Marketing Defined PDF

Marketing Defined 5 Kotler & Armstrong (2012, p4) defined marketing as “….managing profitable customer relationships. The two goals of marketing are (i) to attract new customers by promising superior value and (ii) to keep and grow current cust...

Marketing Defined 5 Kotler & Armstrong (2012, p4) defined marketing as “….managing profitable customer relationships. The two goals of marketing are (i) to attract new customers by promising superior value and (ii) to keep and grow current customers by delivering satisfaction.” Marketing therefore enables companies to understand what customers need or want, then provide goods or services to get to customers at the right place and time, at a price that customers can afford. To achieve this, companies are constantly communicating with customers using various communication channels. Marketing Defined 6 The Chartered Institute of Marketing, (CIM, 2024) defines marketing as “the management process responsible for identifying, anticipating and satisfying customer requirements profitably” From the definitions, we can see Marketing involves a number of activities which are: Identifying customer needs Anticipating customer needs Satisfying customer needs profit Market vs Marketing 9 In marketing, a market refers to a group of people who are willing and able to buy a company’s products. Marketing is the process of looking for these people and attracting them Key Marketing Words Defined 10  Customer Needs and Wants 12 Marketing starts with customers and their needs. When customers need or want something, they give away their money in order to get what they need or want.  Needs – Kotler & Armstrong (2012, p7) define a need as a “state states of felt deprivation,” things that people require for survival like food, water and clothing.  Wants – wants are things that people would like to have as shaped by their culture. People can survive without wants.  Value – value is the ability of a product or service to satisfy a customer’s needs. If the product does not satisfy their needs, customers will not see value in it.  Exchange – this means giving away something so as to get something else in return. Marketing is based on exchange – customers pay money for goods and services. The company gives away goods or services in return for money. Who is a customer – a business or an individual? 14 A company’s customer can be an individual like you, buying goods or services for individual or family use. When a company sells to such individuals, this is known as Business to Consumer (B2C) Marketing. Watch this video on B2C Marketing – B2C Marketing Companies also buy goods or services either to resell or to use them to make other goods or serve customers. When a company sells to other companies, this is known as Business to Business (B2B) marketing. Watch this video on B2B Marketing – B2B Marketing Characteristics of B2B Marketing 16 Goods are often bought for use in making other goods, for resale or for use in further serving customers – can you think of examples? The final purchase decision is normally made by a number of people, each playing a particular role. This is called a Decision Making Unit (DMU). B2B often involves large quantities bought infrequently B2B often involves a lot of money per transaction. Characteristics of B2C Marketing 17 Goods are often bought for individual or family final consumption. The consumer usually makes the decision alone but can refer to friends or family or even follow influencers e.g. on social media. Can you think of a social media influencer? Consumers normally buy in smaller quantities – just what they need. Amounts of money tend to be small. Benefits of Marketing 19 1. Marketing helps companies to better connect with their customers and track them. 2. Social media and mobile platforms allow for more personalised focus and response to customer needs. 3. Through marketing research, the company can better channel its resources towards specific customers rather than waste resources on people who do not have an interest in its products. 4. Marketing ensures customers get what they need relatively easily. 5. Marketing helps companies save money through targeting. Latest trends affecting Marketing 20 Marketing is increasingly influenced by rapid developments in technology. Key trends that have influenced marketing include: AI Marketing – Artificial intelligence Chatbots has resulted in the automation of many marketing functions that used to be done User generated content by humans Customer experience Video Marketing (short form video content) Personalization Influencer Marketing Virtual reality Social Media Increased sustainability concerns Content Marketing Latest trends affecting Marketing 21 Artificial Intelligence It is an integral part of marketing strategies to analyze consumer behaviors and search patterns. Video Marketing Almost 85% of companies use video as a marketing tool. Video marketing is a great way to teach people about your products and services. Most of platforms become better at supporting video content. Influencer Marketing It uses word-of-mouth tactics to drive product and service sales. Influencer marketing works because people tend to view this as more authentic than traditional brand advertising and they trust them. Social Media Social media like Instagram, TikTok