Market segmentation - Wikipedia
All of the following are criteria for successful market segmentation EXCEPT: PTS: a segmentation scheme must produce segments that meet four basic criteria. primarily a marketer should clearly define market segmentation criteria not only ensure The following 5 market segmentation criteria should be useful when. All of the following are criteria for successful market segmentation EXCEPT: a segmentation scheme must produce segments that meet four basic criteria.
If a marketer were to link U. Census data with lifestyle patterns to better segment markets, this would be an example of geodemographic segmentation.
Answer: (b) Difficulty: (2) Page
A common way to segment a business market would be to segment based on operating characteristics and situational factors. Segmenting international markets on the basis of geographic, economic, political, cultural, and other factors is called international psychographics.
To be useful, a market segment must be substantial.
To be useful, a market segment must be conspicuous. A market segment is a set of buyers sharing common needs or characteristics that the company decides to serve. Concentrated marketing is a market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer.
If a firm decides to go after a large share of one or a few segments or niches, then the firm will probably be following a concentrated marketing strategy. In market targeting, the issue is not how and for what, but who is targeted. One of the major positioning errors that a company needs to avoid is that of confused positioning. A difference is worth establishing to the extent that it satisfies the criterion of cultural imperative.
According to the nine cell matrix that describes possible value propositions, the cell that produces a higher price for reduced benefits should be pursued by the marketer.
Each of these brands is directed toward a different segment of the vast laundry detergent market. Why would the company allow this to happen? The answer lies in the fact that different people want different mixes of benefits from the products that they buy.
For example, laundry detergent customers want several different things: The company will accept intracompany brand competition and by doing so, it will keep all the money from the various brands in one common pocket rather than giving it to competition. The company has also developed a separate brand for each of the eight important laundry detergent segments.
For example for other information see the introductory comments in the chapter where all eight segments are identified: Define market segmentation, market targeting, and market positioning. Demonstrate through the steps of a model how these concepts fit together to aid the decision maker in his or her attempt to use market segmentation in the marketing process. Market segmentation is the process of dividing a market into distinct groups of buyers with different needs, characteristics, or behavior who might require separate products or marketing mixes.
Market positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. The marketer formulates a competitive position for a product and a detailed marketing mix.
The steps shown in this model are: Identify the differences between the mass marketing, segment marketing, niche marketing, and micromarketing strategies.
For most of this century, businesses practiced mass marketing. They mass produced, mass distributed, and mass promoted the same product in almost the same ways to all consumers.
The argument for this approach was that mass marketing creates the largest potential market, which leads to lower costs, which in turn can translate into either lower prices or higher margins.
This approach has given way to segment marketing, where marketers isolate broad segments that make up a market and adapt the marketing to match the needs of one or more segments. The benefits of this approach are that the company can market more effectively and efficiently by creating programs that are directed only toward those consumers that can be most effectively served. In niche marketing, there is a focus on subsegments or niches with distinctive traits that may seek a special combination of benefits.
The newest form of segmentation is called micromarketing, where the marketer tailors products and marketing programs to suit the tastes of specific individuals and locations. This can take the form of either local or individual marketing. List and briefly discuss the major bases for segmenting consumer markets. Demonstrate how these major bases would compare to the bases used in segmenting business markets what are the differences and similarities? The major bases for segmenting consumer markets are 1 geographic, 2 demographic, 3 psychographic, and 4 behavioral.
Examples within these categories might be: These bases are contrasted to the major bases for segmenting business markets, which include 1 demographics, 2 operating variables, 3 purchasing approaches, 4 situational factors, and 5 personal characteristics.
Notice that similarities exist between some of the demographic and personal characteristics behavioral categories. Consumer and business markets use many of the same variables to segment their markets. However, there are also differences. Using the approach suggested in the text, list and briefly describe the additional variables that would be important to the business marketer who wished to segment markets. Some additional variables would include: Operating characteristics—how does the customer operate within the industry?
Purchasing approaches—are buying centers used? Situational factors—are there certain times of the year when the buyer is more likely to purchase? Personal characteristics—are there characteristics about the purchasing unit or the senior managers that might impact the purchase decision? Define and give a specific example of intermarket segmentation.
