4. when evaluating market segments, which three major issues should be considered? course hero

How are target markets evaluated?

How are target markets evaluated? The selection of target markets involves the examination of various aspects and measures of a market segment in comparison to the firm’s goals and resources.

How to evaluate market segments?

This preview shows page 1 - 2 out of 3 pages. The preview shows page 1 - 2 out of 3 pages. In evaluating different market segments, a firm must look atthree factors: segment size and growth, segment structural attractiveness and company objectives and resources.

What are the factors that affect market segmentation?

If customers are in a strong negotiating position they will try to push suppliers’ prices down, reducing margins. A market segment will be less favourable when a few major customers dominate it or the channels of distribution. Barriers to entry into the market segment : There may be entry barriers to a segment that will reduce its appeal.

What are the four types of customer segmentation?

There are four main customer segmentation models that should form the focus of any marketing plan. For example, the four types of segmentation are Demographic, Psychographic Geographic, and Behavioral. These are common examples of how businesses can segment their market by gender, age, lifestyle etc. Let’s explore what each of them means ...

What are the 3 factors in evaluating the market segment?

A. Evaluating Market Segments: When evaluating different market segments, a firm must look at three factors: segment size and growth, segment structural attractiveness, and company objectives and resources.

What are the three 3 kinds of segment?

Three Types of Segmentation and How to Use ThemPsychographic Segmentation. This method of segmentation addresses the consumer's values, beliefs, perceptions, attitudes, interests and behaviors. ... Demographic Segmentation. ... Geographic Segmentation.

What are 3 segments in a marketing plan?

The three-step funnel consists of market segmentation, market targeting, and product positioning. Within your research-based market segmentation phase, you are aiming to identify a basis for the segmentation of your target customers, and determine important characteristics to differentiate each market segment.

What are the 4 major factors of market segmentation?

The 4 basic types of market segmentation are:Demographic.Psychographic.Geographic.Behavioral.

What are three bases of segmentation?

The three main types of market segmentation are demographic, psychographic, and behavioral. Demographic segmentation divides people based on their age, income, education level, and occupation. Some examples of companies that use demographic segmentation include insurance providers, healthcare companies, and banks.

What are three examples of segments that every business should ideally have?

What are three examples of segments that every business should ideally have? Leads, prospects, opted-out customers.

What are the 3 strategies in selecting a target market?

The three strategies for selecting target markets are pursuing entire markets with one marketing mix, concentrating on one segment, or pursuing multiple market segments with multiple marketing mixes.

What is segmented marketing strategy?

Market segmentation is a marketing strategy in which select groups of consumers are identified so that certain products or product lines can be presented to them in a way that appeals to their interests.

Which of the following are a requirement for successful market segmentation?

So what are the requirements for effective market segmentation? Effective segmentation should be measurable, accessible, substantial, differentiable, and actionable. When a company has segmented their market accordingly, there is a higher chance that it will become more profitable and successful in the long run.

What are the major variables used in market segmentation?

There are four key types of market segmentation that you should be aware of, which include demographic, geographic, psychographic, and behavioral segmentations.

What are the major consumer market segments?

Consumer markets can be segmented using a multitude of variables from four main categories: Demographic: age, years of education, income, family size, gender, race, marital status. Geographic: Rural/urban, climate, radius, neighborhood, nearby resources and amenities.

What are the most important factors in segmenting international markets?

There are six main international segmentation approaches that this chapter discusses: geographic/location; economic factors; political/legal factors; cultural factors; cross-market segmentation; and micro-marketing .

What are the three segmentation strategies?

Segmentation can be approached in three main ways: firmographic, behavioural and needs-based.

What 3 aspects is lifestyle segmentation based on?

Lifestyle segmentation is a marketing practice that involves dividing customer data into subcategories. These segments reflect the buying practices, interests, dislikes and daily habits of customers.

What are the three types of segmentation in image processing?

Edge-Based Segmentation. Region-Based Segmentation. Watershed Segmentation. Clustering-Based Segmentation Algorithms.

What are the 5 market segments?

There are many ways to segment markets to find the right target audience. Five ways to segment markets include demographic, psychographic, behavioral, geographic, and firmographic segmentation.

How to evaluate market segments?

To evaluate different market segments effectively it is necessary to systematically review two issues: the market attractiveness of the competing segments and the organization’s comparative ability to address the needs of that segment. There are a number of criteria that can be used to judge the attractiveness of a market segment. These fall under three broad headings: market factors, the nature of competition and the wider environmental factors. At this point it is important to stress that marketers need to recognize that many of the criteria that can be used to evaluate the attractiveness of a market segment are qualitative rather than quantitative in nature. This has implications for the manner in which the process is managed. We will return to this topic later in the chapter. Firstly we need to review the criteria themselves.

