Segmentation, targeting and positioning

Question 1

Market segmentation

Answer 1

Dividing a market into distinct groups of buyer with different needs,
characteristics or behavior, who might require separate products and Marketing-Mixes

Question 2

Targeting

Answer 2

The process of identifying each market segment’s attractiveness and selecting one or
more segments to enter.

Question 3

Positioning

Answer 3

Arranging for a product to occupy a clear, distinctive, and desirable place relative to
competing products in the minds of target customers

Question 4

Market segmentation, Targeting, Positioning

Answer 4

Question 5

Market segmentation vs. mass marketing

Answer 5

• Heterogeneity of costumer needs and wants
• Differences in customer buying power and potential CLV
• Individualization in costumer behavior
• Targeted communication
• Advantages through specialization

Question 6

Useful market segments must have the following characteristics

Answer 6

• Measurability (degree to which size, purchasing power and profiles of a market segment can be measured)
• Accessibility (degree to which a market segment can be reached and served)
• Substantiality (degree to which a market segment is sufficiently large and profitable)
• Differentiability (degree to which a market segment is conceptually distinguishable and responds differently to a different marketing mix)
• Actionability (degree to which effective programs can be designed for attracting and serving a given market segment)

Question 7

Segmentation Variables – Consumer Markets

Geographic variables:

Answer 7

Geographic variables include segmentation by nations, regions, states, cities, neighborhoods, urban, suburban, and rural regions. Segmentation by neighborhoods (together with
socio-demographics) is often used when planning direct marketing campaigns.

Question 8

Socio-demographic Variables

Answer 8

Socio-demographic segmentation occurs according to:

• age
• race
• religion
• family size
• ethnicity
• income
• education
• socio-economic status

It is very popular
because of the availability of data and because consumers/businesses with common demographics
often have similar needs/wants and behave similarly.

Question 9

Psychographic Variables

Answer 9

Psychographic variables are used to divide a market into different segments based on social class, lifestyle, or personality characteristics (needs, wants, attitudes, preferences,
individual value system, personality, etc.). These segmentation variables are of crucial importance because they are the underlying drivers of the buying and usage behavior.

Question 10

Benefit segmentation

Answer 10

Benefit sought by one customer may differ from those sought by another.
Benefit segmentation techniques segment the market based on needs/preferences/relative importance
of central product attributes (e.g. price-conscious segment vs. brand-conscious segment vs. qualityconscious
segment).

Question 11

Behavioral Variables

Answer 11

Segmentation occurs on the basis of behavioral variables such as occasions,
user status (non-user, ex-user, potential user, first-time user, regular user), usage rate (light, medium,
heavy), loyalty status, up-buying, cross-buying behavior.

Question 12

How to build segmentation

Answer 12

Segmentations are derived from market research. Typical steps are:

• Desk research (what data is available already)
• Qualitative market research (focus groups, shop-alongs, in-depth interviews) ® to get first insights and ideas about possible segments
• Quantitative market research (online, telephone survey) ® test and quantify findings from the qualitative research ® cluster analysis (find groups of participants with very similar answer patterns = segments)

Question 13

Segmentation variables - organizational Markets

Answer 13

Here, businesses are usually transformed around customer groups (of bigger firms). However, product
groups do not equal a costumer segment.

Question 14

Consumer vs. business markets

Answer 14

Both consumer and business markets have individuals that assume buying roles and purchase decisions are made to satisfy needs. The differences between the consumer
and business markets are:

• market structure and demand (fewer, but larger buyers in business sectors, derived and inelastic demand, fluctuating demand)
• nature of the buying unit (buying center, professional purchases in the business sector)
• Types of decisions and the decision process (complex decisions, formal purchasing process, close and long-term buyer seller relationships in the business sector)

Question 15

Selecting Target segments

Answer 15

Question 16

Undifferentiated marketing

Differentiated marketing

Concentrated marketing

Answer 16

Question 17

Online Targeting

Answer 17

Is done by using IT-related options (i.e. cookies). It is possible to track customers
online by doing this. This facilitates a goal-oriented sales approach.

Question 18

Importance of Positioning

Answer 18

An example would be Proviande using a new slogan “Der feine
Unterschied” compared to their old one “Alles andere is Beilage”. With the new slogan, Proviande is
now addressing a new target group; i.e. the vegetarians or occasional meat eaters that want good quality
and high welfare for the animals when they do decide to consume meat.

Question 19

The Value Proposition

Answer 19

The value proposition describes the full positioning of a brand, i.e. the full mix of benefits on which it is positioned (clarity, consistency, credibility, competitiveness).

Question 20

Developing a positioning strategy

Answer 20

1. By asking customers more or less directly via surveys or interviews about brand attributes/connotations (“How do you perceive brand X?”)
2. By perceptual mapping (method for visualizing costumer’s minds concerning certain objects, shows perceived similarities and differences among objects, can be derived from data on consumer perceptions of brands)