Transcript Unit 01 - Communication and Employability Skills in IT

OCR Cambridge TEC - Level 3
Certificate/Diploma Business
LO3 - Understand how and why
customer groups are targeted
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Learners should be introduced to the concept of market segmentation, target
markets or customer groups. Tutors should explain the characteristics used for
segmentation and the reasons why organisations do this.
Learners should be able to build on work that they carried out for learning
outcome 1 regarding fashion items, mobile phones and phone contracts and
consider which segments have been identified and why.
Learners could be encouraged to identify why products and services are
consumed by people, taking into consideration different ages, backgrounds and
socio-economic groups.
Learners could work in small groups and feedback their findings as a presentation
to their peers. Tutors should also introduce learners to the difference between
B2B and B2C markets and how the segmentation characteristics will be different.
Scenario
Criteria
Tasks
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Assessment
Learning Outcome (LO)
The learner will:
Pass
The assessment criteria are the pass
requirements for this unit.
The learner can:
Merit
For merit the evidence must
show that, in addition to the
pass criteria, the learner is
able to:
Distinction
For distinction the evidence
must show that, in addition
to the pass and merit
criteria, the learner is able
to:
1
P1
Describe how marketing techniques
are used in the marketing of
products in two organisations
M1 - Analyse marketing
techniques used in the
marketing of products in two
organisations
D1 - Recommend
improvements to the
marketing techniques in one
organisation
P2
Describe the main employability and
personal and communication skills
required when applying for a
specific job role
P3
Describe how a selected
organisation uses marketing
research to contribute to the
development of its marketing plans
P4
Use marketing research for
marketing planning
M2 - Evaluate how the
developed marketing mix
would need to be modified for
a new contrasting target group
of customers
D2 - Evaluate how the
developed marketing mix
would need to be modified
for a new contrasting target
group of customers
2
Know the role of
marketing in
organisations
Be able to use
marketing research
and marketing
planning
3
Understand how and
why customer
groups are targeted
P5
Explain how and why groups of
customers are targeted for selected
products
4
Be able to develop a
coherent marketing
mix.
P6
Develop a coherent marketing mix
for a new product or service
Scenario
Criteria
Tasks
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Assessment
Assessment Criteria P5
 The company asks you to identify a group of customers that they
should target their new product at. Recommend a customer target
group, ensuring that you explain how and why you have chosen
that group.
 Guidance: Learners should explain the segmentation methods used
for market segmentation in both B2B and B2C markets, and provide
a variety of examples for different products and/or services.
Scenario
Criteria
Tasks
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Assessment
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Segmentation - The process of defining and subdividing a
large homogenous market into clearly identifiable segments having
similar needs, wants, or demand characteristics. Its objective is to design a marketing
mix that precisely matches the expectations of customers in the targeted segment.
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Few companies are big enough to supply the needs of an entire market; most
must breakdown the total demand into segments and choose those that the company is
best equipped to handle.
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Four basic factors that affect market segmentation are
◦ clear identification of the segment,
◦ measurability of its effective size,
◦ Its accessibility through promotional efforts, and
◦ Its appropriateness to the policies and resources of the company.
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The four basic market segmentation-strategies are based on
◦ behavioural,
◦ demographic,
◦ psychographic, and
◦ geographical differences.
Scenario
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Segmentation also means to divide the marketplace into parts, or segments, which are definable,
accessible, actionable, and profitable and have a growth potential. In other words, a company would
find it impossible to target the entire market, because of time, cost and effort restrictions.
Market segmentation is the technique used to enable a business to better target its products at the
right customers. It is about identifying the specific needs and wants of customer groups and then
using those insights into providing products and services which meet customer needs.
Segments are usually measured in terms of sales value or volume. In the diagram below, segment B is
twice the size of segment C:
Why do businesses need to segment their markets? Because customers differ in terms of:
◦ Benefits they want
◦ Amount they are able to or willing to pay
◦ Media (e.g. television, newspapers, and
magazines) they see
◦ Quantities they buy
◦ Time and place that they buy
There are various a business can use to segment
a market.
Using three different types of products, fashion items, mobile phones and phone contracts, consider
which segments have been identified and why.
