Making marketing decisions: segmentation, targeting, positioning

Flashcards on Price Elasticity of Demand (PED), Segmentation, Targeting & Positioning based on lecture notes.

Price elasticity of demand (PED)

Measures how sensitive the quantity demanded of a good is to changes in its price.

Factors influencing price elasticity of demand

Availability of substitutes, necessity vs. luxury, time horizon, brand loyalty, and income level.

Market segmentation

Dividing customers into different categories to reflect their needs and wants.

Main categories of market segmentation

Demographic, geographic, income, and behavioral.

Demographic segmentation

Dividing customers based on characteristics such as age, ethnic origin, or gender.

Geographic segmentation

Dividing customers based on region or country.

Income segmentation

Dividing customers based on how much they earn.

Behavioral segmentation

Dividing the market based on how people act.

Advantages of market segmentation

Gaining new customers, better identifying customer needs, improvements to customer loyalty, the ability to charge a premium price, increased diversification, and easier promotion of products

Disadvantages of market segmentation

High research and development costs, extensive market research is need, high promotional costs with differentiated products, vulnerability due to focusing on one or two market segments.

Targeting

Choosing your market segment

Mass marketing

A business sells to the largest, less specific part of the market

Niche marketing

Where a business targets a specific smaller segment of a large market

Positioning

How customers perceive your product.

Market position

The place a product occupies in customer minds relative to competing products