What are the barriers to entry into a market segment?

Barriers to entry into the market segment : There may be entry barriers to a segment that will reduce its appeal. These can be in the form of patents, the necessity for new specialized plant or machinery, or the need for high promotional expenditure. It may be that the overall level of investment necessary to enter an area successfully maybe unrealistic for some companies. These same barriers may also put off other potential entrants. Therefore if a company calculates that it can overcome these barriers it may be able to enter a segment where there is little direct competition.

Why are large segments more attractive?

Segment size : A large segment will generally have greater sales potential. This in itself will make it more attractive but it may also offer the potential of gaining economies of scale because of the larger volumes involved. Large segments with their potentially larger sales can justify the higher investments that may be necessary for organizations wishing to operate within them. However, large segments may not always be the most attractive. Large segments can be more competitive as their very size will attract other companies into them. Smaller organizations may not have the resources to address a large market and therefore may find smaller segments more appropriate for their attention.

What is segment rate of growth?

Segment rate of growth (measured in terms of real revenue growth after inflation) : Segments that are growing are normally seen as being more attractive than segments where growth has peaked or even begun to decline. Segments in growth are seen as having a longer-term potential and therefore justify any investment necessary. Once again, however, these segments are likely to be more competitive as other companies also recognize their potential.

What is the total profitability of a segment?

Segment profitability : What is the total profitability of the segment? If you are already operating in this segment it is not your organization’s profitability alone that should be reviewed. In order that all segments are evaluated on a consistent basis it is the profitability of all companies operating in the segment that should be calculated. This will have to be an estimate based on analyzing competitors’ activities.

What is price sensitive segment?

Customer price sensitivity : Segments where consumer shave low price sensitivity are likely to be more attractive as higher profit margins can be gained. Consumers will be more concerned about quality and service rather than price alone. Price sensitive segments are more susceptible to price competition, which leads to lower margins.

What is pattern of demand?

Pattern of demand : The attractiveness of a segment will be affected by any seasonal or other cyclical demand patterns it faces. A large percentage of sales in the gift and card market take place at Christmas in Western countries. An organization has to be able to withstand the cash flow implications of this skewed demand. The same problem occurs in other industry sectors such as travel and tourism.

What is marketing segment?

Marketing segments are separated by many factors relevant to a given small business or brand. Before marketing campaigns or initiatives are begun, the segments to which they will be marketed must be evaluated accurately to ensure that your efforts are worthwhile. The process of evaluation starts with identification and ends with ...

How to find a new market segment?

Sometimes the best tool for finding a new market segment is your existing client base. Examine who buys your products and why, and then extend that model outward to reach new groups with similar characteristics.

How to market a product to a new segment?

Establish a clear line of distribution of product to the new segment. It is often best to arrange for more than one marketing outlet for each segment to maximize exposure and to be certain the message is getting out. There is no use in undertaking a targeted marketing campaign if there is no way to service the market once the orders come in. Be realistic about your reach and capabilities as a small business and make sure the task is possible before going after the segment in question.

What are the consequences of misjudgments in market size?

Misjudgments in market size or interest can result in marketing failures that are hard for a small business to rebound from. Take the extra precaution and read the situation fully before making a move.

What is market segmentation?

Market segmentation is practised by most businesses in one form or another, as a way of streamlining their marketing strategy by dividing broad-based target markets into specific groups of consumers, and devising marketing methods that will appeal to each group.

What is actionable market segment?

Actionable: The market segment must have practical value – its characteristics must provide supporting data for a marketing position or sales approach, and this in turn must have outcomes that are easily quantified, ideally in relation to the existing measurements of the market segment as defined by initial market research.

Why is segmentation important?

It is important, however, to focus resources on market segments whose size, growth and profitability is good, both immediately and in the long run. The following 5 market segmentation criteria should be useful when planning your own company’s market segmentation strategy.

What is reliable market research?

Reliable market research should be able to identify the size of a market segment to a reasonable degree of accuracy, so that strategists can then decide whether, how, and to what extent they should focus their efforts on marketing to this segment.

Is a market segment homogeneous or heterogeneous?

Differentiable: An ideal market segment should be internally homogeneous (i.e. all customers within the segment have similar preferences and characteristics), but externally heterogeneous. Differences between market segments should be clearly defined, so that the campaigns, products and marketing tools applied to them can be implemented without overlap.

Is there a point in wasting marketing budget on a market segment that is insufficiently large?

Substantial: Simply put, there would be no point in wasting marketing budget on a market segment that is insufficiently large, or has negligible spending power. A viable market segment is usually a homogenous group with clearly defined characteristics such as age group, socio-economic background and brand perception.

What is the first thing people think of when they hear market segmentation?

