Market Segmentation

Question 1

Market Segmentation

Answer 1

The process of dividing a market into subsets of consumers with common needs

Benefits:
- Smaller segments can be reached more efficiently and effectively

Myths:
- Causes myopic thinking, losing out potential customers

Truths:
- Leads to efficient use of marketing resources that is profitable and increases value for the customer

Question 2

Quantitative Factors

Answer 2

Behavioral Data:
- Determined from direct questioning/observation and categorized using objective and measurable criteria

Consumer-Intrinsic Factors:
- Age, Gender, Marital Status, Income, Education

Consumption-Based Factors:
- Quantity of Product Purchased, Frequency of Leisure Activities, Frequency of Buying a Product

Question 3

Cognitive Factors

Answer 3

The abstracts that “reside” in the consumer’s mind
- Determined through psychological and attitudinal questioning

Consumer-Intrinsic Factors:
- Personality Traits, Cultural Values, Attitudes towards Politics & Social Issues

Consumption-Specific Factors:
- Attitudes, Preferences, Product Benefits

Question 4

Demographic Segmentation

Answer 4

Core of almost all segmentation
- Easy, Objective, Empirical

Age, Gender, Marital Status, Family Size, Income, Education, Ethnicity, Religion, Geographical Location

Question 5

Psychographic Segmentation

Answer 5

Explain buyers’ purchase decision and choices

Provide marketers with very descriptive profiles of their target markets

Social Class, Lifestyle, Activities, Personality

Question 6

Behavioral Segmentation

Answer 6

User Status:
- current, never used, ever used

Usage Rate:
- light, medium, heavy

Loyalty:
- loyal, variety seeking

Online Behavior

Question 7

Geodemographic Segmentation

Answer 7

Suggests that where a person lives helps determine their consumption behavior

Question 8

Benefit Segmentation

Answer 8

Benefits that consumers seek from products to satisfy their unfulfilled needs

Question 9

Expectations of Service Providers

Answer 9

Social Benefits:
- Recognized/known by staff
- Increase value and importance

Special Treatment Benefits:
- Helping when something goes wrong
- Receiving prioritization

Confidence-Related Benefits:
- Confident that the service will be provided correctly

Question 10

Segments Must Be…

Answer 10

Identifiable:
- Divide consumers into separate segments of common needs
- Demographics (easier) - Psychographics (difficult)

Reachable:
- Communicate with the consumers in the segment effectively and economically

Profitable:
- Companies must be interested in and have the resources to reach the segments they select