Making marketing decisions: segmentation, targeting, positioning

Flashcards for review of lecture notes on price elasticity of demand and market segmentation, targeting, and positioning.

Price elasticity of demand (PED)

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

Factors that influence the 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.

Demographic segmentation

By age, ethnic origin, or gender.

Geographic segmentation

Dividing customers based on region or country.

Income segmentation

Breaking up customers in terms of how much they earn.

Behavioral segmentation

Dividing the market in terms of how people act.

Advantages of Market Segmentation

Gain new customers, better identify needs, improve loyalty, charge premium price, increased diversification, easier to promote.

Disadvantages of Market Segmentation

High research and development costs, extensive market research needed, promotional costs might be higher, risk due to changing customer habits.

Targeting

Choosing your market segment.

Positioning

How customers perceive your product.

Niche Marketing

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

Mass Marketing

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

Value Propositions - Low End

Low price, basic quality, low volume, necessity.

Value Propositions - High End

High price, high quality, high volume, luxury.

Influences on choice of positioning strategy

Assess competitor strength, core competencies, external environment.