P5.1 – Task 01 - Explain how and why groups of customers are targeted for 3 selected products.
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For each of the 3 products, discuss the Geographic, Demographic, behavioural and Psychographic tools
companies use to promote the sales of these goods.
Scenario
Criteria
Tasks
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Assessment
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B2B marketing and B2C marketing are the most common forms of business contact.
There is also C2B and C2C but these involve less marketing.
There is a difference between marketing to a business and marketing to a consumer.
Although a company is still selling a product to a person, experience shows that the
difference between these two types of markets involves different tactics.
When a company markets to a B2B they will realise these businesses work hard to
streamline the buying process in order to save time and money. This often explains why
a B2B purchase is based more on predictive business assumptions and why a
consumer's purchase is based more on emotion.
It is true that the cost of a sale for the business-to-business market is more expensive
and typically higher than the business to consumer market.
Marketing to B2B - When a business is marketing in the form of a B2B the business will
want to focus on the financial benefits of the product. The business will do this by
focusing on the features of the product, sales figures, possible business benefits,
associated sales etc. There is little to no personal emotion involved in the purchasing
decision. The business will want to focus on understanding the business buyers and how
they operate within the confines of their company's procedures. The B2B market are
information seekers, thinking about the resale value. They will be more in-depth with
your businesses marketing style. The businesses most effective marketing message will
focus on how the product or service saves them time, money and resources.
Scenario
Criteria
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Assessment
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Marketing to B2C - When you are marketing to a consumer you want to focus on the
benefits of the product. Their decision is more personal. Consumers are different in that
they demand a variety of distribution channels for convenience, not so with the B2B
market. Consumers are less likely to be interested in a lengthy marketing message. They
will want you to get right to the point. Consumers don't want to work to understand
your benefits, instead they will want you to clearly point out the benefits to them. Your
most effective marketing strategies will focus on the results and the benefits that your
product or service will bring to them.
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When we think of branded content, the campaigns of packaged goods and restaurant
chains typically come to mind. We picture Red Bull and Chipotle, viral videos and
millennials, all of which are B2C marketing. B2B branded content may not always be as
visible, but it’s just as widespread and pursues the same goal, connecting brands with
customers in exceptional ways.
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Despite this shared devotion to branded content, the strategies used to approach B2B
and B2C content marketing are notably different. Marketers in both spaces hope to
engage potential customers through stories. But the nature of the messaging and the
channels used to distribute those stories are as distinctive as the content itself.
P5.2 – Task 02 - Explain B2b and B2C marketing techniques, how they differ and how you
will need to adapt them using the 3 selected products as examples.
Scenario
Criteria
Tasks
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Assessment
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There are several important reasons why businesses should attempt to segment their markets
carefully. No company’s product is going to appeal to everyone, not even Apple and any marketing
that points in their direction can have a detrimental effect, look of globalisation, over visibility,
seeming too common etc.
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Better matching of customer needs - Customer needs differ from one to another. E.g. for Mobile
Phones there are contracts, pay-as-you-go, apps, simplicity, 4G, large, small, popular, unique, and
each of these USP’s will appeal to different people. Creating separate offers for each segment
makes sense and provides customers with a better solution.
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Enhanced profits for business - Customers have different disposable incomes. They are, therefore,
different in how sensitive they are to the price of the product marketed. By segmenting markets,
businesses can raise average prices and subsequently enhance profits, called demographic
focussing.
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Better opportunities for growth - Market segmentation can build sales, this is its function. For
example, customers can be encouraged to "trade-up" after being introduced to a particular product
with an introductory, lower-priced product, maintaining a degree of loyalty, reducing upgrade
charges and making them feel like they are special.
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Retain more customers - Customer circumstances change, for example they grow older, form
families, change jobs or get promoted, change their buying patterns and location. By marketing
products that appeal to customers at different stages of their life, a business can retain customers
who might otherwise switch to competing products and brands.
Scenario
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Assessment
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Focus marketing communications - Businesses need to deliver their marketing message to a relevant
customer audience. If the target market is too broad, there is a strong risk that the key customers are
missed and the cost of communicating to customers becomes too high and unprofitable. By
segmenting markets, the target customer can be reached more often and at lower cost.
