Market Segmentation Using Demographics: Targeting, Positioning and Consumer Behavior Questions

Question 1

Define market segmentation.

Accepted Answer

Market segmentation is dividing a broad market into smaller groups of customers with similar needs or characteristics.

Question 2

What is demographic segmentation?

Accepted Answer

Demographic segmentation is dividing the market based on demographic variables like age, income, education, occupation, family size and region.

Question 3

Define targeting.

Accepted Answer

Targeting means selecting one or more market segments that the company will serve.

Question 4

What is positioning?

Accepted Answer

Positioning is creating a clear and distinctive image of a product/brand in the mind of the target customer.

Question 5

What does STP stand for?

Accepted Answer

STP stands for Segmentation, Targeting and Positioning.

Question 6

State one advantage of demographic segmentation.

Accepted Answer

One advantage is that demographic data is easy to measure and helps identify customer needs and purchasing power (any one advantage).

Question 7

Write any three demographic bases used for segmentation.

Accepted Answer

Demographic bases for segmentation include:

1) Age.
2) Income.
3) Education.

(Any three bases like occupation, family size and region can be written.)

Question 8

Explain any three approaches of targeting.

Accepted Answer

Approaches of targeting include:

1) Undifferentiated targeting: one offer for the whole market.
2) Differentiated targeting: different offers for different segments.
3) Concentrated (niche) targeting: focus on one selected segment.

(Any three approaches can be written.)

Question 9

Explain how income level affects consumer behavior (any three points).

Accepted Answer

Income level affects consumer behavior in the following ways:

1) It decides affordability and choice between premium and budget products.
2) It affects buying frequency and pack size preferences.
3) It influences demand for services like credit, insurance and lifestyle spending.

(Any three points can be written.)

Question 10

Differentiate between segmentation and targeting (any three points).

Accepted Answer

Segmentation and targeting differ as follows:

| Basis | Segmentation | Targeting |
|---|---|---|
| Meaning | Dividing market into groups | Selecting segment(s) to serve |
| Sequence | First step | After segmentation |
| Output | list of segments | chosen segment(s) + strategy focus |

(Any three points can be written.)

Question 11

Explain any three benefits of market segmentation.

Accepted Answer

Benefits of market segmentation include:

1) Better understanding of customer needs, leading to more suitable products.
2) Efficient use of marketing budget by focusing on the most responsive groups.
3) Stronger targeting and positioning, which improves customer satisfaction and competitiveness.

(Any three benefits can be written.)

Question 12

Differentiate between demographic segmentation and psychographic segmentation (any three points).

Accepted Answer

Demographic and psychographic segmentation differ as follows:

| Basis | Demographic segmentation | Psychographic segmentation |
|---|---|---|
| Focus | who the customer is (age, income, education) | what the customer thinks/values (lifestyle, attitudes) |
| Data | easier to measure | harder to measure |
| Use | pricing, channels, broad targeting | messaging, brand personality, deeper motivation |

(Any three points can be written.)

Question 13

Explain STP (Segmentation–Targeting–Positioning) process with an example.

Accepted Answer

STP is a marketing framework used to match a product with the right customers and create a clear brand image. It includes Segmentation, Targeting and Positioning.

First, segmentation means dividing the market into groups based on similarities. For example, a smartphone company can segment by age (students, young professionals, seniors), income (budget, mid, premium) and region (urban, semi-urban).

Second, targeting means selecting the best segment(s) to serve based on profitability, size and company capability. The company may choose “young professionals with mid-to-high income in urban areas” as the target segment.

Third, positioning means creating a distinct place in the customer’s mind. The phone may be positioned as “fast, stylish and value for money for working professionals.”

```mermaid
+flowchart LR
+  A[Segmentation
+age/income/region] --> B[Targeting
+choose best segment]
+  B --> C[Positioning
+clear brand promise]
+  C --> D[Marketing mix
+product-price-place-promotion]
+```

Thus, STP helps a firm focus resources on the right customers, design the marketing mix accordingly, and build a strong position in the market.

Question 14

Explain demographic segmentation and discuss its benefits and limitations.

Accepted Answer

Demographic segmentation is dividing the market into groups based on variables such as age, gender (where relevant), income, education, occupation, family size and region. It is widely used because demographic data is relatively easy to obtain from census, surveys and company records, and it strongly influences needs and purchasing power.

Benefits of demographic segmentation include better understanding of customer needs, efficient use of marketing budget, improved product design and clearer targeting. It helps firms choose suitable price points and communication channels based on income and education.

However, it also has limitations. Demographics may not fully explain attitudes, lifestyle and values, so psychographic factors may be needed. Wrong assumptions and stereotypes can lead to poor targeting. Segments can change over time due to migration, income growth and technology adoption. Also, customer data should be used ethically with privacy protection.

| Point | Benefit | Limitation |
|---|---|---|
| Data | easy to measure | may be outdated or incomplete |
| Insight | links to needs & affordability | may ignore attitudes/values |
| Practice | supports clear targeting | stereotypes and privacy issues |

Therefore, demographic segmentation is very useful, but it works best when combined with behavioral/psychographic insights and ethical data use.

Question 15

Explain how demographics influence consumer behavior and marketing mix (4Ps).

Accepted Answer

Demographics influence consumer behavior because age, income, education, occupation, family life cycle and region shape needs, preferences, awareness and ability to pay. Therefore, companies use demographic insights to design the marketing mix (4Ps).

For Product, age and life cycle affect product features and pack sizes (kids’ products vs senior care). For Price, income level decides affordability and whether to offer budget, mid-range or premium tiers. For Place (distribution), region and urban–rural differences decide store location, channel choice and last-mile strategy. For Promotion, education, language and media habits guide the message and the media channel (TV, print, social media).

| Demographic factor | Consumer behavior effect | 4P decision |
|---|---|---|
| Age | life-stage needs | product features, messaging |
| Income | affordability | pricing, pack sizes |
| Education | awareness/adoption | promotion channel, content |
| Region | access and preferences | distribution, location |

Thus, demographic analysis connects “who the customer is” with “what the customer buys” and helps firms build an effective and efficient marketing strategy.

Market Segmentation Using Demographics: Targeting, Positioning and Consumer Behavior

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