Market Segmentation

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Questions and Answers

What is the primary goal of market segmentation?

  • To reduce the cost of marketing campaigns by targeting fewer people.
  • To divide a broad target market into smaller, more defined groups. (correct)
  • To create a single, unified marketing message for all consumers.
  • To increase the overall size of the target market.

Market segmentation is a simple process that is easy to accomplish.

False (B)

How does market segmentation improve brand loyalty?

By ensuring products or services are a good fit for customers, making them more likely to stick with the brand and recommend it.

Market segmentation enables marketers to focus their efforts and resources on the '______' customers who are most likely to generate revenue.

<p>important</p> Signup and view all the answers

Match the type of market segmentation with its focus:

<p>Geographic = Location Demographic = Who Behavioral = How Psychographic = Why</p> Signup and view all the answers

Which of the following is an example of demographic segmentation?

<p>Targeting customers based on their age, gender, or income. (D)</p> Signup and view all the answers

Behavioral segmentation focuses on where customers are located geographically.

<p>False (B)</p> Signup and view all the answers

What aspects of a consumer does psychographic segmentation analyse?

<p>Personality, lifestyle, values, and opinions.</p> Signup and view all the answers

The VALS framework categorizes consumers based on their ______ and resources.

<p>motivation</p> Signup and view all the answers

Match the VALS consumer type with its description:

<p>Innovators = High income and high resources Believers = Look to their peers for affirmation Strivers = Lower-resource with similar values to achievers Survivors = Least number of resources and the least likely to adopt innovative products.</p> Signup and view all the answers

Which of the following poses a challenge in B2B market segmentation?

<p>Dealing with highly complex target markets. (C)</p> Signup and view all the answers

B2B buying decisions are typically more emotional than consumer buying decisions.

<p>False (B)</p> Signup and view all the answers

How does segmenting the B2B market improve campaign performance?

<p>By directing campaigns toward defined market segments resulting in a higher email open rate.</p> Signup and view all the answers

Using market segmentation, a company can refine its products or services to better meet the needs of its B2B customers, making the product useful for another market ______.

<p>segment</p> Signup and view all the answers

Match the method of B2B market segmentation with its description:

<p>Firmographics = Industry, location, size, legal structure, and performance Technographic = Hardware, software, technology ownership, and usage Needs Based = Customer's need and ability to purchase Values Based = Value the customer brings to the company</p> Signup and view all the answers

Which of the following is a challenge specific to segmenting international markets?

<p>The market being significantly larger and more diverse. (D)</p> Signup and view all the answers

Segmentation and market research do not improve the understanding of international customers.

<p>False (B)</p> Signup and view all the answers

What considerations should be made when segmenting international markets based on geography?

<p>Use consideration when identifying the countries within the region and the infrastructure.</p> Signup and view all the answers

Segmentation based on ______ and legal factors includes type and stability of the government as well as how receptive the government is to foreign firms.

<p>political</p> Signup and view all the answers

Match the factor for segmenting international markets with its description:

<p>Economic Factors = Level of economic development Cultural Factors = Language and Religion.</p> Signup and view all the answers

What does the Power Distance Index (PDI) measure in Geert Hofstede's cultural dimensions?

<p>Power inequality. (C)</p> Signup and view all the answers

Individualism versus collectivism (IDV) focuses on the degree of avoidance for risks and ambiguity.

<p>False (B)</p> Signup and view all the answers

In the context of Geert Hofstede's cultural dimensions, what element does masculinity/femininity cover?

<p>How gender-specific roles are defined.</p> Signup and view all the answers

The ADAMS acronym stands for five criteria; Accessible, Differentiable, Actionable, Measurable, and ______.

<p>substantial</p> Signup and view all the answers

Match the ADAMS criteria with its description:

<p>Accessible = Can you reach the consumers? Differentiable = Is the segment internally homogeneous yet externally heterogeneous? Actionable = Is it possible and profitable to deliver to this target? Measurable = Can you accurately estimate the size of the market?</p> Signup and view all the answers

Which of the following is NOT part of a Buyer Persona?

<p>Location (C)</p> Signup and view all the answers

Undifferentiated marketing involves the need to use separate, concentrated strategies.

<p>False (B)</p> Signup and view all the answers

What is differentiated marketing?

<p>Segmented marketing where several market segments are used.</p> Signup and view all the answers

[Blank] marketing involves customized marketing and specific groups.

<p>micromarketing</p> Signup and view all the answers

Match the marketing strategy with its description:

<p>Micromarketing = Customized marketing Concentrated marketing = Niche marketing. Differentiated marketing = Segmented marketing Undifferentiated marketing = Mass Marketing</p> Signup and view all the answers

What are the steps of the STP Model?