To conduct intermarket segmentation, an international marketer forms segments of consumers who have similar needs and buying behavior even though they are located in different countries. The text uses the examples of MTV who targets the world of the teen and Mercedes-Benz who targets the affluent no matter where they live. As demonstrated in the text, there are several ways to segment a market. However, not all of these ways are always effective.
To be useful and effective, market segments should have five different characteristics. List these and briefly explain each. Market segments must be 1 measurable in terms of size, purchasing power, and clear profiles2 accessible can be effectively reached and served3 substantial large or profitable enough4 differentiable the segments are distinguishable and respond differently to different marketing mixesand 5 actionable can design programs for attracting customers effectively.
A firm can adopt one of three market-coverage strategies when attempting to market its goods and services. List and describe each of these possible market-coverage strategies and provide and example of each. Undifferentiated marketing—a market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer.
It relies on mass marketing techniques. Distributing salt might be an example of this form. Differentiated marketing—a market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each.
Automobiles might be examples of this strategy. Concentrated marketing—a market-coverage strategy in which a firm goes after a large share of one or a few sub-markets.
A specialty truck producer might be an example of this strategy. What factors might a company need to consider when choosing a market-coverage strategy?
Explain and justify your choices. The text suggests the following factors: What are these errors? Present a brief description and illustration of each. The major errors are: Underpositioning—failing to really position the company at all.
Overpositioning—giving buyers too narrow a picture of the company. Confused positioning—leaving buyers with a confused image of a company. If you would like more structure, suggest this structure prior to assigning this question. Companies are often faced with the problem of deciding which differences of a product or service to promote.
This is especially relevant to product positioning. According to the text, a difference is worth promoting if it satisfies seven criteria. What are those criteria? The seven criteria suggested by the text include: Important—the difference delivers highly valued benefit to target buyers. Distinctive—competitors do not offer the difference, or the company can offer it in a more distinctive way.
Superior—the difference is superior to other ways that customers might obtain the same benefit. Communicable—the difference is communicable and visible to buyers. Preemptive—competitors cannot easily copy the difference. Affordable—buyers can afford to pay for the difference.
Technological advancements, especially in the area of digital communications, allow marketers to communicate with individual consumers or very small groups. This is sometimes known as one-to-one marketing.
Answer: (b) Difficulty: (2) Page
By the s, Ford was producing Deluxe models in a range of colours such as this Ford Deluxe Coupe The practice of market segmentation emerged well before marketers thought about it at a theoretical level. Retailers, operating outside the major metropolitan cities, could not afford to serve one type of clientele exclusively, yet retailers needed to find ways to separate the wealthier clientele from the "riff raff".
One simple technique was to have a window opening out onto the street from which customers could be served. This allowed the sale of goods to the common people, without encouraging them to come inside. Another solution, that came into vogue from the late sixteenth century, was to invite favored customers into a back-room of the store, where goods were permanently on display.
Yet another technique that emerged around the same time was to hold a showcase of goods in the shopkeeper's private home for the benefit of wealthier clients. Samuel Pepys, for example, writing indescribes being invited to the home of a retailer to view a wooden jack. A study of the German book trade found examples of both product differentiation and market segmentation in the s.
Contemporary market segmentation emerged in the first decades of the twentieth century as marketers responded to two pressing issues. Demographic and purchasing data were available for groups but rarely for individuals and secondly, advertising and distribution channels were available for groups, but rarely for single consumers.
Between andGeorge B Waldron, working at Mahin's Advertising Agency in the United States used tax registers, city directories and census data to show advertisers the proportion of educated vs illiterate consumers and the earning capacity of different occupations etc.
Thus, segmentation was essentially a brand-driven process. Smith is generally credited with being the first to introduce the concept of market segmentation into the marketing literature in with the publication of his article, "Product Differentiation and Market Segmentation as Alternative Marketing Strategies. However, with the advent of digital communications and mass data storage, it has been possible for marketers to conceive of segmenting at the level of the individual consumer.
Extensive data is now available to support segmentation at very narrow groups or even for the single customer, allowing marketers to devise a customised offer with an individual price which can be disseminated via real-time communications.Mod-03 Lec-06 Market Segmentation and Positioning (Contd.)
But in spite of its limitations, market segmentation remains one of the enduring concepts in marketing and continues to be widely used in practice. One American study, for example, suggested that almost 60 percent of senior executives had used market segmentation in the past two years. Niche market and Porter's generic strategies A key consideration for marketers is whether to segment or not to segment.