1. Demographic segmentation: The who. Demographic segmentation might be the first thing people think of when they hear ‘market segmentation’. This is perhaps the most straightforward way of defining customer groups, but it remains powerful. Demographic segmentation looks at identifiable non-character traits such as:

What is market segmentation?

Market Segmentation isn’t just about your business reaching customers more effectively – it’s also about those customers seeing messaging that is more relevant to them! 2. Psychographic segmentation: The why. Psychographic segmentation is focused on your customers’ personalities and interests.

What are the different types of market segmentation?

The 4 basic types of market segmentation are: 1. Demographic Segmentation. 2. Psychographic Segmentation. 3. Geographic Segmentation. 4.

What is behavioral segmentation?

Behavioral segmentation is possibly the most useful of all for e-commerce businesses. As with psychographic segmentation, it requires a little data to be truly effective – but much of this can be gathered via your website itself. Here we group customers with regards to their: Spending habits. Purchasing habits.

What is technographic segmentation?

Technographic segmentation identifies and groups customers with regards to the role technology plays in their lives. This might mean recognizing groups of early adopters when marketing new technologies. It might also be as simple as recognizing the device users access the site from and presenting deals differently.

Why is segmentation important?

The purpose of market segmentation is not only to help you reach your audience but also to allow your customers to see the true value of your brand via marketing that speaks to them – and in doing so puts you head and shoulders above your competitors.

How many customer segmentation models are there?

There are four main customer segmentation models that should form the focus of any marketing plan.

Why is segmenting consumers by “who” the easiest way to determine the value of a product?

Segmenting consumers by “who” is arguably the easiest way because the information is readily available. Information can include a person’s income, education, family size, and age.

What is market segmentation?

What are Market Segmentation and Targeting? Market segmentation and targeting refer to the process of identifying a company’s potential customers, choosing the customers to pursue, and creating value for the targeted customers. It is achieved through the segmentation, targeting, and positioning (STP) process.

How Do Companies Target Customers?

Targeting is the process of evaluating the attractiveness of the consumer segments, as well as determining how to attract the consumers. A firm’s choice of consumer segment largely depends on the product and service they are offering. It also determines the marketing strategy the company will employ. Markets that are undifferentiated are suitable for mass marketing.

How does segmentation help?

Market segmentation and targeting help firms determine and acquire key customers. Consumers can be put into segments based on location, lifestyle, and demographics. Another way to segment consumers is by asking the who, what, and why questions. Segmentation and targeting influence a company’s strategy for pricing, communication, ...

Why is segmenting consumers by “who” the easiest way?

Segmenting consumers by “who” is arguably the easiest way because the information is readily available. Information can include a person’s income, education, family size, and age. Firms hope that such features closely correlate to the needs of the consumer. For example, if a person is in their mid-40s and belongs to a large family, then the automobile company will likely advertise an SUV instead of a two-seater vehicle.

What is behavior in marketing?

Behavior is the loyalty, purchase occasion, and usage rate of the buyer, and benefits sought are the values the consumer is looking for, such as convenience, price, and status associated with the product. Another way to segment consumers is by asking why, what, and who.

How do companies communicate value to consumers?

After creating value, companies communicate the value to consumers through the design, distribution, and advertisement of the product. For example, the automotive company can create value for price-sensitive customers by marketing their cars as fuel-efficient and reliable.

What are the target markets that firms seek?

Firms will naturally seek target markets where they can leverage their existing skills, capabilities, and technologies.Target markets that require the firm to develop new expertise are generally best avoided.

Which is more likely to adopt a multiple target market strategy?

The firms with higher growth goals are more likely to adopt a multiple target market strategy and will, therefore, be more willing to enter new markets.

What is target market selection?

The selection of target markets involves the examination of various aspects and measures of a market segment in comparison to the firm’s goals and resources. Typically the firm assesses whether this particular target market logically fits with the firm’s strategic direction, whether it is the best use of its resources (opportunity cost), and to what degree with a firm be able to successfully compete in the segment.

Why is target market selection important?

Target market selection is a very important decision for an organization as it is an integral part of their marketing strategy. As consequence, firms will typically adopt a fairly analytical approach to target market selection and will usually use to set criteria to evaluate and assess each market.

What is a firm's target market?

Firms seek target markets where they can enter with a comfortable level of investment, in terms of: financial investment, staff time, and the potential disruption to the balance of their business.

Why are segments with strong growth rates more attractive?

Segments with strong growth rates are more attractive as firms can gain market share from primary demand ( as opposed to needing to win business from established competitors).

What is market development?

Market development (new target markets) is simply one growth. An organization could also consider market penetration, product development, and even diversification or acquisition. Therefore, given the growth choices available, is the new target market the best option at this time?