Question

SAMTECH manufactures advanced technology products such as computers and mobile phones.

Technology markets are very competitive, but SAMTECH was able to differentiate its products by offering features that are not offered by competitors. SAMTECH's Director would like to see better market segmentation.

Identify and explain two bases of segmentation for SAMTECH. Support your answer with examples.
Identify the three possible pricing approaches that SAMTECH can use to price its products. Which pricing approach is the most suitable for SAMTECH. Justify your answer.

Answer 1

SAMTECH can utilize behavioral and psychographic segmentation to better target its customer base, with behavioral focusing on user behavior and psychographic on lifestyle and values. In terms of pricing strategies, cost-plus, competitive, and value-based pricing offer different approaches, with value-based being the most suitable due to SAMTECH's differentiation strategy.

Step-by-step explanation:

For a company like SAMTECH, which manufactures advanced technology products, there are several bases of segmentation to consider.

The first base can be behavioral segmentation, which involves segmenting customers based on their behavior towards technology such as usage rate, loyalty status, and benefits sought.

For example, SAMTECH could target tech enthusiasts who are always looking for the latest features, or loyal customers who trust the SAMTECH brand and would prefer its products over competitors.

The second base is psychographic segmentation, which includes segmenting the market based on lifestyle, social status, or personality characteristics.

SAMTECH could focus on consumers who value innovation and cutting-edge technology, tailoring marketing efforts to appeal to their desire for products that offer new and unique features.

As for pricing approaches, SAMTECH could use the following:

Cost-plus pricing: Setting a price by adding a markup to the cost of the product.

Competitive pricing: Setting a price based on what the competition is charging.

Value-based pricing: Pricing based on the perceived value to the customer rather than the cost of the product.

The most suitable pricing approach for SAMTECH would likely be value-based pricing.

Given the competitive nature of the technology market and SAMTECH's differentiation strategy, pricing products based on the value they deliver to customers could capitalize on the unique features that set them apart from the competition.

This method allows SAMTECH to charge a premium for innovative features while reinforcing the brand's image as a provider of leading-edge technology.