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Gain share of the market segment - Unless a business has a strong or leading share of a market
already, it is unlikely to be maximising its profitability. Minor brands suffer from lack of scale
economies in production and marketing, pressures from distributors and limited space on the
shelves. Through careful segmentation and targeting, businesses can often achieve competitive
production and marketing costs and become the preferred choice of customers and distributors. In
other words, segmentation offers the opportunity for smaller firms to compete with bigger ones.
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Competitive positioning – Products need to be placed on the scale measured by price, quality, desire.
You would not advertise Rolls Royce in a typical car magazine, £2K graphics cards in PCWorld, or a £5
disposable phone in an Apple Shop. Advertise where your customers are according to where you
product lies on the market.
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Improve customer service – Customers who over buy or under buy are likely to complain or ask for
help, targeting the right customers who already have the right knowledge and right level of skill use
reduces down the customer service needs. This also reduces returns, complaints, and
disappointment, all Customer Service headaches.
P5.3 – Task 03 - Explain why a company needs to use segmentation, different purposes and how you
might adapt them using the 3 selected products as examples.
Better matching of customer needs
Enhanced profits for business
Better opportunities for growth
Retain more customers
Focus marketing communications
Gain share of the market segment
Competitive positioning
Improve customer service
Scenario
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Tasks
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Assessment
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Choosing Target Market Segment - The next step in selecting target markets requires the business to critically evaluate the
segments identified in order to select those which are most attractive. For small firms this step may not be very involving since
they may lack the resources needed to do it effectively. So they are often left with using their own intuition or judgment to
determine which segments are the most promising. For companies with the time and money to commit to this step, the results
may identify the segments that are prime customer base for current marketing efforts and also present segments that are future
targets for the company’s offerings.
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In determining whether a segment is worthy of being a target market, the marketer needs to address the following questions:
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Choosing Market Size - Is the segment large enough to support the marketer’s objectives, is the time right, is the location right, is
the market saturated already with adverts and marketing? This is an especially critical question if the marketer is entering a
market served by many competitors.
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Choosing profitability - Is the segment showing signs of growth? If not, should you be spending so much doing the marketing or
drop it back a notch. One of the worst situations for a marketer is to enter a market whose growth is flat or declining, especially if
competitors already exist.
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Choosing relevance to available marketing mix – Is the company small or large, can it manage the 4P’s or 7P’s, is it overkill to do
so much research, can SWOP or PESTLE work with the kind of product you are selling. Does the company have the necessary
skills, knowledge and expertise to service the segment? The company should understand and be able to communicate with the
customers in the segment, otherwise they may face a significant learning curve in understanding how to effectively market to a
segment.
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Choosing fit with corporate strategy and objectives - Does the segment meet the mission of the company? Is it ethical, Legal,
does the kind of marketing reflect the image of the company, Rolex serious, Breakfast serials fun, Games Machine entertaining,
Clothes sleek or rough. The segment should not extend too far beyond the direction the company has chosen to take.
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Once one or more segments have been identified the marketer must choose the most attractive option(s) for their marketing
efforts. At this point the choice becomes the firm’s target markets.
P5.4 – Task 04 - Explain the need for clarity and considerations on Segmentation marketing, how these considerations can impact on
marketing and how you might adapt them using the 3 selected products as examples.
Market Size
Scenario
Criteria
Profitability
Tasks
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Relevance to available marketing mix
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Assessment
Fit with corporate strategy and objectives
P5.1 – Task 01 - Explain how and why groups of customers
are targeted for 3 selected products.
P5.2 – Task 02 - Explain B2b and B2C marketing
techniques, how they differ and how you will need to
adapt them using the 3 selected products as examples.
P5.3 – Task 03 - Explain why a company needs to use
segmentation, different purposes and how you might
adapt them using the 3 selected products as examples.
P5.4 – Task 04 - Explain the need for clarity and
considerations on Segmentation marketing, how these
considerations can impact on marketing and how you
might adapt them using the 3 selected products as
examples.
Scenario
Criteria
Tasks
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Assessment