Transcript Target Market

FOUR ERAS IN THE HISTORY OF MARKETING
• Exchange process Activity in which two or more parties give
something of value to each other to satisfy perceived need.
Marketing defined as:
“Marketing is a social and managerial process by
which individuals and groups obtain what they need
and want through creating and exchanging value
with others”
Core Marketing Concepts
1-3
Consumer Buying Process
(1) Need recognition
(2) Information collection
(3) Evaluation of alternatives
(4) Purchase decision
(5) Post purchase behaviour
Segmentation, Targeting and Positioning
 What customer to serve?
 Companies have to be selective, cannot serve
everyone.
 Segment the market to choose who to serve
 How to serve?
 How the company will differentiate and position
itself in the market
 3 steps in Target Targeting:
Market Segmentation
Identify bases for
segmenting the market
Develop segment
profiles
Target Marketing
Develop measure of
segment
attractiveness
Select Target
segments
Market Positioning
Develop positioning
for target segments
Develop a marketing
mix for each
segment
Segmentation
 Market Segmentation:
 Dividing a market into distinct groups of buyers who have distinct
needs, characteristics, or behavior and who might require separate
products or marketing mixes
 Segment: A group of consumers who respond in a similar way to a
given set of marketing efforts. Can be:
 geographic, demographic, psychographic, behavioral.
Segmentation
 Geographic Segmentation:
 Dividing a market into different geographical units such as
nations, states, regions, counties, cities or neighborhoods.
 May operate in different geographic regions but cater to the
respective needs of segments
 Many companies “localizing” their product, advertisements,
promotions etc.
Segmentation
 Demographic Segmentation:
 Dividing the market into groups based on demographic variables such
as age, sex, family size, family life cycle, income, occupation,
education, religion, race and nationality
 Most popular bases for segmentation:
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Consumer needs/wants/usage vary closely with demographic variables
They are easier to measure
 Different types of Demographic Segmentation:
 Age and Life-Cycle Stages: needs/wants change with age.
Examples: Clothing line, Insurance products
 Gender: largely used in cosmetics, clothing, toiletries and magazines.
Example: Hugo Boss, L'Oreal, Chen One, Bonanza
 Income Groups: dividing into different income groups. Used by
companies such as Automobiles, clothing, cosmetics, financial
services, travel etc. Example: Toyota and Lexus, Mobilink: Jazz and
Indigo
Segmentation
 Psychographic Segmentation:
 Dividing a market into different groups based on social class,
lifestyle or personality characteristics
 People in same demographic segment can have different
psychographic attributes
 Lifestyle segmentation: Based on the notion that people
buy products that reflect their lifestyle – Rolex, Lawrencepur
etc.
Segmentation
 Behavioral Segmentation:
 Dividing a market into groups based on consumer
knowledge, attitude, use or response to a product
 By occasion: buyers are grouped according to occasion
when they get the idea to buy,actually make their
purchase or use the purchased items – weddings,
Valentine’s day, “TCS Sentiments Express”, Ramadan,
Eid etc
 Benefits Sought: groups buyers according to the
different benefits they seek from the product. Shampoos
– anti-dandruff, color care, conditioning etc.
Segmentation
 Behavioral Segmentation – contd
 User Status: Segmented according to groups of:
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Usage Rate: Light, medium or heavy product users
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Nonusers
Ex-users
Potential users
First time users
Regular users
Market share leader tries to attract potential users
Smaller firms: attract leader’s customers to themselves
Heavy users – usually low but high in consumption.
It’s good to have few heavy users than several light users but companies try to
spend more on attracting light customers
Loyalty Status: how loyal customers are to particular brand
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Completely loyal, somewhat loyal or non-loyals
Helps companies to devise strategies to improve positioning for somewhat
loyals, attract non-loyals and study behavior patterns of completely loyals.
Segmentation
 Can we use multiple segmentation bases?
 Examples?
 Requirements of Effective Segmentation:
 Measurable: Should have right data for the segment
 Accessible: can be effectively reached and served.
 Substantial: Profitable enough
 Differentiable: distinguishable and should respond
differently to different marketing mix
 Actionable: effective marketing programs/plans can be
designed for them.
Target Marketing
 Evaluate the segments:
 Segment size and growth: whether it is profitable or
not
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The largest and fastest-growing might not be the most profitable
one
Segment structural attractiveness: too many
competitors? Actual or potential substitutes? Power of
buyers? Powerful suppliers?
