M2- (3.3.3)

• How might a business divide up a market into groups with similar characteristics (segments)?


  Gender

  Class

  Ethnicity

  Education

  Location

  Wealth
• Why is it important for firms to segment their market and aim it at a clear target audience?


  To modify and specialise marketing and raise awareness of who products are for
• How do businesses use marketing to create value for customers?


  1.Choose WHICH customers to serve (marketing segmentation,targeting segments to enter)

  3.decide HOW to serve those customers (product differentiation and positioning)
• What is market segmentation?


  Involves dividing a market into parts that reflect different customer needs and wants
• How do markets differ?


  Customer needs and wants

  location of customers

  How customers buy
• What are the main categories of market segment?


  Income

  Behavioural

  Demographic

  Geographic
• What are parts of demographic segmentation?


  Age, gender, occupation, socio-economic (households characterised by major earners job)
• What does ACORN stand for?


  A classification of residential neighbourhoods
• What is ACORN? A system that segments...


  Markets according to a wide variety of types of households and characteristics of families
• How is ACORN usually done? What does this do?


  By postcode- better inform businesses on where to set up and where to target certain marketing activities to be cost effective
• Income segmentation


  Certain goods/services are aimed at individuals with certain levels of disposable income e.g rolex, aldi
• Geographic segmentation


  Firms look at where particular CONSUMER TYPES live, what INCOME LEVELS are like, and whether it is rural or inner city
• Behavioural segmentation


  Consumers divided into groups based on the way they respond to, use or know of a product
• What does behavioural segmentation involve?


  1.Lifestyle- hobbies, interests, tastes

  2. Level of brand loyalty

  3. Benefits sought by consumers- what are they looking for in the product?, why and when they purchase?

  4. Purchase occasion

  5. Frequency of usage- are they early adopters (buy product on release)?
• What are the benefits of market segmentation?


  1)Helps better understand target market (characteristics,needs, wants)

  2)allows firm to better design their marketing mix to increase sales and market share

  3) helps them build a strong brand identity and loyalty

  4) helps a firm plan suitable new products to meet their chosen market segments
• What are some benefits of niche marketing?


  1)Lower levels of competition-> higher market share and build 'monopoly power'

  2)Build intense customer loyalty

  3) firms can set up and operate on a smaller scale, help keep costs low and decrease risk

  4) easy to differentiate and create a USP

  5)higher prices (due to USP and added value)

  6) easier to design marketing mix and target customers (when exact characteristics, needs, wants known)
• What are some disadvantages of niche marketing?


  1) Lower profits as operate on smaller scale and can't reduce unit cost through economies of scale

  2) new rivals entering market have a big impact as barriers to entry small

  3) larger rivals may enter

  4)changing consumer tastes have a big impact on
• What is mass marketing?


  Selling goods with mass appeal and promoting them to all types of customers
• What are some components of mass marketing?


  -Firms aim products at all of market to maximise their sales and profit

  -Aim to create a generic brand that is renowned for a product (e.g post-it, sellotape)
• What are the advantages of mass marketing?


  Large scale production and economies of scale possible (unit costs lower enabling lower prices)

  Higher sales, revenue and profit

  High barriers to entry,decreased competition for established firms
• What are the disadvantages of mass marketing?


  -High cost as large scale operationalised manufacture is needed to meet mass market demand

  -products must appeal to a wide range of consumers so firms can't easily add value by tailoring products to specific tastes (lower prices have to be charged)

  -more competition form large international rivals

  -consumer tastes change more quickly in mass markets and are harder to keep up to date with