4 Market Segmentation and Market Positioning – Flashcards
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Define segmentaion
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The process of subdividing general markets into distinct segment with different needs, and which respond differently to marketing efforts
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What are 2 benefits to segmentation?
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1. Increase customer satisfaction 2. Increase marketing effectiveness
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Define targeting
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The selection of market segments to advertise to
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What is important to remember about targeting?
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You can't please everyone
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Define positioning
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Activities to make consumers perceive that a brand occupies a distinct position relative to competing brands
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What are 5 STP advantages?
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1. Concentration of force 2. Customer satisfaction 3. Competitive advantage 4. Niche marketing 5. Profitability
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Expand on concentration of force and give an example
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Focus core competencies on relevant market segments A smaller movie theater may only cater to cost conscious consumers and not cater to people demanding newly-released movies
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Expand on customer satisfaction and give an example
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Consumers get what they want Tide has over 41 different detergent variations and methods for various consumer segments (large detergent, packs, ToGo Stick)
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Expand on competitive advantage and give an example
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Tool to survive even the most formidable of competitors Hertz and Enterprise are both big competitors in the rental car industry, but succeed because they cater to different segments
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Expand on niche marketing and give an example
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Untapped segments can be identified Panasonic targets people with 'rigorous physical demands' such as law enforcement and military personnel, with its special Panasonic Toughbook
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Expand on profitability and give an example
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Acknowledges that different segments put different needs and values on goods Price wise, cost conscious consumers may prefer to buy in bulk, versus people that need the travel size, and will pay more because they value the convenience the size gives them.
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What are the 4 sample market segments?
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1. Quality oriented segment 2. Cost oriented segment 3. Durability oriented segment 4. Style oriented segment
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What is an example of quality oriented segment?
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Rolex
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What is an example of cost oriented segment?
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GEICO
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What is an example of durability oriented segment
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Briggs and Riley Travelware
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What is an example of stylish oriented segment?
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Apple
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What are some segment selection criteria?
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1. Internal homogeneity (individuals in groups respond similarly) 2. External heterogeneity (one group differs from another) 3. Parsimony (as few segments as possible) 4. Accessibility (easy to reach with marketing 5. Size (large enough to be profitable)
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What are two types of segmentation variables?
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Response and identifier variables
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Define response variables
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Describe how individuals respond to an offer
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What are 5 response variables?
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1. Functional (performance, reliability, durability) 2. Financial (cost savings, revenue growth) 3. Psychological (trust, esteem, status) 4. Usage (scenario and rate) 5. Service and Convenience (time savings, convenience)
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Define identifier variables
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Categorize and describe the individuals into segments
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What are the two types of identifier variables?
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Business and Consumer
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What 3 variable categories would a business identifier use?
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1. Demographics (industry, company size) 2. Geographics (company location) 3. Situational (specific applications like order size)
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What 3 variable categories would a consumer identifier use?
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1. Demographics (age and income) 2. Geographics (country, region, city) 3. Psychographics (lifestyle, interests)
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What is the dependent variable?
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Response variable
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Define A Priori
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Segmentation done before market research
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Define Post Hoc
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Segmentation done after market research
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What are two segmentation techniques?
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Descriptive and Predictive
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Define descriptive technique
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To describe similarities and differences between groups
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Define predictive technique
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To predict the relationship between the independent and dependent variables
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Define cross tabulation segmentation
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'A Priori'; descriptive segmentation technique where two variables have their relationship expressed on a table
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What is the cross tabs procedure?
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Gather market data > Examine market data > Construct a cross tab > Interpret a cross tab
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Expand on gathering market data
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Conducting surveys to gather response and identifier info
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Expand on examining market data
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Consider relationships between the response and identifier variables
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Expand on constructing a cross tab
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Use purpose build tool to create a data table
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Expand on interpreting the cross tab
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Consider how to apply the results
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Define regression based segmentatoin
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'A Priori'; predictive segmentation technique where the relationship between the D/I variables is determined
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What is the regression based segmentation procedure?
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1. Gather market data 2. Examine market data 3. Execute regression analysis 4. Interpret regression results
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Expand on interpret regression results
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Plug in Part-Worths as regression coefficients
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Define cluster analysis
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'Post Hoc'; descriptive technique; use a numerically based index to indicate the degree of similarity and then group those based on segments
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What are two clustering methods?
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Hierarchical and Partitioning
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Define hierarchical
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Groups clusters in a hierarchy
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What is a top to bottom hierarchy?
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Divisive
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What is a bottom top hierarchy?
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Agglomerative
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What is Ward's clustering method?
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Agglomerative clustering hierarchy that results in a tree like diagram (dendogram)
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What is the K-Means clustering method?
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Specify K (the number of final clusters to expect) and then execute a K-Means algorithm to form groups based on distance from the centroid
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What are 3 types of segments to target?
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1. Financial Potential 2. Alignment with mission 3. Marketability access
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What are 5 targeting approaches?
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1. Single Segment Concentration 2. Selective Specialization 3. Product.Service Specialization 4. Market Specialization 5. Full Market Coverage
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Define single segment concentration and give an example
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Concentrate efforts on one specific market segment Bare Escentuals originally concentrated its efforts on mineral-based cosmetics
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Define selective specialization
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Marketing multiple independent products to multiple segments
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Define product/service specialization and give an example
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Focusing on specific product or service Motel 8 hotel chain focuses on providing lodging services to travelers
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Define market specialization and give an example
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Market a variety of goods and services to one market AHS sells a variety of equipment and supplies to hospitals
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Define full market coverage and give an example
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Offer multiple categories of products to multiple markets Oracle markets 100 different products in over 20 industries
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What are 4 marketing to target segments?
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1. Full Marketing Mix Campaigns (use all 4 P's) 2. Direct Marketing (sell directly to customer) 3. Website Marketing Campaigns (online shopping) 4. Retail Marketing (show off collection of products)
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Give an example for each of the 4 marketing to target segments
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1. Chanel (full mix) 2. Amazon.com (direct) 3. Cisco (web) 4. Home Depot (retail)
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Define brand
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The idea that you own in the customer's mind
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What is important to remember about positioning?
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It is also important to differentiate
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What two powers does positioning key in on?
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The power of the mind (first associated thought) and focus (owning the idea)
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What are some ways to differentiate?
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Be first Own an attribute Leadership (sales, technology, performance) How a product is made Price Specialty
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Define perceptual mapping
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A graphic representation of a customer's perceptions of important attributes that interest them
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What are 5 perceptual mapping applications?
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1. Cluster identification 2. Competition 3. Choice of new opportunity 4. Communications vehicle 5. Customer perceptions
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Expand on cluster identification
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Can identify clusters (segments) of potential customers with similar interests
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Why would you use cluster analysis?
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You can look at clusters of individuals and see what they have in common
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Expand on competition
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Can asses the perception of different competitor
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What is the significance of distance in competition?
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A close distance can signify that customers view the competitors as being very similar
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Expand on new opportunity
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Blank areas in perceptual maps that could suggest an opportunity
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What is one thing to watch out for when assessing a blank on a perceptual map?
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The face that there may be a good reason no one is there
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Expand on communication vehicle
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Marketers can use this as a vehicle to communicate with mangers and other higher ups
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Expand on customer perceptions
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If done at regular intervals is can alert management of changes in customer perceptions over time
