic segmentation?

Answer 6

• Regions: e.g. In the U.K. These might be England, Scotland etc
• countries, categorised by size, development etc
• city/town size, population within ranges or above a certain level
• population density, e.g. urban, Suburban, rural

Question 7

Why do businesses divide the market up this way?

Answer 7

-so they can have a regional and national marketing programmes which alter their products advertising and promotion to meet the individual needs of different area

Question 8

Why would a business use market segmentation?

Answer 8

• better matching of customer needs
• enhanced profits for business
• better opportunities for growth
• retain more customers
• target marketing communications
• gain share of the market segment

Question 9

How does segmentation help to match customer needs?

Answer 9

• customer needs differ

- creating separate products for each segment makes sense and provides customers with a better solution

Question 10

How does segmentation affect profits?

Answer 10

• customers have different disposable incomes

- businesses can have a range of prices and subsequently enhance profits by charging more for those willing to pay more

Question 11

How do opportunities for growth come up through segmentation?

Answer 11

• can build sales

- customers can be encourage to trade up after being introduced to a product with an lower introduction price

Question 12

How does segmentation retain more customers?

Answer 12

• customers change buying habits, grow older etc

- marketing products that appeal to customers in each life cycle stage will retain them

Question 13

How does segmentation improve targeting customers

Answer 13

• if target market is bored they may miss customers

- by segmenting, the target customer can be reached more often and at a lower cost

Question 14

How does segmentation help to gain share of the market segment?

Answer 14

-being more specialised means segmentation offers opportunity for smaller firms to compete with bigger ones

Question 15

What are benefits of market segmentation?

Answer 15

• increase market share, different products for different areas
• assists w/ new development of products, created to suit new/differing needs
• allows for growth into new areas
• helps select the best way of marketing

Question 16

What are limitations of market segmentation

Answer 16

• lack of information and data: some markets are poorly researched w/ little info
• hard to understand what’s the most important segment for a particular product
• difficult to measure and predict consumer behaviour, humans don’t behave in the same way and behaviour changes
• hard to reach segments once identified,finding the right way to reach target customers w right message is hard
• ignore potential customers not in a segment