 Company’s objectives and resources: segment vs.
strategy of company, company may lack resources to
cater to the segment.
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Target Marketing
 Target Market:
 The process of evaluating each market segment’s attractiveness
and selecting one or more segments to enter
 Target
profitably generate the greatest customer value and
sustain it over time.
 Target marketing can be carried out at several different levels
Undifferentiated
(mass)
marketing
Targeting Broadly
Differentiated
(segmented)
marketing
Concentrated
(niche)
marketing
Micromarketing
(local or
individual
marketing)
Targeting Narrowly
Target Marketing
 Undifferentiated (Mass) Marketing:
 A market-coverage strategy in which a firm decides to ignore
market segment differences and go after the whole market
with one offer
 Focus on commonality rather than differences
 Utility goods (KESC) etc
 But in general, difficult as no one solution for all is possible
 Competition will soon oust such firms
Target Marketing
 Differentiated Marketing:
 A market-coverage strategy in which a firm decides to target
several market segments and designs separate offers for
each.
 Most of the firms engage in this: Mobilink, Ufone, Nokia,
Unilever, Banks etc.
 Advantages:
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May give company higher sales and better position within a
segment
Disadvantage:
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Costly and time-consuming
Target Marketing
 Concentrated (niche) Marketing:
 A market-coverage strategy in which a firm goes after a large share
of one or a few segments or niches.
 From small share of large market to large share of one or few
segments
 Bentley, Rolls Royce, Ferrari, Rolex, Café Flo
 Advantages:
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Strong market position because of greater knowledge of segment and
reputation
Effective marketing: fine-tuning products, prices and programs to
carefully defined segments
Efficient marketing: targeting the products/services, channels,
communication towards customers that it can serve best and profitably.
Small segments and less competitive, therefore higher revenue
Many companies start as nichers and become big players whereas
at times large companies introduce niches.
Disadvantages: High Risk
Target Marketing
 Micro Marketing:
 The practice of tailoring products and marketing programs to the
needs and wants of specific individuals and local customer groups
 Includes Local marketing and Individual marketing
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Local Marketing: Tailoring brands and promotions to the needs and
wants of local customer groups – cities, neighborhoods, and even
specific stores e.g. A-1 Karak chai, Halal food shops etc
Individual Marketing: Tailoring products and marketing programs
to the needs and preferences of individual customers
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Also known as “customized marketing”, “one-to-one marketing”, “mass
customization” etc.
High end luxury cars e.g. Maybach, Dell, Designer Clothing, Wedding dresses
etc.
Common in Business-to-business firms as well.
Sees individual in every customer rather than seeing customer in
every individual
Target Marketing
 Choosing a Target Marketing Strategy depends on:
 Company Resources
 Product variability (how much variation is there in design,
models etc)
 Product Life Cycle Stage
 Market Variability (buyer tastes and preferences)
 Competitors’ Marketing Strategies
Positioning
 Product Position/positioning:
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Arranging for a product to occupy a clear, distinctive and
desirable place relative to competing products in the minds of
target consumers
Nokia: Connecting People
Nike: Just Do It
Malaysia Truly Asia
 Why Position? : Competitive Advantage
 Also simplifies the buying process
 Consumers may position with or without marketer’s help
but marketers can’t leave things on consumers’ own
perception.
 What you position is what you promise and what you
promise you should deliver or else: Disaster
Developing a Positioning Strategy
1. Analyze Competitors’ Positions:
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Current picture of competitors: who they are and how they are
perceived by target market
Not only in your own product categories but substitutes as well
2. Identify Competitive Advantage
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Give consumers reason to prefer your brand over competitor’s
Can be on various dimensions: Price, status, service, product
feature, people etc.
Developing a Positioning Strategy
3. Finalize the Marketing Mix
Put the pieces together of each element in marketing
mix
 Marketing mix elements should match the selected
segment
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4. Evaluate the target market’s responses
and modify the strategy
Target marketing is an ongoing process
 Segment might need to be changed or people in the
segment may have changed
 Monitory the changes and adjust positioning strategies
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Repositioning: Redoing a product’s position to respond to
marketplace changes.
Keys to Successful Positioning
Clarity
Consistency
The idea must be
clear to be
remembered easily
Lasting, without any
confusion
Successful Positioning
Credibility
The selected
position/advantage
should be credible
in the minds of
target customers,
close to reality
Competitiveness
Substantial reason
to prefer your brand
over competitors