3.3 Segmentation, targeting and positioning notes Flashcards
(19 cards)
What is segmentation ?
By undertaking research, managers aim to identify groups of similar needs & wants within a market. The process of identifying different groups of similar needs is called segmentation.
What are market segments?
The different groups of needs & wants.
What are the common ways of categorising by segmentation?
Demographic segmentation.
Geographic segmentation.
Income segmentation.
Socioeconomic segmentation.
Behavioural segmentation.
What is demographic segmentation?
Demographics- refers to characteristics of the people in the target population.
E.g. may be similar needs & wants based on aspects such as age and gender.
What is geographic segmentation?
- This method of segmentation groups needs & wants based on the geographical area in which customers are based.
- (E.g. the types of food & drink sold at McDonalds outlets around the world may need to vary to meet the tastes of different customers)*
What is income segmentation?
Split into high income & low income users.
- High income earners- more likely to be interested in products to do with saving & investing.
- Low income earners- likely to be interested in borrowing.
What is a common way of segmenting people based on income & their professions?
Socioeconomic groupings.
What are the most common categories of socioeconomic groupings?
A: Higher managerial, administrative or professionals.
B: Intermediate managerial, administrative or professional.
C1: Supervisors, clerical and junior managerial, administrative or professional.
C2: Skilled manual workers.
D: Semi and unskilled manual workers.
E: Casual labour.
What does behavioural segmentation focus on?
Give examples.
What customers actually do!!
- When they buy.
- How much they buy.
- Brand loyalty.
- The benefit they want from the product.
Why is segmentation useful?
- Managers can understand what different groups want rather than treating all customers as the same.
- Enables more focused and efficient marketing- however the more segments a business decides to focus on, the more complex the operation & more expensive to meet all the different needs.
- Adapting the products to meet the needs of different customers may mean that customers are more satisfied but could be making the potential market smaller.
What will managers want to balance?
Balance a desire to meet customer needs with what is practical, efficient and profitable.
What is targeting?
It occurs when a business decides which segments it wants to operate in.
Targeting
What does segmentation use & why?
- Uses market research to identify which segments exist in a market.
- However, a business may not want to focus on all of them. Choosing which segments to focus on is known as targeting.
A business will target segments where it thinks what?
- There is sufficent demand and potential profit to justify investment.
- It has the ability to be competitive and gain sales.
By selecting target segments, what will the business be able to focus on?
What should this then increase?
- Focus on the needs & wants of the customers in these segments and hopepfully meet their needs more precisely and effectively.
- Should increase competitiveness and provided the revenue is sufficient and the costs not too high, profits.
What is a niche market?
Can you give an examples?
- Is a smaller specific segment of the market with clearly identifiable needs and wants such as tall people.
E.g. clothes retailer may focus on tall people / Goths.
What is a mass market?
A mass market is the whole of the market, where the business doesn’t try and match the needs of a specific segment precisely but aims to provide products that will meet some of the needs of most people.
What is good about niche marketing?
- It is possible to compete within a bigger market such as fashion/ media without directly challenging the bigger businesses & therefore not being seen as a threat by them.
- Not being seen as a threat by larger competitors.
- Gap in the market with limited competition.
