Market Definition & Segmentation Concepts

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Questions and Answers

What is the primary goal of clustering in the context of customer segmentation?

  • To randomly assign customers to different market segments.
  • To group customers based on demographic information only.
  • To group customers into homogeneous segments based on shared characteristics. (correct)
  • To create diverse groups of customers with varying preferences.

Which of the following best describes the role of a CRM system in marketing?

  • To use broad marketing strategies that targets all customers with a blanket approach.
  • To fine-tune marketing efforts based on detailed customer information. (correct)
  • To manage the budget for the marketing department only, without any impact on sales.
  • To limit the number of potential customers by focusing only on the loyal ones.

When might a company consider repositioning one of its products?

  • When customer perception of a product is aligned with the company's intended image.
  • When sales consistently exceed expectations for an identical period.
  • When physical changes to the production process are not feasible.
  • When competing products in the market appear very similar in customers' eyes. (correct)

What is the core focus of positioning in marketing?

<p>How customers perceive and think about brands in a market. (B)</p> Signup and view all the answers

What key elements would be included in a positioning statement for a new product?

<p>The target market description, product type, primary benefits, and differentiation from competitors. (D)</p> Signup and view all the answers

What is the primary challenge in defining a generic market?

<p>The wide variety of product types competing to satisfy similar needs. (C)</p> Signup and view all the answers

What is the key difference between a generic market and a product-market?

<p>Generic markets have diverse customer needs, while product-markets have very specific needs. (C)</p> Signup and view all the answers

When defining a customer type, what should marketers prioritize?

<p>Identifying the final consumer or user of the product. (A)</p> Signup and view all the answers

What does the process of 'segmenting' mean to marketing-oriented managers?

<p>Aggregating individual customers into clusters with similar needs. (D)</p> Signup and view all the answers

Which of these is NOT a characteristic of a 'good' market segment?

<p>It includes the personality of buyers. (D)</p> Signup and view all the answers

What strategy is Gloria following if her company focuses on only one homogeneous segment?

<p>Single target market approach. (C)</p> Signup and view all the answers

What is the core idea behind the multiple target market approach?

<p>Treating two or more segments as separate target markets with different marketing mixes. (B)</p> Signup and view all the answers

Which company example illustrates the use of a multiple target market approach?

<p>Procter &amp; Gamble, due to its various products and brands. (C)</p> Signup and view all the answers

What is the primary goal of a combiner in target market selection?

<p>To identify similarities across different submarkets. (C)</p> Signup and view all the answers

Which of the following is a significant risk faced by combiners?

<p>Vulnerability to competition from other marketing strategies. (D)</p> Signup and view all the answers

Why is cost reduction usually more of a consideration for combiners than for segmenters?

<p>Combiners often achieve economies of scale. (D)</p> Signup and view all the answers

Which of the following is NOT considered a geographic segmentation dimension?

<p>Customer persona type. (D)</p> Signup and view all the answers

What is the primary purpose of a buyer persona in marketing?

<p>To help develop empathy for target customers across an organization. (D)</p> Signup and view all the answers

What concern arises when firms move into international markets, regarding information?

<p>Critical data is frequently less available and less dependable (C)</p> Signup and view all the answers

What is the function of a market grid in the process of market segmentation?

<p>To visualize the broad product market along with smaller, homogenous segments. (B)</p> Signup and view all the answers

During which step of market segmentation is demographic data used to estimate the size of product markets?

<p>Step 6. (C)</p> Signup and view all the answers

Flashcards

What is a market?

A group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods or services to satisfy those needs.

What is a generic market?

A market with broadly similar needs and sellers offering diverse ways of satisfying those needs.

What is a product-market?

A market with very similar needs and sellers offering close substitute ways of satisfying those needs.

Who is the customer type?

The final consumer or user of a product type.

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What is market segmentation?

Grouping people with similar needs into a "market segment" for targeted marketing.

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What is the single target market approach?

The process of choosing one homogenous segment as the target market.

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What is the multiple target market approach?

The process of targeting two or more segments with different marketing mixes.

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What are some operational marketing dimensions?

Demographic dimensions such as age, sex, income, location, and family size.

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Combiner Approach

A marketing strategy that focuses on finding commonalities between multiple customer segments and creating a single marketing mix that caters to all of them.

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Segmenter Approach

A marketing strategy that focuses on tailoring marketing efforts to each specific customer segment, ensuring each group's needs are met.

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Buyer Personas

These are fictional representations of ideal customers within a target segment, based on research and data. They encompass demographics, behaviors, motivations, and goals.

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Market Segmentation

This process involves dividing a broad market into smaller, more homogeneous groups (segments) based on shared characteristics.

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Market Grid

This tool visually organizes a broad product-market into smaller, diverse product-markets using boxes within a rectangle, representing different segments.

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Clustering Techniques

These techniques use algorithms to identify patterns and group data points with similar characteristics, helping to understand market segments.

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Geographic Segmentation Dimensions

These dimensions help categorize markets geographically based on factors like region, country, or city size.

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Aggregating Strategies

These strategies aim to find commonalities between segments, creating a broader appeal. It often leads to economies of scale, which can reduce costs.

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Clustering groups

Grouping similar customers based on their characteristics into distinct segments.

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CRM - Customer Relationship Management

A database used to store detailed customer information for personalized marketing efforts.

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Positioning

The way customers perceive a brand or product in relation to its competitors in the market.

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Positioning Map

A visual representation of how customers perceive competing products based on key features.

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Positioning statement

A concise statement outlining the target market, product benefits, and differentiation from competitors. Used to guide advertising campaigns.

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Study Notes

Market Definition

  • A market is a group of potential customers with similar needs, willing to exchange value with sellers.
  • A generic market has broadly similar needs but diverse ways to satisfy them.
  • A product-market has similar needs and sellers offering close substitutes.
  • Customer type refers to the final consumer or user of the product, distinct from the buyer.
  • Marketers should disaggregate (break down) all potential needs into generic markets & product-markets for profitable operation.

Market Segmentation

  • Marketing-oriented managers approach segmentation as aggregating individuals with similar needs into workable market segments.
  • A "good" market segment must be operational and demonstrably distinct.
  • Common segmentation dimensions include demographics (age, sex, income, location, family size), but not personality.

Target Market Approaches

  • Single-target market approach: Select one specific homogeneous segment as the target market.
  • This strategy entails segmenting the market, and then selecting one target segment to reach with the firm's marketing efforts.
  • Multiple-target market approach: Segment the market, identify multiple target segments, and develop different marketing mixes for each segment. This approach is used by firms serving diverse needs. (e.g., Proctor & Gamble)

Market Combining

  • Combiners target markets by identifying similarities rather than differences among submarkets.
  • This strategy reduces marketing mix complexity and decreases investment required.
  • Combining is often preferred when cost savings from economies of scale are possible.

Buyer Personas

  • Buyer personas are fictional representations of target customers, used across differing organizational functions to understand customers' needs.
  • They improve empathy and understanding of customer perspectives.

CRM for Segmentation

  • Customer Relationship Management (CRM) systems store extensive customer information.
  • This allows fine-tuning of marketing efforts based on insights from customer purchase behavior and other data.

Product Positioning

  • Positioning concerns how customers perceive products in the marketplace and their relationships to competing brands.
  • Understanding customer perceptions is key for positioning strategies.
  • A positioning statement includes explicit aspects of a new product and how it differs from competitors.

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