Term
| Define: Market segmentation |
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Definition
The process of dividing a market into distinct groups of customers, prospective customers, or buying situations in which members are similar in the way they:
- perceive value
- view products and services
- purchase products and services
and who might require separate marketing mixes |
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Term
| What is the difference between market segmentation and product differentiation? |
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Definition
| Market segmentation bends the product to the customer whereas product differentiation bends the consumer to the product |
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Term
| What is the focus and the characteristics of market segmentation? |
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Definition
The development of a distinctive marketing programs to meet the unique requirements of specific target markets
- A different marketing mix for each target market
- Extensive investment in market research |
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Term
| What is the focus and the characteristics of product differentiation? |
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Definition
Design of advertising and sales force programs to persuade target markets of a product's merits
- A standardized marketing mix to serve several target markets supported by a different promotion and minor differences in product features and packaging
- Little investment in understanding target markets' unique requirements |
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Term
| Benefits of market segmentation |
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Definition
- A more efficient allocation of the marketing budget
- A more effective marketing approach to the needs of individual segments
- Enhanced abilities to identify new marketing opportunities through better feedback and communication abilities
- The development of specialist knowledge and extra effort that may enable an organization to dominate particular segments and gain competitive advantage |
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Term
| 4 Factors that influence the need for market segmentation |
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Definition
1. The more heterogeneous the product assortment the greater the need for market segmentation
2. The more the customers differ on buying strategy the greater the need for segmentation
3. The more heterogeneous the market the greater the need for segmentation
4. The more the environment changes the greater the need for market segmentation |
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Term
| Options in target market selection |
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Definition
- Single segment
- Selective specialization
- Product specialization
- Market specialization
- Full market coverage |
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Term
| Single segment target market |
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Definition
| One product in one segment |
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Term
| Selective specialization target market |
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Definition
| One product in a few segments |
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Term
| Product specialization target market |
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Definition
| One product in all segments |
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Term
| Market specialization target market |
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Definition
| A selection of products in one segment |
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Term
| Full market coverage target market |
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Definition
| A selection of products in a selection of segments |
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Term
| Market segments must be... |
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Definition
- Accessible
i.e. must be able to reach them with a marketing program
- Durable
i.e. will exist over time
- Identifiable
i.e. distinguishable from other segments
- Substantial
i.e. economically viable to target with a segmented marketing program
- Unique
i.e. needs, wants, and behaviors are different from other segments
- Winnable
i.e. you can win it |
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Term
| What are key questions in determining a viable footprint? |
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Definition
Breadth: Are there enough customers in the market segment to make it worth while?
Depth: How strong is the preference? Would minor changes in the balance of attributes cause customers to switch? |
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Term
| What are the options in determining positioning? |
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Definition
- Benefits, needs or solutions
i.e. durability vs. absorption in paper towels
- Price/quality
i.e. luxury vs. economy hotels
- Application
i.e. general vs. specialized purpose batteries
- User
i.e. alcohol pops for young consumers, dark ales for experienced consumers
- Product Class
i.e. soap as a bath oil, chewing gum as a teeth whitener
- Competitors
i.e. Direct comparison on image, product features, etc. |
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Term
| What are the 3 pitfalls in positioning |
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Definition
1. Underpositioning
2. Overpositioning
3. Confused positioning |
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Term
| What is underpositioning? |
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Definition
| A pitfall in positioning that results in a vague product that is not valued by customers |
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Term
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Definition
| A pitfall in positioning that results in the communication of too few benefits or solutions |
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Term
| What is confused positioning? |
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Definition
| A pitfall in positioning that results in the communication of too many benefits or solutions, or communicates changing benefits |
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Term
| What are influencing factors that might cause repositioning? |
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Definition
- Customer behaviours change
- Technologies change
- Competitors change
- Other factors |
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Term
| What must repositioning always be relevant to? |
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Definition
| The customer's frame of reference |
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Term
| What are some dimensions for segmenting consumer markets? |
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Definition
- Geographic segmentation
- Demographic/geodemographic segmentation
- Psychographic segmentation
- Behavioural segmentation |
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Term
| What are the steps to applying market segmentation? |
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Definition
1. Building Market segments
(predetermined vs. market define approach)
2. Identifying Competitors
3. Selecting Target Markets
4. Positioning and Implementing |
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Term
| What is the purpose of predetermined segmentation and what are its characteristics and issues? |
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Definition
Purpose:
- Explore and understand differences among known segments
Characteristics:
- Prior knowledge of segment characteristics and their number
Issues
- Based on the managerial judgements, not actual behaviours |
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Term
| What is the purpose of market defined segmentation and what are its characteristics and issues? |
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Definition
Purpose:
- Explore to determine viable segments
Characteristics:
- No prior knowledge of segment characteristics or their numbers
Issues:
- Expensive, resulting segments may be difficult to interpret |
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