<p>Segmentations, Target Markets, and Positioning. (D)</p> Signup and view all the answers

Head-to-head positioning is differentiating a product by highlighting the unique qualities as opposed to the competition.

<p>False (B)</p> Signup and view all the answers

What is a product positioning statement?

<p>A statement that describes the product, service, brand, and target market. These statements should clear the way to the understanding of what the market wants, needs, or expects from the offering.</p> Signup and view all the answers

A perceptual ______ is a visual description of where the product/service is in comparison to the competition.

<p>map</p> Signup and view all the answers

Match the description to the process:

<p>Head-to-head = Positioning of a product to directly compete with the competition. Differentiation = Positioning a product by highlighting the unique qualities as opposed to the competition. Positioning statements = A statement that describes the product, service, brand, and target market. Perceptual map = A visual description of where the product/service is in comparison to the competition</p> Signup and view all the answers

Flashcards

Marketing Segmentation

Dividing a target market into smaller, defined groups with common needs.

Marketing Segmentation Benefits

Allows companies to cut through marketing clutter and reach the broader market.

Focus on Important Customers

Focuses efforts and resources on customers likely to generate revenue.

Improved Product Development

Helps marketers understand consumer wants in a product or service.

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Improved Brand Loyalty

When customers feel products fit them, they stick with and recommend the brand.

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Geographic Segmentation

Segmentation by country, region, climate, and population density.

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Demographic Segmentation

Segmentation by age, gender, income, education, race, and family status.

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Behavioral Segmentation

Segmentation based on occasions, usage, benefits, and loyalty.

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Psychographic Segmentation

Segmentation based on lifestyle, personality, values, and interests.

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VALS Framework Consumer Types

Innovators, Thinkers, Believers, Achievers, Strivers, Experiencers, Makers, Survivors

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Innovators

Consumers with high income, motivated to achieve the finer things in life.

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Thinkers

Consumers with resources, motivated by knowledge.

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Believers

Consumers who look to peers for affirmation and have fewer resources.

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Achievers

High-resource consumers who want to excel at work/family.

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Strivers

Lower-resource consumers who share values with achievers.

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Experiencers

Consumers who want to experience 'being different' and have relatively high resources.

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Makers

Want self-expression, but lack the resources, focusing on family.

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Survivors

Least resources, least likely to adopt innovative products.

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Rational B2B buyers

Buyers typically buy what they need, decisions are deliberate, particularly in terms of price.

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Improved Customer Loyalty/Retention (B2B)

The more marketers know about B2B customers, the better they can meet needs.

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Assistance in Product Development (B2B)

Using market segmentation to refine products to meet business client needs.

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Improved Profitability (B2B)

The right message increases competitiveness and prices products effectively.

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Firmographics

Segmentation by industry, location, size, legal structure, and performance.

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Technographic

Segmentation based on hardware, software, and technology use.

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Needs Based Segmentation

Segmentation based on customers' needs and purchasing ability.

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Values Based Segmentation

Segmentation based on the value the customer brings to the company.

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Behavioral B2B Segmentation

Segmentation based on the customer's interaction with the company

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International Market Segmentation

Political factors, economic factors, geography and culture.

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Choosing Countries Carefully

Use close consideration when identifying the countries within the region.

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Type and Stability of Government

What type and stability does the government have.

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Cultural Factors

Culture, value and attitudes

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ADAMS Criteria

A, D, A, M, S. Accessible, Differentiable, Actionable, Measurable, Substantial.

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Actionable

Is it possible and profitable to deliver to this target?

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Buyer Persona Naming

Creating a made-up persona name

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Target Marketing Strategies

Mass marketing, differentiated marketing, concentrated marketing, micromarketing.

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STP Model

Segmentation, Targeting, and Positioning.

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Study Notes

Market Segmentation

  • Divides a broad consumer or organizational target market into sub-groups of consumers based on shared characteristics

Advantages of Marketing Segmentation

  • Helps cut through market clutter
    • Improves success rate and proper budget use
  • Improves focus on important customers
    • Allows for efficient allocation of resources
  • Improves product development
    • Gives a better understanding of consumer product or service wants
  • Improves brand loyalty
    • Customers who believe that a company’s products or services are suitable for them tend to stick with the respective brand

Methods of Segmentation

  • Segmenting consumer markets include geographic, demographic, behavioral, and psychographic segmentation

Geographic Segmentation

  • Considers the where in segmentation
  • Includes cultural preferences, climate conditions, language and population

Demographic Segmentation

  • Considers the who in segmentation
  • Includes gender, income, age, education, ethnicity, and family structure

Behavioral Segmentation

  • Considers the how in segmentation
  • Includes occasion based and usage based purchasing behavior
    • Occasion: special, traditional, cultural events
    • Usage: convenience, everyday, emergency use

