Marketing and Market Research: Segmentation, Positioning, Mix and Digital
Domain 6 covers how a firm identifies and reaches its market: research design, segmentation and targeting, positioning, the marketing mix and digital metrics. Numerical items usually involve campaign efficiency, so be ready to compute conversion rate, CAC and LTV.
Market research
- Secondary (existing data, cheaper, may be outdated) vs primary (collected for the purpose).
- Qualitative (interviews, focus groups - why) vs quantitative (surveys, panels - how many).
- Watch sampling: an unrepresentative sample invalidates the conclusion, not the arithmetic.
Segmentation, targeting, positioning
- Criteria: geographic, demographic, psychographic, behavioural; a usable segment must be measurable, substantial, accessible, differentiable and actionable.
- Targeting: undifferentiated, differentiated, concentrated, micromarketing.
- Positioning: the place the offer occupies in the customer's mind; perceptual maps; points of parity and points of difference; repositioning.
Marketing mix
- 4P: product, price, place, promotion; services add people, process and physical evidence.
- Pricing: cost-plus, value-based, skimming, penetration, psychological, yield management.
- Product life cycle (introduction, growth, maturity, decline) drives mix decisions.
Digital marketing
- Funnel: awareness → consideration → conversion → loyalty.
- Tools: SEO/SEM, content, email, social, influencers. Metrics: CTR, conversion rate, CAC, LTV, ROAS.
Worked example
A campaign costs €6,000, delivers 200,000 impressions at 0.5% CTR = 1,000 clicks, converting at 4% = 40 customers, so CAC = 6,000 ÷ 40 = €150. Each customer spends €60 per order at a 40% gross margin = €24, three orders a year, retained two years: LTV = 24 × 3 × 2 = €144. LTV/CAC = 0.96, so the campaign destroys value. Raising conversion to 5% gives 50 customers and CAC of €120 (ratio 1.2); still short of the 3:1 rule of thumb, so retention or average order value must also improve.
Traps
- Computing ROI on revenue instead of gross margin.
- Confusing CTR with conversion rate.
- Segmenting on demographics when behaviour drives the purchase.
- Using cost-plus pricing in a differentiated position.