Chapter 5 Detail Flashcards
Segmentation
Identify and describe markets
Targeting
Selecting attractive segments on which to focus
Positioning
Developing strategies for competing in each chosen segment and to assist with establishing a unique selling proposition (USP) in the segment: distinguishes product/brand from competitors and forms the basis for competitive advantage
Good segmentation
Identifies worthwhile segments to pursue (needs).
Recognises the dynamic nature of markets (heterogeneous).
Places the right products before the customers most likely to purchase it
Requirements for useful segmentation
Segments should be fundamentally different from each other.
Each segment should be large enough to be economically viable.
Should be relatively stable in the short term.
Segments should ultimately be actionable – customers that form part of a segment should be identifiable: organization should be able to find and reach them through communication/distribution channels.
The number of identified segments should be manageable and accessible (the organisation should have the resources needed to address it).
Segmentation: Needs-based
Nees and preferences
Segmentation: Demographic
Demographic variables (age, gender, income)
Segmentation: Geographic
Variables such as province, city, development status (urban/rural), postal codes
Segmentation: Product, service or channel
Products/services offered or channels.
Necessary to understand which specific features attract them to a product or channel in order to develop more specific need-based propositions
Segmentation: Psychographic
Personality attributes, motives and lifestyles
Segmentation: Behaviouristic
Customer’s understanding of, uses for, and responses to products and services
Market segmentation would not make sense if
Organization has relatively few, large customers
Market an organisation addresses is relatively homogenous
Alternatives to market segmentation: One-to-one marketing
Unique solutions tailored to needs of individual customers. Often used in conjunction with other marketing approaches such as segmentation
Alternatives to market segmentation: Mass customisation
Customise products and services on a larger scale. Advances in technology have made this possible
Alternatives to market segmentation: Permission marketing
Customers sign up to segment & give marketers permission to market to them.
The market segmentation process: 1. Defining the market and scope of segmentation
Buying centre role players:
Gatekeepers: control the flow of info to and from the buying centre.
Influencers: affect the decision by providing info regarding alternatives.
Deciders: make ultimate buying decision, whether it’s their actual role or not.
Buyers: have formal authority to select a supplier and conclude the contract.
The market segmentation process: 2. Deciding on an approach to segmentation
A priori: predetermined variables.
Hypothesised segmentation: develop hypothetical segments that are developed, tested and quantified through qualitative and quantitative research.
Bottom-up segmentation: conducted without any prior knowledge or predetermination of variables to be used in the process.
Utilise existing knowledge about segments: Representatives extensive prior knowledge with can identify hypothetical segments
The market segmentation process: 3. Identify and profile segments
Applying buying pro forma
Barriers to segmentation
Barriers to segmentation: Excessive interest in customers’ identities
Excessive interest in customers’ identities at the expense of focusing on product features.
Barriers to segmentation: Too little focus on customer behaviour
Too little focus on customer behavior that reveals attitudes and future behavior
Barriers to segmentation: An obsession with the technical detail of segmentation
May lead to missing the mark in terms of serving decision-makers with usable marketing information
Barriers to segmentation: Infrastructure
Occur when organizational structure, culture and systems are inappropriate or too inflexible to deal with segmentation
Barriers to segmentation: Political
May occur where the different functions in the organization do not co-operate as result of power struggles
Barriers to segmentation: Process
Occur when organization does not have the knowledge and skills to conduct a segmentation project
Barriers to segmentation: Implementation
Occur when it is difficult or impossible to change the existing structure or status quo to implement a new segmentation structure
Barriers to segmentation: Capability
May occur where organizations identify attractive segments, but simply do not have the resources and capabilities to address the segments successfully
Positioning concept
Functional concept: solving consumer’s problems; what product does for users.
Symbolic: focus on aspirations; appeals to consumer’s higher-order psychological needs.
Experiential: position products in terms of unique experience.
Positioning effectiveness
Pre-testing (Concept testing, test marketing, market research, competitive intelligence)
Post-testing
Positioning dimensions
- Product features
- Product benefits
- Heritage (Nando’s)
- Manufacturing process
- Ingredients
- Endorsements by customers, intermediaries or celebrities (Lionel Messi Lay’s chips)
- Competitive comparisons
- Environmental friendliness (Tesla)
- Value for money (Shoprite)