and Snapchat allow brands to create advertisements that play when users switch between their friends’ stories. These ads have become more interactive, allowing users to click on them to learn more about a brand’s products and services. Where can Marketing be used? 22 Marketing can be used in many different environments such as: Commercial organisations – these sell goods or services and therefore actively use marketing to identify, track and target customers e.g. Carrefour, Al Futtaim, ADCB, HCT etc. Not-for-Profit organisations – These organisations are sometimes called charities or Non-Governmental Organisations (NGOs) and are set up to provide some help or services to the community. All the money they get goes towards paying salaries and other administration costs. They use marketing to attract donors so they receive funds e.g.- the Emirates Red Crescent Authority, the Emirates Foundation etc. Where can Marketing be used? 23 Marketing can be used in many different environments such as: Individuals  people publicising themselves to build a reputation and attract followers e.g. social media influencers post content to attract followers – some get money from say YouTube based on subscriber numbers.  Politicians market themselves to get voters who elect them into political office e.g. Donald Trump or Kamala Harris. Event marketing, tourism or destination marketing are other areas of marketing – can you think of any others? Criticisms of Marketing 24 Not all marketing activities are good to everyone. Marketing is often criticised for: Promoting materialism – many people buy new things not because they need them, but because they are available e.g. when you upgrade your Iphone every time there is a new version Worsening environmental problems through unnecessary demand to fulfil our wants Promoting a throw-away culture, there is a new thing so I will throw away my old one and buy a new one Adding excessive markups for certain products – e.g. why does an Iphone cost so much more than a Nokia? What other criticisms can you think of? Introduction to the Marketing Environment 5 A company operates within an environment where it interacts with many different factors The marketing environment can be divided into Firm Internal Environment Micro-environment Macro environment Each of these environments has several factors that the company needs to respond to or manage to be successful. Introduction to the SW analyses (part of SWOT) 6 For a business to be successful, it needs to analyse its internal strengths and weaknesses Doing this, the company is able to identify external opportunities that match its strengths and capabilities This is very important because if a company chooses business opportunities that are bigger than what it can manage, this will result in failure. At the same time, the company has to identify its weaknesses This allows the company to plan to address and improve on its weaknesses and avoid attacks. SWOT Analysis 7 To identify a company’s strengths and weaknesses in a structured way, a SWOT analysis is used: S=Strengths W=Weaknesses O=Opportunities T=Threats Strengths and Weaknesses are part of the INTERNAL ANALYSIS Opportunities and Threats are part of the EXTERNAL ANALYSIS The Internal Environmental Analysis 8 Strengths – Strengths are sometimes known as Critical Success factors. They are aspects of the business that are strong. Each company must assess itself to identify its strengths by answering these questions: SWOT Analysis What do we do well? What unique resources can we use to position ourselves ahead of competitors (skills, people, money, equipment, history, heritage, positive brand name etc.). What do others see as our strengths? The Internal Environmental Analysis 10 Weaknesses – are parts of the business that put it at a disadvantage when compared to competitors e.g. negative reputation in customers’ eyes; poor product quality; poor customer service etc.. The company must identify these weaknesses in order to improve on them: SWOT Analysis Avoid being defensive and be honest with yourself, Conduct a detailed analysis of what has gone wrong in your organisation. Ask stakeholders what they feel could be improved e.g. customers, suppliers, distributors etc. The Micro Environment 15 Micro environmental factors are those immediately around but outside the company including customers, distributors, suppliers and competitors. Customers - This group is the primary reason why a company exists. The company should therefore develop a very close understanding of customers and their needs and build close relationships with these customers. If customers believe in and trust a company, they can continuously prefer it over competitors leading to high levels of loyalty. Competitors - These are other companies targeting the same customers and can potentially reduce the company’s profits. The company needs to do an analysis of competitors; who they are, what products and services they offer, what prices they charge and what customers say about them. With this intelligence, the company can make its own products and services better suited to customer needs and thus be more competitive. The aim is to have a competitive advantage – to be preferred amongst competitors. In the UAE, Lulu competes with Carrefour, Almaya, Abu Dhabi Cooperative Society, Choitrams, etc. The