Chapter 10 Target Marketing and Market Segmentation PDF

Chapter 10 Target Marketing and Market Segmentation MARKETING: Organisational function and a set of processes for creating, communicating and delivering value for customers. For managing customer relationships in way that benefits the organisation and its stakeholders. VALU...

Chapter 10 Target Marketing and Market Segmentation MARKETING: Organisational function and a set of processes for creating, communicating and delivering value for customers. For managing customer relationships in way that benefits the organisation and its stakeholders. VALUE: Compare product’s benefit with its cost. BENEFIT: Functions and emotional satisfaction associated with owning, experiencing and possessing a product. A satisfied customer perceives the benefit derived from the purchase to be greater than the cost. COST: Sales price Expenditure of buyer’s time Emotional costs of making a purchase decision IMPROVEMENT: Company may Develop an entirely new product that performs better than existing products. (Provide greater performance benefits) Keep a store open longer hours during busy session. (Provide greater shopping convenience benefit) Offer price reductions. (Provide lower costs benefit) Offer information that explains how a product can be used in new ways. (Provide new functions at no added cost benefit) 1 RAYMOND CHIENG  Chapter 10 Target Marketing and Market Segmentation UTILITY: The ability of a product to satisfy a human want or need. Form utility – Designing products with features that customers want. Time utility – Providing products when customers would want them. Place utility – Providing products where customers would want them. Possession utility – Transferring product ownership to customers. o Set selling prices. o Set terms for customer credit payments. o Providing ownership documents. RELATIONSHIP MARKETING: Marketing strategy that emphasised building lasting relationships with customers and suppliers. Stronger economic and social ties can result in greater long-term satisfaction, customer loyalty, and customer retention. CUSTOMER RELATIONSHIP MANAGEMENT (CRM): A method that an enterprise uses to built better information connections with clients, so that managers can develop stronger enterprise-client relationships. Data Warehousing – Compiling and storage of customer’s data providing raw materials that enables marketer to extract information used for finding new clients and identifying best customers. 2 RAYMOND CHIENG  Chapter 10 Target Marketing and Market Segmentation THE FIRM AND ITS MARKETING PLAN: Plans Strategies Decisions MARKETING ENVIRONMENT: Political-Legal Environment – Relationship between business and government, usually in the form of government regulation of business. o Both global and domestic have profound effects on marketing. o Environmental legislation has determined the destines of entire industries. Sociocultural Environment – Customs, mores, values and demographic characteristics of the society in which an organisation functions. o Changing social values force companies to develop and promote new products. Technological Environment – All the ways by which firms create value for their constituents. o Create new goods and services. o New products make existing products obsolete. o New products change human’s values and lifestyle. o Lifestyles often stimulate new products not directly related to the new technologies themselves. Economic Environment – Relevant conditions that exist in the economic system in which a company operates. o Companies determine spending patterns by consumers, business and governments. o Influences marketing plan for product offerings, pricing and promotional strategies. o Concerned with economic variables such as inflation, interest rates, and recession. Competitive Environment – The competitive system in which businesses compete. o Substitute product competition – Product dissimilar to those of competitors but fulfil the same need. o Brand competition – Occurs between similar products based on buyer’s perceptions of the benefits of products offered by particular companies. o International competition – Competitive marketing of domestic products against foreign products. 3 RAYMOND CHIENG  Chapter 10 Target Marketing and Market Segmentation TARGET MARKET: A firm’s marketing efforts can focus on a group of people who have similar wants and needs and can be expected to show interest in the same product. MARKET SEGMENTATION: Process of dividing a market into categories of customer types, or “segments”. TARGET MARKETING AND MARKET SEGMENTATION: Dividing a market into categories of customer types who have similar wants and needs and can be expected to show interest in the same product. Once customers have identified segment, companies may adopt a variety of strategies. IDENTIFIED SEGMENT: Geographic Variables – Geographic units, from countries to neighbourhood, that may be considered in developing a segmentation strategy. o McDonald’s restaurants in Germany, in contrast to those in the United States, offer beer on the menu. o Pharmacies in Jackson Hole, Wyoming, sell firearms that are forbidden in Chicago. o Starbucks is targeting a larger geographic segment in China. Demographic Variables – Characteristics of populations that may be considered in developing a segmentation strategy. o Age, education, family life cycle, family size, income, nationality, race, religion, gender. Geo-Demographic Variables – Combination of geographic and demographic traits that become the most common segmentation tool. o Female Young Urban Professionals, well educated, 25 to 54-year-olds with high paying professional jobs living in the “downtown” zip codes of major cities. Psychographic Variables – Consumer characteristics that may be considered in developing a segmentation strategy. o Lifestyles, opinions, interests, attitudes. 4 RAYMOND CHIENG  Chapter 10 Target Marketing and Market Segmentation UNDERSTANDING COMSUMER BEHAVIOUR: Able to explain customer choices. Able to predict future buying behaviours. CONSUMER BEHAVIOUR (PERSONAL AND ENVIRONMENTAL FACTORS): Psychological Influences – Include an individual’s motivations, perceptions, ability to learn, and attitudes. Personal Influences – Include lifestyle, personality, and economic status. Social Influences – Include family, opinion leaders, and such reference groups as friends, coworkers, and professional associates. Cultural Influences – Include culture, subculture, and social class influences. STAGES OF THE CONSUMER BUYING PROCESS: Problem / Need Recognition – Need to replace old shoes. Information Seeking – Search for stores, styles, prices, opinions of others. Evaluation of Alternatives – Which are more comfortable, affordable and how will others react to them. Purchase Decision – Choose rationally or emotionally. Postpurchase Evaluation – Observe reactions of others, test durability, compare with other shoes. 5 RAYMOND CHIENG