Questions and Answers
What is a market composed of?
Individuals or organizations with the ability and willingness to make purchases to fulfill their needs or wants.
What is market segmentation?
The process of dividing a market into meaningful, relatively similar, and identifiable segments or groups.
Why is market segmentation important?
It enables marketers to tailor the marketing mixes to meet the needs of specific segments.
What does market segmentation help decision makers to do?
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Successful market segmentation depends on four basic criteria: (1) a market segment must be __________.
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A segment must be __________ and measurable.
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Members of a market segment must be accessible to __________ efforts.
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The choice of segmentation bases is crucial because an inappropriate segmentation strategy may lead to __________.
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What is geographic segmentation?
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What is demographic segmentation?
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How does income level affect consumers?
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What is psychographic segmentation?
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What is benefit segmentation?
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What does usage-rate segmentation involve?
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Study Notes
Characteristics of Markets and Market Segments
- A market consists of individuals or organizations ready to purchase goods or services to satisfy their needs or desires.
- Market segments comprise groups sharing similar product needs driven by common characteristics.
Market Segmentation Process
- Involves dividing a market into identifiable, meaningful segments.
- Aims to customize marketing strategies to specific segments for effective fulfillment of needs.
Importance of Market Segmentation
- Since the 1960s, market segmentation became essential in marketing strategy for successful businesses.
- Tailors marketing mixes to meet distinct consumer segment needs.
- Aids in recognizing consumer preferences, declining demand, and emerging opportunities.
Decision-Making with Segmentation
- Helps in precisely defining marketing objectives.
- Assists in better allocation of resources based on segment potential.
Criteria for Successful Market Segmentation
- Substantial: A segment must have sufficient potential customers to justify its existence.
- Identifiable: Segments should be measurable and easily identifiable.
- Accessible: Marketing efforts should be able to reach the segment effectively.
- Responsive: Segments must respond distinctively to marketing strategies.
Substantiality
- A segment must be large enough to justify the development of a dedicated marketing mix.
Bases for Segmenting Consumer Markets
- Geographic: Based on location, market size, density, or climate.
- Demographic: Involves age, gender, income, ethnicity, and family life stages.
- Psychographic: Focuses on personality, motives, and lifestyle traits.
- Benefits Sought: Groups consumers based on the desired benefits from products.
- Usage Segmentation: Divides markets by the quantity of product consumption.
Risks of Inappropriate Segmentation
- Choosing the wrong segmentation strategy can lead to lost sales and profit opportunities.
Detailed Bases of Segmentation
- Geographic Segmentation: Focuses on location factors such as country, region, or climate.
- Demographic Segmentation: Categorizes markets by age, gender, income, ethnicity, and family dynamics.
- Age Segmentation: Utilizes various terms to categorize different age groups.
- Gender Segmentation: Highlights that purchasing patterns differ, with women typically buying more than men.
- Income Segmentation: Indicates that income influences consumer wants and their purchasing power.
- Family Life Cycle (FLC): Stages determined by age, marital status, and presence of children.
Psychographic and Other Segmentations
- Psychographic Segmentation: Based on personality, motives, lifestyles, and geodemographics.
- Lifestyles: Categorizes individuals by time use, values, beliefs, and socioeconomic indicators like income and education.
- Geodemographic Segmentation: Classifies customers into neighborhood lifestyle categories.
- Benefit Segmentation: Groups consumers based on the benefits sought from products rather than demographic factors.
- Usage-Rate Segmentation: Divides markets based on consumption levels of the product.
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Description
Test your knowledge on Chapter 8's concepts of segmenting and targeting markets. This quiz focuses on the characteristics of markets and market segments, helping you understand the importance of identifying specific groups for effective marketing strategies.