Micro Environment 18 Distributors - These are companies that help move a company’s products closer to where the customers are. These distributors tend to stock products from different competitors so it is important to develop closer relationships with them so that they can give a company’s products more favourable treatment. As an example, Almarai distributes its products through companies like Lulu, Carrefour etc. but the same companies also sell competing products from Al Rawabi, Al Ain Farms etc. Each of these companies tries to have a closer relationship with distributors to secure space for its products on the shelves. Suppliers - A company relies on suppliers to supply it with needed raw materials. It is therefore important to build strong relationships with suppliers so as to ensure that the company does not run out of supplies and can get high quality resources especially where there are shortages. Carrefour, Lulu etc. want to ensure that they build strong relationships with Al Rawabi, Al Ain Farms etc. to benefit from various marketing activities. Class Activity – What to do with this? 19 In your groups, imagine you work for Lulu Supermarkets and your boss has asked you to: 1. Identify 3 different types of distributors that Lulu could use to sell its products 2. Identify 3 different suppliers that Lulu buys products from What should Lulu Supermarkets do for suppliers and distributors if it is to be successful? Present your answers to the rest of the class. Introduction to the Marketing Environment 5 Businesses do not operate in a vacuum. They operate within an environment where they interact with various forces and stakeholders. Businesses therefore have to constantly review their plans to ensure they remain relevant within their environments and stakeholders. The Marketing environment refers to all the internal and external factors that influence an organisation’s marketing activities. The marketing environment is divided into the macro, the micro and internal environments. The Macro Environment 6 The Macro environment is made up of the major uncontrollable forces that influence a company’s decisions and marketing efforts. A company has no control on these factors but it can minimize their effects by responding and adapting its actions accordingly. The EXTERNAL factots are Political, Economic, Social, Technological, Ecological and Legal Forces The macro environmental factors are sometimes abbreviated as PESTEL or PEST forces (taking the first letters of each factor). The Macro Environment 7 Political forces – these include the political stability in the country (if there is a war, it is difficult to do business and conduct marketing activities). The forces also include regulation, country leadership, foreign and trade policies etc. If these forces are positive, marketing can be done successfully but if they are negative, this affects marketing activities. Can you think of a country where it is not advisable to go and start business activities at the moment? What are the major political issues in that country? How could businesses that already operate there reduce the impact of the political forces? The Macro Environment 8 Economic forces – these include interest rates, levels of employment, inflation rates and monetary policies in a country. In a country where there are high levels of unemployment, people may not afford to buy luxurious goods and therefore marketing such goods may not be successful. What do you think is the economic situation in the UAE? Think of employment levels, the standard of living, the cost of living, interest rates, salary levels etc. Is it a good place to do marketing activities? Why or Why not The Macro Environment 9 Social forces – these are sometimes known as demographic forces as the focus on people and cultural issues. People’s religious beliefs, culture and the way people live together affect purchase decisions and therefore marketing performance. In the west, a family can be one person and their dog or cat, while in some cultures, families typically have multiple members When people in those different areas make purchase decisions, what they buy is different. A company therefore needs to understand the social and cultural factors in the targeted country. As an example, McDonalds changed from the beef burger to a Mutton burger when they opened shop in India The Macro Environment 10 Technological forces – these forces include such forces as internet connectivity, level of IT development, availability of infrastructure, transport and communication systems etc. Countries with well-developed infrastructure are more conducive for marketing than those where there is less developed infrastructure The availability of internet facilitates connections to various social media platforms and makes it easy to target customers with marketing messages, enhancing online business. Can you think of a country / countries where technological infrastructure is weak? Can you think of a company that does not have advanced technology to serve its customers? The Macro Environment 11 Ecological forces – these include climate change, pollution, environmental degradation, ethics, fairness, justice etc. Companies now have to do their marketing in a way that does not harm the environment or people Customers and other stakeholders can protest