Transcript Marketing Management - 6 (Available)

MARKETING MANAGEMENT
Chaudhry Muhammad Nadeem Faisal
Cell: 0305-7761061
Email: [email protected]
B-Email: [email protected]
Url: www.littlemichael.co.uk/faisal/index.htm
Blekinge Institute of Technology
SE-371 79 Karlskrona
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www.bth.se/eng
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
1. LEVEL OF MARKET SEGMENTATION
2. BASE FOR SEGMENTING CONSUMER MARKET
3. BASE FOR SEGMENTING BUSINESS MARKET
4. MARKET TARGETING
Blekinge Institute of Technology
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IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
1. LEVEL OF MARKET
SEGMENTATION
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IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
Segmentation, Targeting and Positioning
Product
Market
Market
Segments
Market
Targets
A
B
D
A
C
D
Positioning Strategy
for Each Targets
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Marketing Program
For Each Target
Source: Victoria L. Crittenden, “ Strategic Marketing management ” , McGraw-Hill, NY,2002,
p,10.
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
Steps in Segmentation, Targeting and Positioning
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Source: Victoria L. Crittenden, “ Strategic Marketing management ” , McGraw-Hill, NY,2002,
p,10.
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
LEVEL OF MARKET SEGMENTATION
Market segmentation represents an effort to increase a
company's targeting precision. It can be carried out at
four levels: segments, niches, local areas, and
individuals.
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IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
Mass Marketing
In mass marketing, the seller engages in the mass production,
mass distribution, and mass promotion of one product for all
buyers. Henry Ford epitomized this marketing strategy when he
offered the Model-T Ford to all buyers; they could have the car
"in any color as long as it is black." Coca-Cola also practiced
mass marketing for many years when it sold only one size Coke
in a 6.5-ounce bottle.
Mass Marketing
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Same product to all consumers
(no segmentation)
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
The traditional argument for mass marketing is that it
creates the largest potential market, which leads to the
lowest costs, which in turn can translate into either
lower prices or higher margins. However, many critics
point to the increasing splintering of the market, which
makes mass marketing more difficult. According to Regis
McKenna:
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The proliferation of advertising media and distribution
channels is making it difficult to practice "one size fits
all" marketing. No wonder some have claimed that mass
marketing is dying. Not surprisingly, many companies
are retreating from mass marketing and turning to
micromarketing at one of four levels.
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
SEGMENT MARKETING
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A market segment consists of a large identifiable group
within a market. A company that practices segment
marketing recognizes that buyers differ in their wants,
purchasing power, geographical locations, buying
attitudes, and buying habits. At the same time, though,
the company is not willing to customize its
offer/communication bundle to each individual customer.
The company instead tries to isolate some broad
segments that make up a market. For example, an auto
company may identify four broad segments: car buyers
seeking basic transportation, those seeking high
performance, those seeking luxury, and those seeking
safety.
Segment Marketing
Different products to one or more segments
(some segmentation)
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
Thus segmentation is a midpoint between mass marketing
and individual marketing. The consumers belonging to a
segment are assumed to be quite similar in their wants
and needs. Yet they are not identical. Some segment
members will want additional features and benefits not
included in the offer, while others would gladly give up
something that they don't want very much. For example,
Ritz-Carlton Hotels target affluent guests and provide
many amenities and a lower price. Thus segment
marketing is not as precise as individual marketing but is
much more precise than mass marketing.
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Segment marketing offers several benefits over mass
marketing. The company can create a more fine-tuned
product/service offer and price it appropriately for the
target audience. The choice of distribution channels and
communications channels becomes much easier. And the
company may face fewer competitors if fewer
competitors are focusing on this market segment.
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
NICHE MARKETING.
Market segments are normally large identifiable groups
within a market? for example, nonsmokers, occasional
smokers, regular smokers, and heavy smokers. A niche
