CH4 Flashcards
What is market segmentation
Dividing a market into smaller consumer groups with distinct needs or characteristics and consumption pattern
Methods of segmenting a market
- Geographic segmentation
- by region, country etc - Psychographic segmentation
- social class, lifestyle, personality, characteristics - Behavioral segmentation
- by occasion, by usage rate, by benefit, by degree of customer loyalty - Demographic segmentation
- age, gender, income level
What is target marketing
It is the process of evaluating the attractiveness of different markets and selecting one or a few to another
Factors considered when evalutating market segment for it’s attractiveness
- The size and growth of market
- The operating characteristic of the market
- the no. of subsitutes of product
- power of supplier and power of connsumer
- pressence of aggressive and powerful competitors - The objectives and resources of company
- e.g not attractive when payback period is long
3 strategies used to select target markets
- Differenciated marketing
- Undifferenciated marketing
- Concentrated marketing
What is undifferenciated marketing and its advantages and disadvantges
It is when the marketer ignores the segment differences and target the entire market with one product
+ offering one product to the entire market is efficient in terms of production and marketing
- may not satisfy the different needs and wants of the market
What is differenciated marketing and it’s advantage and disadvantage
The marketer chooses several market as his target markets and tailor products to each of them
+ can better satisfy the needs and wants of more customers by offering more products
+ increase total sales revenue
- company needs to separate production and marketing effort to serve different segments, high operating costs may be incurred
What is concentrated marketing and it’s +/-
It is when marketer focuses the resources on one or a few small market segments ( market niches) \
+ Resources are pooled, thus a more efficient use of resources
+ giving satisfaction can give company better reputation and increase sales
+ can better understand customer requirements and tailor & satisfy more effectively
- If the niche segment grows, it may attract large companies
- higher risk because sales and profit drops if operating conditions becomes poor
What is positioning
Process by which a company creates an image for it’s product, then project it’s image in it’s target consumer’s mind
3 steps involved in positioning
- identifying competitive advantage
- selecting the right competitive advantage
- designing a positioning statement and communicating to target markets
How can companies identify and acquire competitive advantage
- product differenciation
- people differenciation
- service differenciation
- channel differenciation
- image differenciation
2 issues to be conidered when selecting the right competitive advantage
- how many should be selected
- which should be selected
- distinctive, profitable, affordable, important, communicatable, superior etc
3 areas to be covered when designing a positioning statement
- Product/ brand
- Benefit
- Targer comsumers
