Making marketing decisions: segmentation, targeting, positioning

what is market segmentation

involves dividing a market into parts that reflect different customer needs and wants

how do businesses use marketing to create value for customers

businesses choose which customers to serve

→market

what are the main catagories of market segementation

demographic

income

behavioural

geographical

explain the demographic catagories in market segmentation

dividing into segments based on demographic variables such as age, gender, family, lifestyle, religion, nationality, ethnicity ect.

explain the income catagories in market segmentation

dividing into segments based on income often on the basis of social - economic grouping

explain the behavioral catagories in market segmentation

dividing into segments based on the different ways customers use or respond to a product and the benefits they seek

explain the geographical catagories in market segmentation

dividing into different geographical units such as nations, regions, cities, neighbourhoods or other territories

what are some benefits of effective market segmentation

it focuses rescources on parts of a market where the business can succeed

helpss with new product development- focused on needs

potential

what is niche marketing

where a business targets a smaller segment of a larger market

customers have specific

what is mass marketing

where a business sells into largest part of the market, where there are many similar

key features of mass market

* customers form the majority in the market
* customer needs and wants are more ‘general’ and less ‘specific’
* associated with higher production output and capacity
* success usually associated with low cost operating or market leading brands

advantages of targeting a niche market

* less competition
* clear focus- target particular customers
* builds up specialist skill and knowledge
* can often charge higher profit
* profit margins often higher
* customers tend to be more loyal

disadvantages of targeting a niche market

• lack of economies of scale

• risk of over dependence on a single product or market

• likely to attract competition if successful

• vunerable to market changes