GameDog is a small start-up company that that develops video games. An independe
ID: 419916 • Letter: G
Question
GameDog is a small start-up company that that develops video games. An independent marketing research firm – using a combination of demographic and psychographic variables – has broken the overall video game market into three major segments: Segment A (multiple player games), Segment B (single player games), and Segment C (educational games). Because GameDog lacks the financial resources to compete in all three segments, management must decide which of the three it will pursue as its target market.
Accordingly, GameDog’s top management has asked you to explain which criteria it should take into consideration to assess the attractivenessof various market segments, in general, so that it can decide which segment to pursue. In addition to explaining which criteria should be used to evaluate the attractiveness of different market segments, also discuss the relevance of each criteria.
Explanation / Answer
Market segmentation is the process of dividing a broad target market into different sub-market based on some characteristics of the consumers.
There are basically four types of market segmentation. These are - Demographic, geographic, psychographic and behavioral segmentation.
Criteria to consider market segment :-
The attractive market segmentation helps the companies to become stable by providing long term profits. GameDog's market segmentation can be determined according to the amount they can invest in the market. Some of the criteria to decide the market segement are below -
1. Differentiable -
An ideal market segment must be homogenous internally and heterogenous externally in nature. That is, the customers must have a same product preference and same characteristics but also have different preference for the same product variety. Those differences between markets must be observe so the company can use marketing tools to meet their demands.
2. Substantial -
The market must be of ideal size i.e. not too large nor too small. Because if the market segment is very large then the company may not have sufficient amount to invest in the market, and if it is small then it may be a waste of time to invest in the market. It is point to be noted that the market must be stable in nature.
3. Measurable -
The company must focus on the volume of the market segment i.e. they have to determine the no. of customers present in the market. It is needed to estimate the no. of customers because the company then can plan the time and ways to market a product.
4. Responsive -
The market must be responsive in nature. It means that when a company launches a different product, the customers must response quickly. The customers must response more in case of marketing mix.
5. Actionable -
The company must focus on different marketing mix on different market segment. This way they can differentiate their characteristics. Marketing mix factors include - people, place, price, promotion, products, physical environment and process. These 7 factors are also called 7 P's.
Hope this helps :)
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