market segmentation
Post on 12-Jan-2015
6.252 Views
Preview:
DESCRIPTION
TRANSCRIPT
BHO1171 -4- School of HTM - VU 1
MARKET SEGMENTATION, TARGETING AND POSITIONINGLECTURE 4 : BHO1171 INTRODUCTION TO MARKETING
This lecture will explain:
• what constitutes a market
• market aggregation / mass market concepts using examples
• what market segmentation means and the reasons for segmenting markets
• What criteria (bases) can be used for segmenting markets (main focus of lecture)
• Bases for segmenting B2B markets
• What criteria can be used to determine if the segmentation is effective
• How to evaluate different segments – which segment to target?
• Once a target segment is chosen, marketing program can be developed
• Concept of positioning and why there is a need to position a product in the market
• Selecting the right competitive advantage – what criteria can be used to select the right differences to promote
BHO1171 -4- School of HTM - VU 2
What are Markets?
• In Economics and Marketing - the term "market" denotes an aggregate of people who, as individuals or as organisations;
• have needs for products in a product class;• have the ability, willingness and authority to
purchase such products;• eg: Students are part of the market for textbooks,
calculators, paper, etc.
BHO1171 -4- School of HTM - VU 3
TYPES OF MARKETS
• Markets can be divided into two categories:
• Consumer market - buy products for consumption - not for making profit.
• Organisational or industrial market -
purchase a specific kind of product for resale
use in producing other products
use in general daily operations.
eg: producers, resellers, government and institutions
BHO1171 -4- School of HTM - VU 4
REQUIREMENTS FOR A MARKET
For a group of people to be a market - it must meet the following four requirements:
• must need or want a particular product • have the ability to purchase the product.• must be willing to use their buying power.• must have the authority to buy the specific products. eg:
Under 18s not allowed to buy alcohol in most States.
BHO1171 -4- School of HTM - VU 5
Stages in Market Orientation
MassMarketing
MassMarketing
Product-VarietyMarketing
Product-VarietyMarketing
TargetMarketing
TargetMarketing
BHO1171 -4- School of HTM - VU 6
HISTORICAL APPROACHES TO MARKETS
• Mass Marketing: In mass marketing the seller mass produces, mass distributes, and mass promotes one product to all buyers.
• Product-Variety Marketing: Here the seller produces two or more products that have different features, styles, quality, sizes, and so on.
• Target Marketing: Here the seller identifies market segments, selects one or more of them, and develops products and marketing mixes tailored to each.
BHO1171 -4- School of HTM - VU 7
MASS MARKETING
• Also known as mass marketing or undifferentiated marketing
• A single marketing program is used to offer the same product to all consumers.
• This approach will not satisfy the needs and wants of every buyer completely.
• Used by marketers of standardised goods like sugar, salt, petrol, paint
• This approach is used when consumers perceive little or no difference between the products of different firms - when competing products seem virtually the same.
BHO1171 -4- School of HTM - VU 8
MARKET AGGREGATION: THE STRATEGY FOR MASS MARKETING
• a large number of people must have the same basic need or want.
• a single marketing mix must satisfy various potential customers.
• Consumers are expected to compromise by accepting a product that may not suit their needs perfectly.
• Market is vulnerable to competitors.• Promotion and marketing activities create perception
of uniqueness and superiority - product differentiation.
BHO1171 -4- School of HTM - VU 9
MARKET SEGMENTATION - STRATEGY OF SUBDIVIDING THE MARKET
• Why segment markets? - because markets consist of buyers and buyers differ in one or more respects.
• They differ in their: wants & resourcesgeographic locations
buying attitude & practices
Any of these may be used to segment a market.
BHO1171 -4- School of HTM - VU 10
WHAT IS MARKET SEGMENTATION?
• Divide a market into distinct groups of buyers (each with relatively similar product needs).
• Segments are made up of groups of people with different needs, characteristics or behaviour
• Each segment may require separate products or marketing mixes
BHO1171 -4- School of HTM - VU 11
EXAMPLE:GMH
Sellers look for broad classes of buyers who differ in their product needs or buying responses
• GMH has found that high and low-income groups differ in their car-buying needs and wants
• Young consumers’ needs and wants differ from those of older consumers
• Hence GMH has designed specific models for different income and age groups
BHO1171 -4- School of HTM - VU 12
SEGMENTATION BENEFITS
• Firms segment the market to better service customers.
• Allows firms to compete more effectively.• With a segmented market firm can tailor a marketing
mix to a well defined target market.• What marketers look for are distinctive groups of
consumers within the total- segmentation allows them to meet needs more efficiently.
