MKTG7501 - Lec 6 -Targetting -Stu

8/9/2019 MKTG7501 - Lec 6 -Targetting -Stu

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Market Segmentation,Market Segmentation,Targeting and PositioningTargeting and PositioningMarket Segmentation,Market Segmentation,Targeting and PositioningTargeting and Positioning

MKTG7501MKTG7501 MarketingMarketingSeminar 6Seminar 6MKTG7501MKTG7501 MarketingMarketingSeminar 6Seminar 6


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10-2

Opening Exercise

Visit any newsagent. Have a look at thevarious magazines on display. Glance

through one or two. Think about theaudiences targeted by the magazine.

Is itpossible to figure out the profile ofthe targeted audience in terms of theirage, gender, income, life style etc., ?


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Seminar Objectives

1. What is a market?

2. Explain market segmentation, and identify severalpossible bases for segmenting markets

3. Distinguish between the requirements for effective

segmentation4. Outline the process of evaluating market segments

and suggest some methods for selecting marketsegments

5. Illustrate the concept ofpositioning for competitive

advantage by offering specific examples6. Discuss choosing and implementing a positioning

strategy, and contrastpositioning based onproduct, service, personnel and imagedifferentiation


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What is a Market

Broadly, a market is the actual and potential customersof a product, service or idea.

Five essential characteristics (Lamb et al., 1998)(1) Markets are composed of individual people

(consumer markets) or organizations (business markets)(2) These customers have wants and needs which canbe satisfied by products and services(3) These people have the ability to purchase theproducts or services

(4) They are willing to exchange resources(5) They have the authority to buy


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Evolution of Approaches to Marketing

MassMarketing

Product-VarietyMarketing

TargetMarketing


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Stages in MarketOrientation

Mass marketing

In mass marketing, the seller mass produces, massdistributes and mass promotes one product to all

buyers Product-variety marketing

Here, the seller produces two or more products thathave different features, styles, quality, sizes

Target marketing Here, the seller identifies market segments, selects

one or more of them, and develops products andmarketing mixes tailored to each


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Three Major Steps in Target Marketing

1. Market segmentation

Dividing a market into distinct groups of buyers withdifferent needs, characteristics or behaviour who

might require separate products or marketing mixes2. Market targeting

Evaluating each market segments attractiveness andselecting one or more of the market segments to

enter3. Market positioning

Setting the competitive positioning for the productand creating a detailed marketing mix


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Why Market Segmentation?

Markets consist of buyers, and buyersdiffer in one or more ways They may differ in their wants, resources, locations,

buying attitudes and buying practices andpreferences for buying channels such as ordering bymail, phone, the Internet or from a physical location.

Because buyers have unique needs and wants, eachbuyer is potentially a separate market. When a

market is segmented a marketing mix can be tailoredto a well-defined target market separate marketingmix for each segment

Provides a better basis for customer service that canhelp companies increasing profits within resource

constraints


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Segmentation - Definition

The process of dividing a heterogeneousgroup of buyers or potential buyers into

more homogeneous groups with relativelysimilar product needs


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Steps in Segmentation, Targetingand Positioning


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Bases for SegmentingConsumer Markets (1)

C

H

A

R

A

CT

E

R

I

S

T

I

C

S

1. Demographic

2. Geographic

3. Behavioural

4. Psychographic


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Geographic

Segmentation calls for dividing the market intodifferent geographical units such as nations, regions,states, municipalities, cities, neighbourhoods or

climate

Demographic segmentation

Consists of dividing the market into groups based onvariables such as age, gender, family size, family life

cycle, income, occupation, education, religion, raceand nationality multivariate demographicsegmentation


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Psychographic segmentation

Buyers are divided into different groups based onsocioeconomic status, values & lifestyle, attitudes or

personality characteristics Behavioural segmentation

Divides buyers into groups based on their purchaseoccasion, benefits sought, user status, usage rate,

loyalty status, readiness stage, their attitude towardsit market mavens


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Segmenting Business Markets

Bases

forSegmenting

Business

Markets

Demographics

PersonalCharacteristics

SituationalFactors

OperatingVariables

PurchasingApproaches


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Major segmentation variables forindustrial markets

10-15


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Segmentation in International Markets

Universal segments based common needs Eg: business people, the affluent, cyberphiles similarity depends on product category eg:

NOKIA 9000 communicator Regional segments similarity of customer

needs at the regional level

Economic status on the basis of GNP per

capita Political system Eg: Nigeria, Bangladesh and

Argentina in 1988

Intermarket-grouping - Narrow focus on

international niches Eg: Mercedes Benz


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Group Exercise

Form into large groups (around 6-7 in a group)

Discuss the key attributes of the productassigned to the group

Identify more than one market segment usingsegmentation criteria

Identify one viable market segment you want to

target Workout a detailed customer profile for theproduct (description of average person likely tobuy the product)


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Requirements for EffectiveSegmentation (1)

Requirementsfor

EffectiveSegmentation

Measurable

Substantial

Actionable Accessible


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Requirements for EffectiveSegmentation

To be useful, market segments must have the followingcharacteristics: Measurability The degree to which the size and purchasingpower of the segments can be measured. Advantages ofdemographic variables - Certain segmentation variables are difficult

to measure. Accessibility The degree to which the segments can be reached

and served-ease of obtaining data about the segment.

