Chapter 4: Segmentation, Targeting, Postitioning Flashcards
What is targeting?
strategy of focussing on a certain group of consumers
What is segmentation?
Process of dividing consumers into distinct groups
What is positioning?
Strategy of using different message from competitors to communicate to different groups
By creating perception that the product of different from what is offered from others
Why do marketers segment markets?
Increase sales and profits
How do they increase sales and profits?
Focus on just a few groups of customers
Enough resources to respond effectively
What are the characteristics of each segment?
Have common needs
Respond similarly to marketing action
What is a market segment
Relatively homogenous group of prospective buyers from market segmentation process
How do firms cater to different market segments?
Product differentiation
Product differentiation uses positioning and it is a strategy that
Involves using marketing mix to change perception of it being better
Perceived difference may be physical or nonphysical
Sales and profits is also called
ROI
Return on investment
If sales are higher without segmentation,
Do not segment
What are the options after segmentation?
One product to cater to multiple market segments
Multiple product and multiple market segments
Segments of one- mass customization
When is ‘one product to cater to multiple segments’ used?
Firm can only product single product or service
No extra costs of developing and producing additional versions
Attempt to sell it to two or more
‘Multiple products and multiple market segments’ may be more expensive. It is justified when
Customers needs are served better
Quality is not reduced
Having different products do not lead in increase in price
Adds to sales and profits
Segments of one involves
Tailoring different product for each customer on several sets of options available
Why is mass customization used?
Customer has unique wants and needs
Customer desires unique treatment. Tender loving care
Economies of scale make it affordable
Customer are less willing to compromise their individual tastes and settle for standardized products
Internet ordering, flexible manufacturing, marketing processes make it easier
What are the five steps in segmenting a market, selecting and reaching target segments?
Group potential buyers into segment
Group products to be sold into categories
Develop a market product grid and estimate size of market
Select target markets
Take marketing actions to reach target market
Criteria that must be met before segments are formed is called
Criteria to use in forming segments
What criteria must be met before segmentation is carried out?
Potential for increased profit
Similarity of needs of potential buyers within segment
Difference of needs of buyers among segment Potential of a marketing action to reach a segment
Simplicity and cost of assigning potential buyers to segments
There is potential for increased profit when
Different groups of customers are willing to pay different prices
Target the most profitable group
Why must needs be similar in the segment?
A unique product can be created diff from competitor
To meet their needs
Why there must be difference of needs among segments?
The more segments there are, more versions marketer has to create
Cost higher, profits lower
Combine into fewer segments
Potential for marketing action to reach is important because
Company must let them know that product is unique and superior
They must see that they belong to the segment
Characteristics of potential customers should
Be easily recognized
Without incurring excessive costs
Expensive tests should not be required to categorize
