3A. Customer Segmentation

Question 1

What is the most foundational issue for making marketing decisions?

Answer 1

Customers vary widely in their needs and preferences, whether real or perceived

Question 2

What are some sources of customer heterogeneity?

Answer 2

• Individual differences
• Life experiences
• Functional needs
• Self-identity/ image

Question 3

What is a key decision marketeres have to make (to do with slicing)?

Answer 3

How small are you going to slice your marketing?

Question 4

If you do not slice your marketing at all, what is this called?

Answer 4

MASS MARKETING

• one product fits all
• single market approach

Question 5

What is an example of one-to-one marketing?

Answer 5

Probably something like…

Spotify:
They have detailed algorithms and can give you highly unique offerings

Question 6

What are the 3 main advantages of market segmentation?

Answer 6

1. Divide & Conquer
2. Efficiency
3. Opportunity

Question 7

How is “Divide & Conquer” an advantage of market segmentation?

Answer 7

Tailor the marketinging mix program within each targeted segment to best match customer needs and provide superior value

Question 8

How is “Efficiency” an advantage of market segmentation?

Answer 8

Target those consumers with the greatest likelihood of buying the products == makes marketing efforts more EFFICIENT

Question 9

How is “Opportunity” an advantage of market segmentation?

Answer 9

Identify new opportunities not discovered by competitors

Question 10

What are the two analytical approaches to segmentation?

Answer 10

1. Groups of customers are derived based on data (cluster analysis)
2. Redundant, highly correlated variables to build those groups can be summarised in underlying dimensions (factor analysis)

Question 11

Why would you use segmentation with an analytical approach rather than without?

Answer 11

Without:
- Managers segment customers according to their imporessions after meeting existing/ potential customers (highly subjective!)
- Focuses mainly on descriptors (eg. age/ gender..), which are unclear if they really reflect customer needs

Question 12

What is the “STP” process?

Answer 12

Segment Markets (identify customer segments + develop segment profiles)

Target Markets (evaluate the attractiveness of each segment, and make a selection)

Position Product (Identify possible positioning concept for each target segment, develop & communicat positioning concept)

Question 13

What are the three data collection opportunities/ environments?

Answer 13

1. Primary data collection (eg. new survey)
2. Existing customer data
3. Third-party data (eg. market research reports)