Psychographic Segmentation

  • Considers the why in segmentation
  • Focuses on interests, activities, opinions, social media habits, and personality to define consumer segments

VALS Framework

  • Innovators: High income, high resource individuals motivated by achievement
  • Thinkers: Resourceful individuals motivated by knowledge
  • Believers: Individuals motivated by peer affirmation and possessing fewer resources than innovators/thinkers
  • Achievers: High resource consumers who excel in workplace and family settings
  • Strivers: Lower-resource consumers influenced by achievers
  • Experiencers: High-resource consumers who want to experience "being different"
  • Makers: Those wanting self-expression, like experiencers, but lack resources
  • Survivors: Individuals with the least resources, unlikely to adopt innovative products

B2B Market Segmentation

  • B2B segmentation has several advantages but also faces unique market challenges

Challenges in B2B Segmentation

  • B2B markets are complex due to buying centers inside organizations that have varying influence
    • Makes it difficult to identify purchase decision makers
  • Involves rational buyers which makes consumer buying decisions more deliberate, with a focus on price
    • Marketers must understand the drivers of these needs
  • Products can be complex and tweaked to meet company specifications

Advantages in B2B Segmentation

  • Improves marketing campaign performance
    • There is a noted 14.3% higher email open rate
  • Improves customer loyalty and retention
    • Marketers are better able to meet customer objectives, this builds greater customer retention
  • Assists in product development
    • Refines its products or services to meet needs of B2B customers, increasing general product appeal
  • Improves profitability
    • Increases competitive edge, ability to properly price products and target new customers

B2B Market Segmentation Methods

  • Firmographics: Industry, location, size, legal structure, performance
  • Technographic: Hardware, software, tech ownership, usage
  • Needs-based: Ability for customer to make purchases and express needs
  • Values-based: Customer value to the enterprise
  • Behavioral: Customer interaction metrics

International Market Segmentation

  • International Markets have differences, challenges and advantages compared to domestic markets

Challenges in International Market Segmentation

  • Cultural, economic, political, and diverse international market factors
  • Segmentation is significantly larger than domestic markets

Advantages in International Market Segmentation

  • Segmentation and research helps marketers understand international customer behavior
  • Focus on similarities allows combining segments across countries or regions

Methods of International Market Segmentation

  • Based on geography
    • Involves countries in a region, and internal infrastructure
  • Based on political and legal factors
    • Focuses on government stability/receptiveness to foreign firms, monetary regulations, and level of bureaucracy
  • Based on economic factors
    • Looks at the levels of economic development, income, and economic status
  • Based on cultural factors
    • Considers language, religion, values, and attitudes

Geert Hofstede’s cultural dimensions

  • Power distance index (PDI)
    • Focuses on the varying degrees of power inequality
  • Individualism versus collectivism (IDV)
    • Considers priority of individual needs and goals versus collective ones
  • Uncertainty avoidance (UAI)
    • Focuses on tolerance for risk/ambiguity
  • Masculinity/femininity (MAS)
    • Focuses on how gender-specific roles are defined

Effective Market Segmentation

  • ADAMS is a five point guide to evaluating market segments
  • Includes concepts for determining access and effectiveness

ADAMS

  • (A) Accessible: Can a market segment be effectively reached for promotional purposes?
  • (D) Differentiable: Is the market segment internally homogenous, but externally heterogeneous?
  • (A) Actionable: Is it possible to profitably deliver to this market segment?
  • (M) Measurable: Can accurate estimates be made regarding the size of the market?
  • (S) Substantial: Is the market segment large enough to be profitable?

Selecting Target Markets

  • Requires creation of a customer profile, aka buyer persona, with important details such as
    • Name
    • Age
    • Interests
    • How they use media
    • Finance information
    • Brand affinities

Target Market Strategies

  • Undifferentiated marketing relies on mass market appeal
  • Differentiated marketing makes appeals via segmented marketing strategies
  • Concentrated marketing relies on focusing on niche marketing
  • Micromarketing uses customized marketing to appeal to specific groups

Product Positioning

  • STP Model provides a guide to segmentation and positioning strategy
    • Step 1: Segment a broad market into individual sections
    • Step 2: Choose the segment/s with the highest potential value
    • Step 3: Target segment with marketing message

Approaches to Positioning

  • Head-to-head: Product positioning that directly competes with market competitors
  • Differentiation: Positioning that highlights the unique qualities that set a product apart
  • Positioning statements: Statements for the product, service, brand, and target market.

Perceptual Mapping

  • Perceptual maps are visual descriptions indicating the comparison of products against competing products
  • Uses qualities that factor into customer purchases decision making

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