Week 4 - Segmentation, Targeting and Positioning Flashcards
Knowing the market
To overcome this problem, marketers seeks to identify and understand those parts of the total market to which it can offer the most value
Consumer markets consist of households and individuals that buy products for private consumption
Market segmentation enables the organisation to form a strategy for a group, or segment, that has common features, rather than try to market to everyone
The organisation develops the most effective marketing mix for each segment. This approach is known as the target marketing concept
Target Marketing
Compromise between the necessity to respond to the particular desires of potential customers and the objective of achieving the lowest possible production and marketing cost
Principally done through achieving economies of scale.
Target marketing is based on three premises
- Individual buyers or groups of buyers can be identified
- Sellers understand the needs of buyers
- Sellers seek to shape their offer to meet the needs of target buyers
Marketing types
Mass Marketing - Buyers have common wants, needs and demands e.g Salt
One-To-One Marketing - Buyers have unique wants, needs and demands e.g hairdressers, consultants - services
Target Marketing - The market contains subgroups
Mass Marketing
A single product offering is created, communicated and delivered to meet the needs of most people in the market
Undifferentiated approach (treat the market like one person)
Can capture very large markets at very low cost per unit, ensuring high levels of profitability
Can be seen with commodity products (raw materials) and global mass market
One-To-One Marketing
One-To-One Marketer - seeks to appeal to each customer by providing a unique, customised offering that will meet their individual needs
A one-to-one approach usually results in higher unit costs and a more restricted market
Target Market
When choosing target markets, the organisation will generally consider three factors
- Its own resources
- Market demand
- Competition
Differentiated Targeting Strategy
For each market segment the organisation develops a tailored marketing mix (Different types of toothpaste, kids, herbal and whitening)
Differentiatated Target Strategy
An organisation identifies a range of target market segments. These cover the majority of the total market
Product and Market Specialisation (1)
Small organisations with limited resources frequently adopt one of the following specialised approaches to target market
- Product specialisation: Certain product
- Market specialisation: Certain target market
- Product-Market specialisation: Mix of both
Product and Market Specialisation (2)
Specialisation approaches work if:
- The market is characterised by a wide range of needs and product preference
- Clear market segments/product categories are identified
- Market is clearly divided
- Market segments/product categories are profitable enough
- Segment/product categories are actionable
Product and Market Specialisation (3)
The process involves three main stages
- Segmentation
- Targeting
- Positioning
Market Segmentation
There are two steps in the market segmentation phase
1. Identifying variables that can be used to define meaningful market segment
2. Profiling the market segments so they can be assessed in the second stage of the target marketing process
Identifying Segmentation Variables
Segmentation variables are characteristic that buyers (i.e. individuals, group or organisations) have in common and that might be closely related to their purchasing behaviour
Identifying Segmentation Variables
- Possible variables for segmenting consumer markets
Geographic - (Climate, local population density, region, topography, urban, suburban and rural location)
Demographic - (Age, ethnicity, household composition, income, gender)
Psychographic - (Psychological traits (personality attributes and motives), geodemographics, lifestyles)
Behavioural (Purchasing Behaviour) - (Benefit expectations, brand loyalty, occasion, price sensitivity, volume of usage)
Effective Segmentation Criteria
It is crucial that the segments are evaluated against the following criteria to ensure the segment is worthwhile in pursuing
- Measurability
- Accessibility
- Substantiality
- Practicability
Profile Market Segment
This describes the typical potential customer in the market segment - the common features shared by members of market segments and how they differ between market segments
Segment profile will typically describe in terms of a number of segmentation variables
Market Targeting
Market targeting involves a systematic examination of the range of possible market segments
- Potential sales volume
- Potential revenues
- Ability of the organisation to satisfy the expectations
Requires a close understanding of competitors
How their offerings are seen by potential target market segments
Evaluate Potential Segments
The evaluation of potential market segment involves detailed and rigorous analysis of
- Sales potential
- Competitive situation
- Cost structure
SWOT is good to use
Select Target Market
Determines whether the chosen target market strategy will lead to healthy sales volumes and sustainable profitability
The organisation is no longer referring to an individual buyer or the entire mass market - it is now a target market segment or segments.
Positioning
Positioning describes how target markets perceive the organisation’s offer relative to competing offers
It is how customers distinguish the organisation, it products and its brand from competitors
Determining positioning for each segment
To determine the appropriate position, an organisation needs to undertake detailed market research to understand it current position in the minds of its target market segment
Perceptual mapping is used
Typically produces two-dimensional maps showing how each other in term of range of product attributes
Quality (high - low (I))
Safety (low - high (-))
Analysing Current Position
Commonly used positioning variables - include
- Attributes
- use/application
- Product user
- Price and quality
- Product class
Determine The Marketing Mix For Each Segment
The marketing mix for each segment should:
- Be consistent with the desired positioning
- Be internally consistent
- Be sustainable in the long term
