Topic 9 Flashcards
What is market segmentation?
Marketing technique allows to satisfy needs, wants and aspirations of consumers more accurately - divides market into subgroups based on shared common features
In what 3 ways can markets be segmented?
Geographically
Demographically
Behaviourally
What is geographical segmentation?
According to location
What is demographic segmentation?
Age
Gender
Occupation
Income group
What is behavioural segmentation?
Service usage
Loyalty
Impulsiveness
What is the benefit of market segmentation?
Means can develop products to meet individual needs - differentiates its own brand
Providers differentiate products by using add ons to target specific groups, what are 9 potential bonuses are there available with packed current accounts?
Travel insurance Breakdown cover Mobile phone insurance Identity theft protection Exclusive interest rates Film and music downloads Cashback Home emergency cover Commission free travel money
By which 5 shared characteristics are accounts usually differentiated to suit?
Income and wealth Stage in lifecycle Loyalty Money management needs Other add on needs
What are 6 main criticisms of packaged accounts?
Complaints of being charged money for products they did not know about and did not want
Concerns that the monthly fee is not good value for money
Can end up paying again for benefits they’ll are already paying for in other insurance
Make claims to find it offers limited coverage or only pays out in certain events which do not apply to them
Reports of banks upgrading customers without their knowledge
Do not always take into account customers circumstances or look at individual needs
Customers must check T&Cs of all benefits but problems with financial I capability, so FCA says that providers of packaged accounts must do what 3 things?
Check that each customer will be eligible to make a claim all benefits and share this info
Send each customer an annual statement of how to claim and check whether circumstances have changed and if policies still suit needs
Ensure that advisers check each policy is appropriate
What is an interest free credit card balance transfer?
An interest free period on the balance transferred
Attractive to those who are over indebted and pay high interest
Must pay fee on initial transfer - 3% of balance
What are the 2 main T&Cs that could result to termination of free transfer period if fail to meet?
Must stay within credit limit and make payments on time each month
Must agree to pay off amount transferred within agreed period
What is cashback?
Card company gives amount back to the consumer equal to an agrees percentage of amount spent on card
What is a reward program?
Type of loyalty product with credit/charge cards
Customers build up points whenever they use card, which they can exchange for goods
Method of increasing customer retention
What does market research allow providers to gain understanding of?
Familiar with customers and needs
Understand market and level of demand
Identify usp
What 4 main types of information is gained from market research
Demand from potential customers
Opinions of existing customers
Public opinion on financial services sector (informed on any negative publicity and issues with strong issues, so can take steps to counter negative perceptions)
Overview of wider trends
Using pestle creates awareness of what 5 main external environment changes?
Changes in legislation and impact
Aware of regulatory changes
Monitor effects of changes in unemployment levels
Up to date with demographic changes
Up to date with developments in cyber crime
What 5 methods are commonly used to collect primary data?
Questionnaires Interviews Focus groups Observation Mystery shopping
From what 9 main sources can providers get secondary data from?
Physical and online libraries Trade publications Websites Advertising Market reports Surveys Financial statements Economic reports News items
What is internal secondary data?
Old primary data from provider itself
Confidential information which cannot be used by competitors
In What 3 main ways is internal secondary data used?
Marketing department have figures from past advertising and promotion
Financial statements forecast future trends
Online spending patterns
External data is by external companies, what are 6 main providers?
Public sector organisations and governments Regulators and complaints bodies Professional organisations Commercial market research organisations Competitors Media
What is product development?
Process by which firms create new products that are different from existing products and those of competitors
In what 4 ways can products be differentiated?
Entirely new product
Product which satisfies existing need nut redesigned due to new technology, new idea or innovation
Existing product slightly modified or presented differently to appeal to new/different market segment
Existing product with additional benefits
New products need developing due to which 4 key external environmental changes?
Political and legal changes (European court of justice interprets Eu laws - affected gender discrimination in insurance)
Economic changes (low interest - introductory bonus on savings)
Social changes (multi-car insurance as youth can’t move out)
Technological changes
