UNIT 5: SEGMENTATION AND TARGETING

Question 1

WHAT IS A MARKET SEGMENT?

Answer 1

A group of customers who share a similar set of needs and wants.

Question 2

WHAT IS A TARGET MARKET?

Answer 2

One or more specific groups of potential customers. The organization directs its marketing program towards them.

Question 3

DETERMINING THE TARGET MARKET: PROCESS (3 STEPS + POINTS INCLUDED)

Answer 3

1. You have to identify the segments
   - you have to find the relevant market (where the company really acts)
   - you have to analyze the characteristics of the potential customers
   - choose a segmentation criteria and apply the method.
2. You have to evaluate the attractiveness of the segments
3. You have to select one or more target segments and apply the method

Question 4

1st STEP OF DETERMINING THE TARGET GROUP: IDENTIFY MARKETING SEGMENTS: Segmentation variables

Answer 4

There are 2 segmentation variables: general and specific

General:
- demographic: age, gender, family
- socio-economic: income, education
- geographic: region, city size
- psychographic: leadership, self-expression
- life-style: interests

Specific:
- brand loyalty
- behavioral occasions
- usage rate

Question 5

2nd STEP OF DETERMINING TARGET MARKET: SEGMENT VALUATION: What can affect the segmentation from both views? (Company and customers)

Answer 5

1. Segment attractiveness (from the customers’ view):
   - segment size
   - unsatisfied needs
   - segment access
   - macro environment factors
   - substitute products
   - power of suppliers and customers
2. Company position (from the company’s view)
   - company image
   - market share
   - type of competitive advantage

Question 6

3rd STEP OF DETERMINING THE TARGET MARKET: STRATEGIES (4 types)

Answer 6

1. Undifferentiated strategy: there is only one marketing mix for the whole market
   - wants to reach as many customers as possible
   - advantage: cost-efficiency
2. Differentiated strategy: different marketing mixes to differentiate segments, also different strategies
   - For example: Coca-Cola original, light, zero
3. Concentrated strategy: one marketing mix to one narrow segment
   - only one target with only one marketing mix
   - for example: LUSH. That brand is fighting against animal testing, the packages are eco-friendly, focused only this narrow segment who are environmentally cautious.
4. Micro marketing strategy: one marketing mix which is based on the collected information about the customers
   - real estate industry: they try to satisfy every single need what the customer has.