Topic 2: Segmentation, Targeting, Differentiation and Positioning

Question 1

Market segmentation

Answer 1

involves analysing a market with the aim of directing marketing focus towards smaller segments of buyers with distinct characteristics or behaviours that might require tailored marketing strategies or mixes.

Question 2

Market targeting (or targeting)

Answer 2

consists of evaluating each market segment’s attractiveness and selecting one or more market segments to enter.

Question 3

Differentiation

Answer 3

involves differentiating the firm’s market offering from that offered by competitors, to create superior customer value

Question 4

Positioning

Answer 4

consists of arranging for a market offering to occupy a clear, distinctive and desirable place in the minds of target consumers relative to competing products.

Question 5

four important segmentation topics

Answer 5

1) segmenting consumer markets,
(2) segmenting business markets,
(3) segmenting international markets and (4) requirements for effective segmentation.

Question 6

main variables that might be used in segmenting consumer markets

Answer 6

geographic, demographic, psychographic and behavioural variables

Question 7

Geographic segmentation

Answer 7

calls for dividing the market into different geographical units, such as nations, regions, states, local government areas, cities or even neighbourhoods

Question 8

Demographic segmentation

Answer 8

divides the market into segments based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation and nationality

Question 9

Behavioural segmentation

Answer 9

divides buyers into segments based on their knowledge, attitudes, uses or responses to a product

Question 10

Psychographic segmentation

Answer 10

divides buyers into different segments based on social class, lifestyle or personality characteristics

Question 11

market segments must be

Answer 11

• Measurable: The size, purchasing power and profiles of the segments can be measured.
• Accessible: The market segments can be effectively reached and served.
• Substantial: The market segments are large or profitable enough to serve.
• Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs.
• Actionable: Effective programs can be designed for attracting and serving the segments.

Question 12

In evaluating different market segments, a firm must look at three factors

Answer 12

(1) segment size and growth,
(2) segment structural attractiveness, and
(3) company objectives and resources

Question 13

target market

Answer 13

consists of a set of buyers who share common needs or characteristics that the company decides to serve

Question 14

Market targeting can be carried out at several different levels. Figure 6.2 shows that companies can target

Answer 14

very broadly (undifferentiated marketing), 
very narrowly (micromarketing) or 
somewhere in between (differentiated or concentrated marketing).

Question 15

Undifferentiated marketing

Answer 15

firm might decide to ignore market segment differences and target the whole market with one offer

Question 16

differentiated marketing (or segmented marketing)

Answer 16

strategy, a firm decides to target several market segments and designs separate offers for each

Question 17

concentrated marketing (or niche marketing)

Answer 17

instead of going after a small share of a large market, the firm goes after a large share of one or a few smaller segments or niches

Question 18

Micromarketing

Answer 18

is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Rather than seeing a customer in every individual, micromarketers see the individual in every customer. Micromarketing includes local marketing and individual marketing.

Question 19

Local marketing

Answer 19

involves tailoring brands and promotions to the needs and wants of local customer groups – cities, neighbourhoods and even specific stores

Question 20

individual marketing

Answer 20

tailoring products and marketing programs to the needs and preferences of individual customers. Individual marketing has also been labelled one-to-one marketing, mass customisation and markets-of-one marketing.

Question 21

Choosing a targeting strategy

Answer 21

Which strategy is best depends on company resources

Question 22

Socially responsible target marketing

Answer 22

The biggest issues usually involve the targeting of vulnerable or disadvantaged consumers with controversial or potentially harmful products.
For example, over the years, marketers in a wide range of industries – from cereal and toys to fast food and fashion – have been heavily criticised for their marketing efforts directed towards children.

Question 23

value proposition

Answer 23

how it will create differentiated value for targeted segments and what positions it wants to occupy in those segments

Question 24

product’s position

Answer 24

is the way the product is defined by consumers on important attributes – that is, the place the product occupies in consumers’ minds relative to competing products

Question 25

product’s position

Answer 25

is the complex set of perceptions, impressions and feelings that consumers have for the product compared with competing products

Question 26

perceptual positioning maps

Answer 26

which show consumer perceptions of their brands versus competing products on important buying dimensions

Question 27

The differentiation and positioning task consists of three steps

Answer 27

(1) identifying a set of differentiating competitive advantages upon which to build a position;
(2) choosing the right competitive advantages; and
(3) selecting an overall positioning strategy

Question 28

Identifying possible value differences and competitive advantages

Answer 28

An alert company can find ways to differentiate itself at every customer contact point. In what specific ways can a company differentiate itself or its market offer? It can differentiate along the lines of product, services, channels, people or image.

Question 29

Choosing the right competitive advantages

Answer 29

Which differences to promote

Not all brand differences are meaningful or worthwhile; not every difference makes a good differentiator. Each difference has the potential to create company costs as well as customer benefits. A difference is worth establishing to the extent that it satisfies the following criteria:
•Important:
•Distinctive:
•Superior:
•Communicable: The difference is communicable and visible to buyers.
•Pre-emptive: Competitors cannot easily copy the difference.
•Affordable: Buyers can afford to pay for the difference.
•Profitable: The company can introduce the difference profitably.

Question 30

Value proposition

Answer 30

the full mix of benefits upon which the brand is differentiated and positioned.

Question 31

positioning statement

Answer 31

A statement that summarises company or brand positioning
The statement should follow the form: To (target segment and need) our (brand) is (concept) that (point of difference).21 For example: ‘For every athlete, Nike’s experience and expertise ensures that you have the perfect shoe for your sport.’