is a more narrowly defined group, typically a small
market whose needs are not being well served.
Marketers usually identify niches by dividing a segment
into sub segments or by defining a group with a
distinctive set of traits who may seek a special
combination of benefits. For example, the sema, and
heavy smokers with emphysema who are overweight.
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Niche Marketing
Different products to subgroups within segments
( more segmentation)
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
While segments are fairly large and thus normally attract
several competitors, niches are fairly small and normally
attract only one or a few competitors. Niches typically
attract smaller companies. Larger companies, such as
IBM, whose lose pieces of their market to nichers; Dalgic
labeled this confrontation as "guerrillas against gorillas.“
As a defense, some larger companies have turned to niche
marketing, which has required more decentralization and
some changes in the way they do business. For
example, Johnson & Johnson consists of 170 affiliates
(business units), most of which pursue niche markets.
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Niche marketers presumably understand their niches'' needs
so well that their customers willingly pay a price
premium. For example, Ferrari gets a high price for its
cars because its loyal buyers feel that no other
automobile comes close to offering the product-servicemembership benefit bundle that Ferrari does.
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
An
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attractive niche is characterized as follows: The
customers in the niche have a distinct and complete set
of needs; they will pay a premium to the firm best
satisfying their needs; the "nicher" has the required
skills to serve the niche in a superior fashion; the nicher
gains certain economies through specialization; the
niche is not likely to attract other competitor or the
nicher can depend on itself; and the niche has sufficient
size, profit, and growth potential.
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
LOCAL MARKETING.
Target marketing is increasingly taking on the character of
regional and local marketing, with marketing programs
being tailored to the needs and wants of local customer
groups (trading areas, neighborhoods, even individual
stores). Thus Citibank provides different mixes of
banking services in its branches depending on the bank's
neighborhood
demographics.
And
Kraft
helps
supermarket chains identify the cheese assortment and
shelf positioning that will optimize cheese sales in lowincome, middle-income, and high-income stores, and in
different ethnic communities.
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Local / Individual Marketing
Products to suit the tastes of individuals or locations
(complete segmentation)
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
Those in favor of localizing a company's marketing point to
the pronounced regional differences in communities''
demographics and lifestyles. They see national
advertising as wasteful because it fails to address local
target groups. They also see powerful local and regional
retailers who are demanding more fine-tuned product
assortments for their neighborhoods.
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Those against local marketing argue that it drives up
manufacturing and marketing costs by reducing
economies of scale. Logistical problems become
magnified when companies try to meet different regional
and local markets'' requirements. And a brand's overall
image might be diluted if the product and message differ
in different localities.
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
INDIVIDUAL MARKETING.
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The ultimate level of segmentation leads to "segments of
one,"
"customized
marketing,"
or
"one-to-one
marketing." The prevalence of mass marketing has
obscured the fact that for centuries consumers were
served as individuals: The clothier tailor-made the suit,
the cobbler designed shoes for the individual, and so on.
And much business-to-business marketing today is
customized, in that a manufacturer will customize the
offer, logistics, and financial terms for each major
account. It is the new technologies? Specifically
computers, databases, robotic production, and instant
communication media such as e-mail and fax? That are
permitting companies to consider a return to customized
marketing, or what is called "mass customization." Mass
customization is the ability to prepare on a mass basis
individually designed products and communications to
meet each customer's requirements.
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
2. BASE FOR SEGMENTING
CONSUMER MARKET
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IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
BASE FOR SEGMENTING CONSUMER MARKET
Blekinge Institute of Technology
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
Demographical bases (age, family size, life cycle,
occupation)

