Market segmentation

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  • Created by: hamishc
  • Created on: 22-04-16 21:41
What is the aim of the STP process?
To focus marketing efforts where they'll be most effective.
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What is market segmentation?
When a business divides the market into groups of similar characteristics and needs.
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What is market targeting?
Deciding which market segment to focus on and adapting the marketing mix to appeal to that group.
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What is market positioning?
When a business creates an favourable image of its product in the target customers mind compared to other products.
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What ways can a business segment its market?
Demographically, geographically, socio-economic group, behaviour.
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How does a business segment demographically?
Age, gender, socio-economic class (type of job), family size.
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How does a business segment geographically?
Neighbourhood, city, county, country, or world map.
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How does a business segment income?
E.g. high incomes more likely to buy luxury goods.
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How does a business segment behaviour?
Amount of use, lifestyle (university students buy more microwave meals so the business targets this segment.
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What are the advantages of market segmentation?
Helps to better understand the companies target market, allows a firm to better design its marketing mix, helps a business build a strong brand identity and loyalty, helps a firm plan future products to meet the market segment.
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What are the disadvantages of market segmentation?
Difficult to identify most important segments, constant research needed to keep up to date with segments, products may become to specific to a market segment, firms may find it difficult to reach the chosen segment, may ignore lucrative segments.
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What ways to businesses target the market segments?
Concentrated marketing, differentiated marketing, undifferentiated marketing.
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What is concentrated marketing?
Involve targeting 1 or 2 segments. Good for small businesses with few recources. The segments must be big enough for decent return, have potential for growth, and have a need the business can meet that competitors haven't.
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What is differentiated marketing?
Where several segments are targeted and the marketing mix is adapted to each segment. Only feasible to large companies with large budgets.
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What is un-differentiated marketing?
Where the market segments are ignored and the company tries to reach the entire market with a single product and marketing mix. Makes sense for widely used products like soap.
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What is a niche market?
When firms target a product or service at a small segment of a larger market.
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Adv of niche market?
Lower levels of comp mean higher market share, possible for intense customer loyalty, can easily differentiate themselves by having a USP, higher prices can be charged as USP means added value, easier to design marketing mix as it targets segments.
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Disadv of niche market?
Lower profits due to smaller market size and inability to change costs through economy of sales, small barriers to entry means rivals can enter easily, if successful then larger businesses may enter, fast changing consumer tastes.
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What is a mass market?
A strategy of selling goods with mass appeal and promoting them to all types of cusomers.
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Adv of a mass market?
Large-scale production means economies of scale are possible, larger market means more sales/ revenue, high barriers to entry means decrease competition (e.g. high set-up costs, existing brand loyalty, lower prices by rivals).
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Dis-adv of a mass market?
High costs as larger scale of production is needed to meet demand, products must appeal to a range of customers (products cannot be tailored meaning no added value), consumer tastes change more quickly, more competition from international rivals.
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How do businesses effectively position their product?
They convince the target customer that their product has benefits that are relevant for them compared to competitor products.
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What are the influences on positioning?
State of the market (positioning in recession may be based on value), companies current products (position new products similar to old ones), attributes of the company (company needs to position their product based on strengths and weaknesses).
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Card 2

Front

What is market segmentation?

Back

When a business divides the market into groups of similar characteristics and needs.

Card 3

Front

What is market targeting?

Back

Preview of the front of card 3

Card 4

Front

What is market positioning?

Back

Preview of the front of card 4

Card 5

Front

What ways can a business segment its market?

Back

Preview of the front of card 5
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