Strategy: Market segmentation, product/service differentiation, and positioning

Question 1

What is market segmentation

Answer 1

Market segmentation involves dividing the total market into segments, then selecting one of these segments to become the target market.
The ultimate aim of market segmentation is to increase sales, market share and profits by developing a marketing mix to target that market.

A segmentation variable is the characteristics of individuals or groups used by marketing managers to divide a total market into segments.

The consumer market can be segmented according to four main variables:

Question 2

Divisions of market segmentation

Answer 2

Geographic

region, urban, suburban, rural, city size, climate, land forms

Behavioural:

Purchase occasion, benefits sought, loyalty

Psychographic:

Lifestyle, personality, motives, socio-economic group, consumer opinions and interests

Demographic:

Age, gender, education, occupation, income, social class

Question 3

Case study: market segmentation

Answer 3

Demographic
Mass market = 18-50 (20,000 minimum income)

Geographic
Japan, north America, Australia, Suburban or Urban,

Psychographic
all life styles,

Behavioural
durable, price sensitive, fuel efficient

Corolla -

Demographic

Middle-class and working customers
Mostly middle-aged people
For people who are looking for affordable cars → low maintenance costs - low prices but high quality vehicles
Price range: $29,270 - $40,450
Majority are females

Geographic
Expansive geographic regions

Psychographic
middle class

Behavioural
quality and reliability of the Corolla has allowed them to remain in the top ranks

Question 4

Product services/positioning

Answer 4

This refers to the technique in which marketers try to create an image or identity for a product/service compared with the image of competing products or services.
This image gives the product its position within the market and aims to create an image that differentiates its product/ service from the others.
The business will use other elements of the marketing mix to shape and maintain this image.

Question 5

Product service/positioning CASE STUDY

Answer 5

Toyota is rate high quality and low prices along with ford and honda