• Pros include:
• Serving a specific target segment or market does not mean you can charge any price you want; you can add a premium because you are considered a product that has a value proposition. So, higher value sales.
• Also there are higher chances to develop stronger brand value/equity because you will stand for something very specific in consumers’ mind and this will appeal to specific groups of potential customers.
• Operational costs are lower because you need fewer resources to serve the market. Same rule applies to your marketing costs as a total, since your budget will be allocated into channels that serve only this target segment or market.
• However, targeting advertising is usually more expensive (per channel). But this can result in a higher return on your marketing budget.
• With a premium car like BMW, you are likely to serve much fewer customers (as opposed to say, the Proton market. It is just simple mathematics, so sales are probably lower than if you served a broader market; however, your profit margins will be higher.
• At least three ‘pros’ – this is worth 3 x 2.5 = 7.5 marks
• Pros include:• Serving a specific target segment or market does not mean you can charge any price you want; you can add a premium because you are considered a product that has a value proposition. So, higher value sales.• Also there are higher chances to develop stronger brand value/equity because you will stand for something very specific in consumers’ mind and this will appeal to specific groups of potential customers.• Operational costs are lower because you need fewer resources to serve the market. Same rule applies to your marketing costs as a total, since your budget will be allocated into channels that serve only this target segment or market.• However, targeting advertising is usually more expensive (per channel). But this can result in a higher return on your marketing budget.• With a premium car like BMW, you are likely to serve much fewer customers (as opposed to say, the Proton market. It is just simple mathematics, so sales are probably lower than if you served a broader market; however, your profit margins will be higher.• At least three ‘pros’ – this is worth 3 x 2.5 = 7.5 marks
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