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Chapter 3: B2C Market Segmentation Targeting and Positioning
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25
Marketing
Undergraduate 2
12/02/2013

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Term
Define: Market segmentation
Definition
The process of dividing a market into distinct groups of customers, prospective customers, or buying situations in which members are similar in the way they:

- perceive value
- view products and services
- purchase products and services

and who might require separate marketing mixes
Term
What is the difference between market segmentation and product differentiation?
Definition
Market segmentation bends the product to the customer whereas product differentiation bends the consumer to the product
Term
What is the focus and the characteristics of market segmentation?
Definition
The development of a distinctive marketing programs to meet the unique requirements of specific target markets

- A different marketing mix for each target market
- Extensive investment in market research
Term
What is the focus and the characteristics of product differentiation?
Definition
Design of advertising and sales force programs to persuade target markets of a product's merits

- A standardized marketing mix to serve several target markets supported by a different promotion and minor differences in product features and packaging
- Little investment in understanding target markets' unique requirements
Term
Benefits of market segmentation
Definition
- A more efficient allocation of the marketing budget
- A more effective marketing approach to the needs of individual segments
- Enhanced abilities to identify new marketing opportunities through better feedback and communication abilities
- The development of specialist knowledge and extra effort that may enable an organization to dominate particular segments and gain competitive advantage
Term
4 Factors that influence the need for market segmentation
Definition
1. The more heterogeneous the product assortment the greater the need for market segmentation
2. The more the customers differ on buying strategy the greater the need for segmentation
3. The more heterogeneous the market the greater the need for segmentation
4. The more the environment changes the greater the need for market segmentation
Term
Options in target market selection
Definition
- Single segment
- Selective specialization
- Product specialization
- Market specialization
- Full market coverage
Term
Single segment target market
Definition
One product in one segment
Term
Selective specialization target market
Definition
One product in a few segments
Term
Product specialization target market
Definition
One product in all segments
Term
Market specialization target market
Definition
A selection of products in one segment
Term
Full market coverage target market
Definition
A selection of products in a selection of segments
Term
Market segments must be...
Definition
- Accessible
i.e. must be able to reach them with a marketing program
- Durable
i.e. will exist over time
- Identifiable
i.e. distinguishable from other segments
- Substantial
i.e. economically viable to target with a segmented marketing program
- Unique
i.e. needs, wants, and behaviors are different from other segments
- Winnable
i.e. you can win it
Term
What are key questions in determining a viable footprint?
Definition
Breadth: Are there enough customers in the market segment to make it worth while?

Depth: How strong is the preference? Would minor changes in the balance of attributes cause customers to switch?
Term
What are the options in determining positioning?
Definition
- Benefits, needs or solutions
i.e. durability vs. absorption in paper towels
- Price/quality
i.e. luxury vs. economy hotels
- Application
i.e. general vs. specialized purpose batteries
- User
i.e. alcohol pops for young consumers, dark ales for experienced consumers
- Product Class
i.e. soap as a bath oil, chewing gum as a teeth whitener
- Competitors
i.e. Direct comparison on image, product features, etc.
Term
What are the 3 pitfalls in positioning
Definition
1. Underpositioning
2. Overpositioning
3. Confused positioning
Term
What is underpositioning?
Definition
A pitfall in positioning that results in a vague product that is not valued by customers
Term
What is overpositioning?
Definition
A pitfall in positioning that results in the communication of too few benefits or solutions
Term
What is confused positioning?
Definition
A pitfall in positioning that results in the communication of too many benefits or solutions, or communicates changing benefits
Term
What are influencing factors that might cause repositioning?
Definition
- Customer behaviours change
- Technologies change
- Competitors change
- Other factors
Term
What must repositioning always be relevant to?
Definition
The customer's frame of reference
Term
What are some dimensions for segmenting consumer markets?
Definition
- Geographic segmentation
- Demographic/geodemographic segmentation
- Psychographic segmentation
- Behavioural segmentation
Term
What are the steps to applying market segmentation?
Definition
1. Building Market segments
(predetermined vs. market define approach)
2. Identifying Competitors
3. Selecting Target Markets
4. Positioning and Implementing
Term
What is the purpose of predetermined segmentation and what are its characteristics and issues?
Definition
Purpose:
- Explore and understand differences among known segments

Characteristics:
- Prior knowledge of segment characteristics and their number

Issues
- Based on the managerial judgements, not actual behaviours
Term
What is the purpose of market defined segmentation and what are its characteristics and issues?
Definition
Purpose:
- Explore to determine viable segments

Characteristics:
- No prior knowledge of segment characteristics or their numbers

Issues:
- Expensive, resulting segments may be difficult to interpret
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