Market segmentation and positioning
12 important questions on Market segmentation and positioning
When developign a marketing plan, we also assess the market potential or the potential market. What do we mean by this?
An estimate of the maximum possible sales of a product or service in the entire market within a specified time frame with optimal marketing efforts from all suppliers
We distinghuish three submarkets or types of demand that together form the effective demand. Name them.
- Initial demand: those who buy the product for the first time
- Replacement demand: those who already own the product, but buy a new one to replace it
- Additional demand: those who already own the product and purchase another one
What does 'market segmentation' do?
It divides the total market for product into smaller subsets of customers having similar needs or behaviour, and then modifies the firm's products and marketing strategies to fit the needs and wants of these individual, homogeneous market segments rather than those of the aggregate market
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Selecting and reaching the right target segments requires a systematic approach, based on both quantitative and qualitative measures. This process can be divided into three steps:
- Segmenting the market: dividing a larger, heteregeneous market into smaller, fairly honmogeneous groups.
- Targeting: selecting one or more of these market segments on which to concentrate when entering the market
- Positioning: finding ways to amek the company stand out from competitors
What do you do when applying demographic market segmentation?
You divide the market up into subgroups, based on factors such as income, age, gender, ethnic and racial background, social class, and education
Where do you look at while segmentating the market psychographically?
At psychological characteristics: buyers' values, attitudes, interests and perceptions
What do we mean by 'benefit segmentation'?
Defining a market in terms of the benefits that people seek from the product, and then segmenting based on consumer preference for a specific product characteristic.
Describe 'behavioural segmentation'
Its a way of grouping people within a market on the basis of their product usage rate, degree of brand loyalty and willingness to buy.
Targeting strategy, 3 steps:
- Do buyers consider the products or brands as identical (homogenous) or different from one another (heterogeneous)?
- When they are defined as hetereogeneous, should we target these segments with just one marketing mix or with different marketing propositions?
- How many market segments should we focus on and which of the identified segments would be suitable target markets?
Concentrated market, what is the goal?
Aiming only at a narrow portion of the market, hoping to gain a high market share and a strong position in that part of the market.
What does the market grid approach do?
It helps in selecting the best target market
What do you do when developing a positioning strategy?
You create a clear, powerful and consistent image for your products - relative to those of competitors - that will occupy a prominent position in the customer's mind
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