BHO1171 -4- School of HTM - VU 13
EFFECTIVE USE OF MARKET SEGMENTATION
• can the market be identified and measured?
• is the segment large enough to be profitable?
• is the market reachable?
• is the segment responsive?
• the segment must be stable
BHO1171 -4- School of HTM - VU 14
Bases for Segmenting Consumer Markets
CHARACTERISTICS
1. Demographic
2. Geographic
3. Behavioural
4. Psychographic
BHO1171 -4- School of HTM - VU 15
Segmenting Bases
• Refer Table 7.1 pp219• Geographic
– region, city size, urban,rural,climate
• Demographic– income,age, gender, family life cycle,– social class, education, occupation, ethnicity
• Psychographic– personality, lifestyle, values
• Behavioural– benefits desired, usage rate
BHO1171 -4- School of HTM - VU 16
EXAMPLE:GEOGRAPHIC SEGMENTATION
• Dividing the market into different zones - • Regions, States, Cities
• ICI’s fertiliser arm segments by geography - emphasising the right product in the right areas
• Can localise products, advertising, promotion and sales efforts to fit needs of individual areas
• People in different areas have different need and wants
BHO1171 -4- School of HTM - VU 17
Segmenting by DemographicsExamples:
• Cars designed to appeal to women – Holden Barina, Suzuki Jimmy(what about the ute!) – gender segments
• CBA Visa card has ads in Cosmopolitan & Cleo
Pepsi targets different demographic segments in different ways: (age-life cycle stage)
• Ads to teens (dance-beat music, adventure, rapid scene movements)
• Ads to seniors (softer and more sentimental – closing the generation gap by sharing a common soft drink - Pepsi
BHO1171 -4- School of HTM - VU 18
Segmenting by Psychographics
• Socioeconomic status has strong effect on preferences for cars, clothing,home furnishings, leisure, store choice
• Lifestyle: frozen dinners, low fat yoghurts, Solo soft drink
• Personality – creating products that correspond to consumer personalities – cosmetics, insurance, liquor, online share trades
BHO1171 -4- School of HTM - VU 19
Segmenting by Behaviour
• Occasions: Valentine’s Day, Mother’s Day, marketing of greeting cards, Kodak single use cameras
• Benefit sought: eg tooth decay prevention, whiteness,tartar control, fluorigard
BHO1171 -4- School of HTM - VU 20
BASES FOR SEGMENTATION BUSINESS MARKETS
• Demographics
• Operating Variables
• Purchasing Approaches
• Situational Factors
• Personal Factors
BHO1171 -4- School of HTM - VU 21
MARKET TARGETING
• Market targeting is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.
BHO1171 -4- School of HTM - VU 22
Market Targeting: Evaluating Market Segments
Size andGrowth
Size andGrowth
StructuralAttractiveness
StructuralAttractiveness
CompanyObjectives and
Resources
CompanyObjectives and
Resources
BHO1171 -4- School of HTM - VU 23
Requirements for Effective Segmentation
Requirementsfor
EffectiveSegmentation
Measurable
Substantial
Actionable Accessible
BHO1171 -4- School of HTM - VU 24
Choosing a Market-Coverage Strategy
FactorsAffectingStrategy
Decisions
FactorsAffectingStrategy
Decisions
CompanyResources
Competitors’Strategies
MarketVariability
ProductVariability
Stage inLife Cycle
BHO1171 -4- School of HTM - VU 25
Market Coverage Strategy
Remember that a market may consist of a number of segments: Do we need to cover all segments?
The market coverage strategy that works best will depend on:
• the company’s resources• how different the product is• the competitors’ marketing strategies• the nature of the market
BHO1171 -4- School of HTM - VU 26
STRATEGIC POSITIONING
EXAMPLE: Shampoo Market• Shampoo market is highly fragmented - overflowing with
brands that promise: - body and control
- renewed life for dull hair
- elimination of split ends
- avoidance of dandruff.
• Effective marketers understand the value of establishing a solid position in the minds of consumers.
BHO1171 -4- School of HTM - VU 27
Product Positioning Strategies
Against aCompetitor
Against aCompetitor
UsageOccasions
UsageOccasions
Away fromCompetitors
Away fromCompetitors
ProductAttributes
ProductAttributes
ProductClass
ProductClass
BenefitsOffered
BenefitsOffered
UsersUsers
BB
AA
EE DD
CCHHGG
FF
BHO1171 -4- School of HTM - VU 28
PROCEDURE FOR IDENTIFYING AN APPROPRIATE POSITION
• (1) Determine the relevant product / market
• (2) Identify competitors.