Substantiality The degree to which the segments are large orprofitable enough. A segment should be the largestpossiblehomogeneous group worth going after with a tailored marketingprogram.

Actionability The degree to which effective programs can bedesigned for attracting and serving the segments

Responsiveness The segment must respond in a similar way.


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Market Targeting:Evaluating Market Segments

Marketing segmentation revealsthe market segment opportunitiesfacing a firm. The firm now has to

evaluate the various segments anddecide the number of segments to

cover and the ones to serve.


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Market Targeting:Evaluating Market Segments (3)

Segment size and growth

The company must first collect and analyse data oncurrent dollar sales, projected sales growth rates andexpected profit margins for the various segments. It

wants to select segments that have the right size andgrowth characteristics, but right size growth is arelative matter.

Segment structural attractiveness

A segment might have desirable size and growth and

still not be attractive from a profitability point of view.(a) current and potential competitors (b) substituteproducts (c) power of buyers, and (d) power ofsuppliers


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Market Targeting:Evaluating Market Segments (4)

Company objectives and resources

Even if a segment has positive size growth and isstructurally attractive, the company must

consider its own objectives and resources inrelation to that segment

Some attractive segments may not mesh with thecompanys long-run objectives the company

may be lacking the strengths needed to competein the segment.


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Selecting Market Segments (1)

After evaluating different segments, a company hopes tofind one or more market segments worth entering. Itmust then decide which and how many segments to

serve. A target market consists of a set of buyers sharing

common needs or characteristics that the companydecides to serve. The company can adopt one of threemarket-coverage strategies:

Undifferentiated marketing

Differentiated marketing

Concentrated marketing


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Segment 1

Segment2

Segment3

CompanyMarketing

Mix

Segment 1

Segment2

Segment3

CompanyMarketing

Mix

CompanyMix 1

CompanyMix2

CompanyMix3

Market

A. UndifferentiatedMarketing

B. DifferentiatedMarketing

C. Concentrated

Marketing


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Undifferentiated marketing A company might decide to ignore market segment

differences and go after the whole market with onemarket offer. It focuses on what is common in the

needs of consumers rather than on what is different production, inventory and transportation costeconomies.

Differentiated marketing

A company decides to target several marketsegments, and designs separate offers for each. Byoffering product and marketing variations, it hopesfor higher sales and a stronger position within eachmarket segment - costlier in terms ofproduction,

promotion, inventory and administrative costs


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Concentrated marketing

Is especially appealing when company resources arelimited. Instead of going after a small share of a large

market, the company goes after a large share of oneor a few submarkets.


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Choosing a Market-Coverage Strategy

FactorsAffecting

Strategy

Decisions

CompanyResources

CompetitorsStrategies

MarketVariability

ProductVariability

StageinLife

Cycle


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Market Positioning

Once a company has decided which segments of themarket it will enter, it must decide which positions itwants to occupy in those segments

Product position is the way the product is defined byconsumers on important attributesthe place theproduct occupies in consumers minds relative to

competing products


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Positioning as creating a position inthe prospects mind


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Product Positioning Strategies

Againsta

Competitor

Usage

Occasions

Awayfrom

Competitors

Product

Attributes

Product

Class

Benefits

Offered

Users

B

A

E

D

CH

G

F


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Positioning on product attribute


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Positioning on

benefits offeredWD 40 - There isalways another use


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Positioning on usageoccasion

In the summer,Sustagen is positionedas a beverage forreplacing athletes bodyfluids


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Positioning the product for a certain classof users - Re-positioning Head and Shouldersshampoo as suitable for everyday use


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Positioning against competitor


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Positioning away from competitor Were number two, so we try harder away from largest competitor HERTZ


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Highlight

DeWalt a new range of

professional portable power

tools - Black & Deckers

response to Japanese

brand Makita positioned

as a premium brand of tools

for professionals


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Positioning Strategies

Marketers can follow several positioning strategies.

Some firms find it easy to choose their positioningstrategy.

In many cases, two or more firms will go after thesame position. Then, each will have to find otherways to set itself apart, such as promising highquality for a lower cost or high quality with moretechnical service.

Each firm must differentiate its offer by building aunique bundle of competitive advantages thatappeals to a substantial group within the segment.


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Identifying a Positional Direction


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Identifying a Repositioning Direction


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Identifying Possible CompetitiveAdvantage (1)

Consumers typically choose products and services thatgive them the greatest value

The key to winning and keeping customers is to

understand their needs and buying processes betterthan competitors and to deliver more value

If a company can position itself as providing superiorvalue to selected target marketseither by offeringlower prices than competitors or by providing more

benefits to justify higher pricesit gainscompetitive advantage


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Identifying Possible CompetitiveAdvantage (2)

Product Service

Personnel Image

AreasforCompetitive

Differentiation


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Selecting the Right Competitive Advantage

A difference is worth establishing to the extent that itsatisfies the following criteria: Important The difference delivers a highly valued benefit

to target buyers

Distinctive Competitors do not offer the difference, or the

company can offer it in a more distinctive way Superior The difference is superior to other ways that

customers might obtain the same benefit

Communicable The difference is communicable andvisible to buyer.

Pre-emptive Competitors cannot easily copy the difference

Affordable Buyers can afford to pay for the difference

Profitable The company can introduce the differenceprofitably

MKTG7501 - Lec 6 -Targetting -Stu

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