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ANSWERS Marketing introduction Revision and Study Sheet

THEME 5: SEGMENTATION AND TARGETING

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OBJECTIVE OF THIS THEME: •

Understand the marketing strategy and its components

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Distinguish between the various categories of segmentation variables

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Gain an overview of the factors related to targeting decisions and the four types of targeting

Diagrams and figures : Brunet, Johanne, Sihem Taboubi, Colbert Francois, Renaud Legoux, Jean-Luc Geha, Sandra Laporte, et Bruno Lussier. 2017. Gestion du marketing 6E édition. Montréal (Québec): Chenelière éducation.

Theme 5 : Segmentation and targeting

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THEORETICAL QUESTIONS FOR THE MAIN CONCEPTS: 1. WHAT IS SEGMENTATION AND WHAT IS IT USED FOR? Segmentation is a marketing strategy that divides the market into sub-markets made up of homogeneous groups of consumers, users or customers with similar needs and behaviours, each group being different from the others.

2. WHAT QUESTIONS CAN A MANAGER ASK TO EFFECTIVELY SEGMENT A MARKET? Why? What benefits are our clients looking for? Where ? Where do they live? Who ? Who are they? For example, how old are they and what is their family situation? What do we know about them (e.g., values and beliefs)? How? Where do they want to buy or use them?

Theme 5 : Segmentation and targeting

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3. WHAT ARE THE SEVEN VARIABLES TO CONSIDER WHEN SEGMENTING A MARKET? Sociodemographic The demographic, economic, and social characteristics of consumers that influence their demand for products and services in several markets, including income, age, education, asset value, gender, ethnicity, religion, language, occupation, family status, and family structure.

Geographic Characteristics relating to the geographic location of consumers: world region, country, neighborhood, postal code, climate and type of physical environment. Psychographic Consumers’ mentalities, values, opinions, interest in various activities and outlook on life.

Lifestyles A combination of the three previous variables (sociodemographic, geographic and psychographic).

Behavioural Needs, expectations, situations and uses. Volume and profitability The purchase price or profit that the company can expect from the segment. Market Elements that are not included in the above categories and that are relevant to a particular market due to their strong influence on demand.

Theme 5 : Segmentation and targeting

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4. HOW CAN THESE FIVE FACTORS RELATED TO TARGETING DECISIONS INFLUENCE A COMPANY'S PROFITABILITY? Size The targeted segment must generate a sales volume that is large enough to be profitable for the company as well as its intermediaries or distributors. Growth Profitability potential is also influenced by the expected growth of the chosen segment. For example, a small segment may have strong growth potential and prove to be more attractive in the future than it is today.

Accessibility Is there a cost-effective way to reach the target segment through distribution and communication? Sometimes companies do not target potentially promising segments because no distribution channel or communication media can reach them at an affordable cost.

Competitive situation The number and strength of current and future competitors that target this segment. Cost of adaptation The less expensive is it to adapt to the target, the more likely it is that the adaptation will be profitable, other things being equal.

Theme 5 : Segmentation and targeting

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5. WHAT DEFINES EACH OF THE FOUR MAIN TYPES OF TARGETING AND FOR WHICH TYPE(S) OF BUSINESS(ES) ARE THEY BEST SUITED? Mass marketing Targeting the entire market and adopting the same marketing mix across the board. This approach usually requires offering services or products designed to meet average needs, at an average or low price, with mid-range customer service, mass distribution and a corresponding level of communication.

Segment marketing Targeting one, some or all market segments and adapting the components of the marketing mix to each of them. Segmented marketing can be concentrated, broad or comprehensive, depending on the number of segments being targeted. •

Concentrated: The company targets a single segment (sometimes two), which may be large or small.

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Broad: The company can target three or more segments.

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Comprehensive: The company targets all (or almost all) market segments by adapting the components of the marketing mix to each segment.

Niche marketing Targeting a single, small segment of the overall market (representing no more than 10% of the market, usually less), and tailoring all marketing mix variables to it. The company becomes a specialist on the needs of this small segment. As a result, it acquires distinctive know-how and becomes highly effective.

Customized/Personalized marketing Adapting the company’s offer to each client. This type of segmentation is taken to an extreme, with each customer becoming a segment made up of one person.

Theme 5 : Segmentation and targeting

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