Week 3: Understanding which customers to serve

Question 1

What is market segmentation?

Answer 1

Dividing a market into smaller groups of buyers with:
distinct needs, characteristics or behaviours
that might require separate marketing strategies or marketing mixes,
so we can really create value for them.

Question 2

What are the 3 principles of market segmentation?

Answer 2

1. A business exists for a purpose ( e.g., to be profitable etc.)
2. Customers differ based on:
   - Needs, characteristics, behaviours
   - The cost to serve them
   - Their appreciation of your value creation
   - Their willingness to pay
3. A business cannot be all things to ppl - to achieve its purpose, must focus on attractive market segments.

Question 3

What is the aim of market segmentation?

Answer 3

to enable brands to better target their:
- products, services or content,
making sure they reach the right users, in the right place and right time.

Question 4

What are the 4 different types of segmentation criteria?

Answer 4

1. Geographic
2. Demographic
3. Psychographics
4. Behavioural

Question 5

What does Geographic segmentation criteria entail?

Answer 5

• refers to using location, such as:
  regions, countries, urban vs. rural areas, to define who you’ll market to
• language as well - brands + marketers need to ensure that the language in their promotion & communication is precise and error free.

Question 6

What does Demographic segmentation criteria entail?

Answer 6

looks at the structure of a population, for e.g. in terms of:
- age, income, gender, marital status
+’s:
- easy to collect,
- simple to measure & analyse
- cost-effective (thus usually the first steps brands use)
-‘s:
- its vague,
- based on assumptions,
- doesn’t take into account needs & wants of individual consumers.

Question 7

What does Psychographics segmentation criteria entail?

Answer 7

combines attitudinal variables with demographics. Involves stuff such as:
- personality, values and lifestyles, opinions & interests

data can be collected thru:
- surveys, interviews, or analytical data gathered by google/ social media

+’s:

• offers a personal look into what consumers like, dislike, need, want and love.
• most valuable data
• ’s:
• very subjective + difficult to quantify
• can be harder to collect + analyse
• marketers must make sure info is interpreted properly + for the right reasons.

Question 8

What does Behavioural segmentation criteria entail?

Answer 8

Looks at specific behaviour such as ppl’s:
- brand choices, media consumption, price sensitivity, benefits sought

• data tends to be gathered + analysed by tools like Google Analytics or particular Algorithms that track things like users dwell time on a website
• Big brands such as Netflix & Spotify are at the top of their game with this - their focus on personalising content & experiences has really paid off - Their on point segmentation efforts show their dedication to personalisation and optimised user experience.

Question 9

Overall, what does segmentation help with?

Answer 9

it helps to focus marketing efforts,
making sure products, services and campaigns are so streamlined and delivered to the most appropriate audience for that brand.

Question 10

The combination of ………….. criteria can be effective and one can compliment the other during actionable insights, for more accurate segmentation and analysis.

Answer 10

different market segmentation

Question 11

You can keep adding segmentation criteria to a market until…

Answer 11

you achieve feasible market segments.

Question 12

What are the characteristics of feasible market segments?

Answer 12

1. Clear differentiation and relevance:
   clearly distinct from each other and be relevant (e.g., segmenting a market b/n left-handed, right-handed and both handed ppl - then you decided to market soda exclusively to left-handed ppl, which doesn’t make sense and isn’t relevant market segment for soda’s as consumption doesn’t matter whether you use diff. hands.
2. Measurability:
   there are associated metrics that can be collected to size the segment and monitor performance (e.g., volume, growth rate)
3. Stability over time:
   the segments are stable enough to be meaningful over time
4. Actionability:
   marketing strategies can be formulated and implemented for each segment
5. Accessibility:
   the segment can be easily reached and served by the company once identified.
6. Economic viability : profits outweigh costs of tailoring marketing mix

Question 13

Should customers needs be satisfied regardless of the costs it poses on the company?

Answer 13

No

Question 14

Target market segments should be selected using a set of criteria, such as:

Answer 14

• Segment revenue,
• Segment size and growth rate,
• Profitability,
• Fit with overall business strategy and company resources,
• Competitive intensity (you might want to look into other segment if there’s too much competition)
• Ethicality (e.g. exploiting people’s addictions or targeting children)

Question 15

What is positioning?

Answer 15

Arranging for a product to occupy a clear, distinctive and desirable place in the minds of target consumers relative to competing offerings.

Positioning is not about all consumers in a market - just your target segment.

Question 16

How is positioning achieved?

Answer 16

it is achieved by defining a specific and consistent strategy over time

Question 17

________ refers to how a company will create differentiated value for targeted segments and what positions it wants to occupy in those segments.

Answer 17

Value proposition

Question 18

________ segmentation divides the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation

Answer 18

Demographic

Question 19

………………states the product’s membership in a category and then shows its point of difference from other members of the category

Answer 19

a positioning statement.

Question 20

________ consists of evaluating each market segment’s attractiveness and selecting one or more segments to enter.

Answer 20

Market targeting

Question 21

________ segmentation divides buyers into different segments based on lifestyle or personality characteristics.

Answer 21

Psychographic

Question 22

________ segmentation divides buyers into segments based on their knowledge, attitudes, uses, or responses concerning a product

Answer 22

Behavioral

Question 23

________ involves dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes.

Answer 23

Market segmentation

Question 24

_______ involves actually distinguishing the firm’s market offering to create superior customer value.

Answer 24

Differentiation

Question 25

When an effective program can be designed for attracting and serving a particular segment, the segment is best described as ________.

Answer 25

Actionable

Question 26

When the size, purchasing power, and profile of a market segment can be calculated, the market is ________.

Answer 26

measurable

Question 27

________ consists of arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

Answer 27

Positioning

Question 28

Market segments that can be effectively reached and served are ________.

Answer 28

accessible

Question 29

Market targeting is ________.

Answer 29

evaluating segment attractiveness and deciding how many and which segment(s) to serve

Question 30

A segment is less attractive if it ________.

Answer 30

already contains many strong and aggressive competitors

Question 31

A ________ consists of a set of buyers who share common needs or characteristics that the company decides to serve.

Answer 31

target market