Podcast
Questions and Answers
What is a primary benefit of customer segmentation for retailers?
What is a primary benefit of customer segmentation for retailers?
Which of the following is a characteristic of a target market?
Which of the following is a characteristic of a target market?
How does customer segmentation contribute to product development?
How does customer segmentation contribute to product development?
What does the process of customer segmentation involve?
What does the process of customer segmentation involve?
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Which aspect of marketing strategy is enhanced through customer segmentation?
Which aspect of marketing strategy is enhanced through customer segmentation?
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Why is estimating the size of the target market crucial?
Why is estimating the size of the target market crucial?
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Which of the following best describes the role of customer segmentation in identifying competitors?
Which of the following best describes the role of customer segmentation in identifying competitors?
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Which factor is NOT typically used in customer segmentation?
Which factor is NOT typically used in customer segmentation?
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The Living Standards Measure (LSM) in South Africa categorizes people based on their race, gender, and age.
The Living Standards Measure (LSM) in South Africa categorizes people based on their race, gender, and age.
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Geographic segmentation divides the market based on demographic factors such as age and income.
Geographic segmentation divides the market based on demographic factors such as age and income.
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Demographic segmentation includes factors like social class and gender.
Demographic segmentation includes factors like social class and gender.
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The SAARF LSM consists of 8 groups that represent living standards in South Africa.
The SAARF LSM consists of 8 groups that represent living standards in South Africa.
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Customer profiling helps identify typical users of a product or service.
Customer profiling helps identify typical users of a product or service.
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Market segmentation does not consider consumer buying behavior.
Market segmentation does not consider consumer buying behavior.
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Income levels are irrelevant in determining socio-economic groups.
Income levels are irrelevant in determining socio-economic groups.
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Psychographic segmentation focuses solely on the geographical location of consumers.
Psychographic segmentation focuses solely on the geographical location of consumers.
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Study Notes
Market
- A market consists of all the consumers who purchase specific goods and services.
- The market may be subdivided into separate segments, each of which can be considered a separate market on its own.
Target Market
- A group or groups of people to whom a firm decides to direct its marketing efforts and its goods and services.
- A well-defined target market is essential for an efficient and effective marketing strategy as it creates the opportunity to subdivide the market into segments.
Why is the Target Market Important?
- Estimates the size of the market the company aims to win over.
- Forecasts the growth of the market.
- Identifies competitors in the market.
- Divides the market into relevant segments.
- Creates an appropriate marketing mix.
Customer Segmentation
- Customer Segmentation is the process of identifying and dividing subdivisions of a market into distinct customer groups that share similar characteristics.
- Enables retailers to:
- Develop products tailored to specific customer needs.
- Implement customized marketing programs.
- Choose specific product features.
- Implement a range of service options.
- Apply appropriate product pricing based on customer segments.
- Focus marketing efforts on specific customer groups.
- Build loyal relationships with customers
- Improve customer service.
- Be competitive in the market.
- Use company resources effectively.
- Improve products to meet customer needs.
- Increase profit potential.
- Group customers by factors like demographics, psychographics, and behavior.
- Facilitate customer relationship management (CRM).
Customer Profiling
- A customer profile is a generalized description of the types of customers likely to buy a retail store's products and services.
- Customer profiles describe the typical users of a product or service.
Generic Customer Profiles
- Geographic Segmentation: Dividing potential buyers based on geographic locations like countries, cities, or states.
- Demographic Segmentation: Dividing the market based on factors like age, gender, social class, etc.
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Socio-Economic Segmentation: Dividing the market based on a combination of occupation and income.
- Socio-economic groups (A-E) have similar characteristics related to taste, lifestyle, and disposable income.
- Psychographic Segmentation: Dividing the market based on personality traits, values, attitudes, interests, and lifestyles of consumers.
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Behavioral Segmentation: Dividing the market based on actual consumer buying behavior.
- Groups customers based on their knowledge of, attitude towards, use of, or response to a product.
Living Standards Measure (LSMs)
- A method of segmenting the South African market that groups people based on their living standards.
- The SAARF LSM (Living Standards Measure) is a widely used marketing research tool in Southern Africa.
- It divides the population into 10 LSM groups, 10 (highest) to 1 (lowest).
- Previously, there were eight groups, but in 2001, the SAARF introduced the Universal LSM with 10 groups.
- The SAARF LSM offers a unique way of segmenting the South African market.
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Description
Explore the concepts of market segmentation and target markets in this quiz. Understand the importance of identifying customer groups and how it can influence marketing strategies. Test your knowledge on the key elements that make up effective market analysis.