• (3) Determine how consumers evaluate options
• (4) Learn how competitors are perceived
• (5) Identify gaps in positions held
• (6) Plan and carry out the positioning strategy
• (7) Monitor the position
BHO1171 -4- School of HTM - VU 29
DEFINING A POSITIONING STRATEGY
• Identifying a Positional Direction
• Identifying Possible Competitive Advantage
• Selecting the Right Competitive Advantage
• Differences to Promote
• Communicating the Chosen Position
BHO1171 -4- School of HTM - VU 30
IDENTIFYING A POSITIONAL DIRECTION
• See Pages 234-235 Kotler
• Brand position of department stores
• Brand repositioning strategies
BHO1171 -4- School of HTM - VU 31
SOURCES OF COMPETITIVE ADVANTAGES
• Product Differentiation can be based upon features or performance.
• Services Differentiation may come from delivery, installation, repair, or training advantages.
• Personnel Differentiation is derived from a superior work force.
• Image Differentiation can be generated from effective use of symbols in association with product consumption.
BHO1171 -4- School of HTM - VU 32
Promoting Differences
Criteriafor
DeterminingWhich
Differencesto
PromoteAffordableAffordable SuperiorSuperior
ProfitableProfitable
PreemptivePreemptive
DistinctiveDistinctive
ImportantImportant
Commun-icable
Commun-icable
BHO1171 -4- School of HTM - VU 33
EXAMPLE: FORD MOTOR COMPANY
• A company that has evolved from a mass-marketer to a market-targeter.
• Ford originally made one car for the entire — didn’t even have a choice of colours.
• “You can have any colour car you want so long as it’s black” Henry Ford
• Over time, Ford added other cars to its line (product-variety marketing), and eventually developed cars for nearly every market segment (target marketing).
BHO1171 -4- School of HTM - VU 34
EXAMPLE: PROCTER & GAMBLE
• Most companies that have been around for a long time have shown a similar evolution.
• Procter & Gamble, had been in existence more than 80 years when it introduced Ivory Flakes to supplement Ivory Soap (product variety)
• Was almost 90 years old when it first developed a product (Camay) to compete with an existing P&G product (Ivory) (“150 Years of P&G”, Advertising Age, August 20, 1987, p. 10).
• Today, P&G is one of the pre-eminent market targeting companies in the world.
BHO1171 -4- School of HTM - VU 35
EXAMPLE:SEGMENTS IN THE BEER MARKET
• The beer market is segmented in many ways:
• region (through regional brewers and brands),
• income and social class (premium beers and imports versus budget beers),
• life style (“The original party animal”),
• purchase occasion (“Here’s to good friends”), and
• usage rate (“The one beer to have when you’re having more than one”).
BHO1171 -4- School of HTM - VU 36
EXAMPLE:BENEFIT SEGMENTATION IN INDUSTRIAL
MARKETS• Service, selection, and reliability can all be used in benefit
segmentation of industrial markets.
• Suppliers who want to emphasise these characteristics must identify firms that need these benefits.
• By better satisfying these firms’ needs, the supplier is able to charge higher prices than competitors who offer fewer services or less selection.
• Other suppliers can find market segments that do not need these benefits, and sacrifice service, selection, and reliability to reduce costs and be able to sell at a lower price.
BHO1171 -4- School of HTM - VU 37
Steps in Segmentation, Targeting, and Positioning (fig 7.1)
BHO1171 -4- School of HTM - VU 38
Segmenting Business Markets
Basesfor Segmenting
BusinessMarkets
Basesfor Segmenting
BusinessMarkets
DemographicsPersonalCharacteristics
SituationalFactors
OperatingVariables
PurchasingApproaches
BHO1171 -4- School of HTM - VU 39
BHO1171 -4- School of HTM - VU 40
Selecting Market Segments
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
CompanyMarketing
Mix
CompanyMarketing
Mix
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
CompanyMarketing
Mix
CompanyMarketing
Mix
Company Mix 1Company Mix 1
Company Mix 2Company Mix 2
Company Mix 3Company Mix 3
MarketMarket
A. Undifferentiated Marketing
B. Differentiated Marketing
C. Concentrated Marketing
BHO1171 -4- School of HTM - VU 41
Identifying a Positional Direction (fig 7.4)
BHO1171 -4- School of HTM - VU 42
Identifying a Re-Positioning Direction(fig 7.5)
BHO1171 -4- School of HTM - VU 43
Identifying Possible Competitive Advantage
ProductProduct ServiceService
PersonnelPersonnel ImageImage
Areas for CompetitiveDifferentiation
Areas for CompetitiveDifferentiation
top related