Geographical bases (states, regions, countries)

Behavior bases (product knowledge, usage, attitudes,
responses)

Psychographic bases (lifestyle, values, personality)
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
1. Demographic Segmentation
These bases are also observable general bases. Dividing the
total market into segments on the basis of such
demographic variables as age, gender, income,
occupation, education, race, nationality and social class
is called demographic segmentation. This is the most
popular method by which marketers identify market
segments. Demographic segmentation is widely used for
two reasons.
Demographic
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Age, gender,
family size and
life cycle,
or
income
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
1. First, consumer ’s wants and needs are often closely
associated with their demographic characteristics.
2. Second, demographic variables are easy to measure and
are readily available to marketers. For example, the ford
Motor Company redesigned the Mustang in 1994 to
appeal more to women, who represent a $65 billion
annual market.
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IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8

1. Geographic
These bases are observable general bases. When marketing
managers divide the whole market into segments based
on location, they are using geographic segmentation.
Many types of location can be used – regions, countries,
states,
counties,
cities
or
towns,
and
even
neighborhoods- depending on the goods or services
being marketed.
Geographic
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Nations, states,
regions or cities
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8

4. Psychographics
These bases are observable product-specific bases. The
segmentation variables base on consumer’s personality,
characteristic and life-style. Psychographics classify
consumers by their attitudes, feelings and personality.
Psychographics analysis recognizes that individuals who
have similar interest, enjoy similar activities, and have
similar outlook on life should be grouped together for
marketing purposes.
Psychographic
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Social class, lifestyle,
personality
or
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
Used in conjunction with demographics, however, this
approach can be a powerful tool in painting a realistic
profile of designated market segments. In a retail study,
psychographics is one of three major segmenting bases
used to generate unique customer profiles distinguishing
department store shoppers from those who prefer
discount stores.
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IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
4. Behavior Segmentation
Divide into two groups on the base of their knowledge of,
attitude to, use of, or response of a product.
Decision Role
Peoples play five role in buying: Initiator, Influencer,
decision, buyer, and user. This is especially useful in
designing the communication strategy.
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Example: the doctor prescribe the medicine and the
pharmaceutical
companies
influences
doctors
prescription behavior by providing technical information
about the products , patients relative buy medicine and
the patients use the product
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
Behavioral Variable
Many markets believe on behavioral variable--- Occasions,
Benefits, User status, Usage rate, Buyer-reading stage,
and attitude are the best starting point for constructing
Market-segments.
Occasions
Greeting cards at different occasions, chocolate as gift at
special parties or events, biscuit with tea in evening.
Behavioral
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Occasions, benefits,
uses, or responses
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
Benefits
Many products are categories offer different products
targeted at peoples who seek different sets of benefits.
Shampoos offer different sets of benefits, cleaning of
hair, conditioning effects , medicinal properties, and
sustainability to hair types. Different products offer
different benefits to user.
User status
Every products have its non-users, Ex-users, potential user,
first time users and regular users.
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Usage Rate
Markets can be segmented into light user, medium user and
heavy product user.
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
Buyer Reading stage
Some peoples are un-aware, some are aware, some are
informed, some are interested, some desired and some
are intend to buy the product.
Loyalty Status
Marketers usually envision four Group-based on brand
loyalty status
Hard-core Loyal: Use only one brand all the time
Split Loyal: Who are loyal to two or three brands
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Shifting Loyal: Who shift loyalty form one to other brand
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Switcher : Who show no loyalty to any brand
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
Target Market
Unaware
Aware
Not Tried
Negative
opinion
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Neutral
Tried
Favorable
Opinion
Rejecter
Not yet
reject
Loyal to other
brand
switcher
Light User
Regular
User
Repeated
Loyal to
Brand
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figure
Heavy User
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
Attitude
Five attitude about he products: enthusiastic, positive,
indifferent, negative and hostile
The Political worker in door to door campaign user voter
attitude who much time to spend with that voter. They
thanks to enthusiastic and reinforce to positive and try
to win the indifferent and spend no time on negative and
hostile.
Conversion Model
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The Conversion Model measures commitment according to
psychological attachment to a brand and their opening
to change, to determine how easily consumer can be
converted to other choice
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
The user of a brand into 4 group based on strength
commitment from low to high as fallows.
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
Convertible (defect).

Shallow (Uncommitted to brand and switch- some
actively considering alternative ).

Average (Also committed to brand they are using, but
not strongly).

Entrenched (Strongly committed to the brand they are
using).
None user of a brand into 4 groups based on their balancedisposition and openness to try to brand form low to
high as follows.
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
None user of a brand into 4 groups based on their balancedisposition and openness to try to brand form low to
high as follows.
Strong Unavailable, (committed to a brand)
Weakly Unavailable (committed but not strongly)
Ambivalent: attracted
Available : Mostly likely to be acquired with shot run
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IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
3. BASE FOR SEGMENTING
BUSINESS MARKET
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IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
BASE FOR SEGMENTING BUSINESS MARKET
We can segment the business market with some same
variable in consumer
market such as, geography,
benefits and usage rate, but business market use other
variables. Which segments and customer to serve. A tire
company sell the tire to automobile manufacturer, trucks
farm tractor, or aircraft. Within a chosen targeted
industry a company can further segmented by company
size . The company might be setup separate operation s
for selling large and small industry.
Within a given target industry and customer size the
company can segments further by purchase criteria.
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IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
Personal
Characteristics
Situational
Factors
Demographics
Bases
for Segmenting
Business
Markets
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Purchasing
Approaches
Operating
Characteristics
a
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IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
4. MARKET TARGETING
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IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
MARKET TARGETING
One the market has identified its segments opportunities, it
must decide how many and which ones to target.
Effective Segment Criteria.
Measureable : the size, purchasing power and
characteristics of the segment can be measureable.
Substantial: The segments are large and profitable enough
to sever.
Assessable: The segment effectively can be reached and
served.
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Differentiable: the segment are conceptually differentiable
and respond different to different market mix element
and program.
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
Actionable: the effective program can ne formulated for
attracting and serving the segments.
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IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
EVALUATING MARKET SEGMENTS
Segment Size and Growth

Analyze sales, growth rates and expected profitability.
Segment Structural Attractiveness

Consider effects of:
Competitors, Availability of
Substitute Products and, the Power of Buyers &
Suppliers.
Company Objectives and Resources

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Company skills & resources relative to the segment(s).
Look for Competitive Advantages.
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
MARKET COVERAGE STRATEGY
Company
Marketing
Mix
Market
A. Undifferentiated Marketing
Company
Marketing Mix 1
Segment 1
Company
Marketing Mix 2
Segment 2
Company
Marketing Mix 3
Segment 3
B. Differentiated Marketing
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Segment 1
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Company
Marketing
Mix
Segment 2
Segment 3
C. Concentrated Marketing
IDENTIFYING MARKET SEGMENT
AND TARGET CHAP-8
CHOOSING A MARKET COVERAGE STRATEGY
Company
Resources
Product
Variability
Product’s Stage
in the Product Life Cycle
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Market
Variability
Competitors’
Marketing Strategies