Market Segmentation and Segmentation Strategies - Needs-based market segmentation: process

8 important questions on Market Segmentation and Segmentation Strategies - Needs-based market segmentation: process

What happens if you fall into the demographic trap in the needs-based market segmentation process?

If there are 3 categories per variable, you will end up with 729 different segments.

What is step 1 of the needs-based market segmentation? What does it entail?

Needs-based market segments, which groups customers into segments based on similar needs and benefits sought by a customer in solving a particular consumption problem.

What is step 2 of the needs-based market segmentation? What does it determine?

Segment identification determines which demographics, lifestyles, and usage behaviours make the segment distinct and identifiable.
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Segment attractiveness is an important step in needs-based market segmentation. What are the forces that shape segment attractiveness?

1. Market demand
  • Market size
  • Growth rate
  • Market potential
2. Competitive intensity
  • Number of companies
  • Easy of entry
  • Substitutes
3. Market access
  • Customer familiarity
  • Channel access
  • Company fit

How does a company access segment profitability in needs-based market segmentation? Which step in the process is this?

A company estimates NMC that is expected at a certain level of segment market penetration. It is step four.

What happens in the fifth step segment positioning in needs-based market segmentation?

A value proposition is created and a product-price positioning strategy (proposition strategy) based on that segment's unique customer needs and characteristics.

What happens in the sixth step segment strategy 'acid test' in needs-based market segmentation?

A segment storyboard is created to test the attractiveness of each segment's positioning strategy. It is a way to ensure that target customer needs are accurately translated and that the characteristics are identified into the positioning strategy.

What happens in the seventh step marketing mix strategy in needs-based market segmentation?

The segment positioning strategy is expanded to include all aspects of the marketing mix: product, place, price, promotion, and service.

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