against a company seen to be doing business in a way that negatively affects the environment or other people. Watch video below showing protests against Shell Climate change protest against Shell What do you think Shell can do to successfully conduct its business without protests? Can you think of other companies? The Macro Environment 12 Legal forces – these are laws that may affect business and marketing such as consumer protection laws, competition laws, laws regarding registration and conduct of business etc. Companies have to do business in a way that does not break the law otherwise they may face fines Companies have to do business in a way that does not break the law otherwise they may face fines or their managers may be jailed Sometimes legal and political forces are presented together as they are closely related. Before doing any marketing activities, a company conducts an environmental audit, looking at each of the forces to decide whether it is worth doing business. The External Environmental Analysis 16 Opportunities – these are gaps in the market that the company could exploit based on its strengths and weaknesses. It is important to be realistic and only select those opportunities that the company can successfully pursue with its current resources and competences, SWOT Analysis Opportunities can be a result of changes in the market e.g. government regulation changes, customer preferences, changes in the competitive landscape, changes in technology; new resources that your company has etc. An opportunity today may not be an opportunity tomorrow and each company faces different opportunities based on its strengths / weaknesses The Internal Environmental Analysis 17 Threats – Threats are external factors that may affect a business in a negative way. Usually, weaknesses expose a company to threats It is therefore important to identify weaknesses and improve them. SWOT Analysis Equally, a company must identify all those uncontrollable external changes in the environment that may negatively affect the performance of the business. A threat in one part of the business may represent an opportunity in another part Completing a SWOT Analysis 18 1. The SWOT analysis applies both to companies as well as individuals. 2. It must be completed honestly for it to be meaningful. 3. It must be used as a learning and improvement tool, NOT to assign blame! Consumer Behaviour 5 Your responses to the questions in the previous activity explain how you behave when deciding to, and when buying certain products. It shows what factors you consider, who you listen to and the different influences that affect your decision-making process. This information is very important for marketers so that they know how to influence your decision-making process so you can choose their products What is consumer Behaviour? 6 Customer Behavior or Consumer Behaviour can be defined as “why, how, where, and when consumer buy products and services” What does consumer behavior really mean? It is the study of the process consumers go through to select, purchase, use, and dispose of products, services, ideas, or experiences to satisfy their needs and desires. What is consumer Behaviour - continued 7 Consumer Behaviour studies the steps consumers go through to select, purchase, use, and dispose of products, services, ideas, or experiences to satisfy their needs and desires. It also looks at the influences that shape consumers’ decisions on what to buy, where and how. Such knowledge is very important for marketers so that they can place appropriate stimuli in front of customers to help influence the decisions on what products are bought and where. The importance of Consumer Behaviour 8 Why is understanding consumer behaviour important? Understanding consumer behavior is essential for businesses to: Drive sales and improve profits, develop better relationships with customers, Understand what marketing stimuli to present to customers to help them make purchase decisions Improve the competitiveness of the organization, Understand what products to place in front of customers. Types of Consumers 11 A consumer is a person or group of people who buy products or services for use either for their own personal use or for use in producing other products or services. Consumers can be divided into two types: Individual Consumers Organizational Customers Individual consumers or end Organizational customers are users buy products or services companies that buy products to for their own personal use. manufacture other products, to Such products are called re-sell or to use in serving their consumer products. e.g. a man customers. The products that they buying a car for his personal buy are organization products. use. Buyer Decision Roles 12 There are 5 main roles in the buyer decision process: 1. Initiator: the person who begins the process of considering a purchase. 2. Influencer: the person who persuades others concerning the outcome of the decision. Influencers typically gather information and attempt to impose their choice criteria on the decision. 3. Decider: the individual with the power and/or financial authority to make the ultimate choice regarding which product to buy. 4. Buyer: the person who conducts the transaction. The buyer calls the supplier, visits the store, makes the payment, and effects delivery. 5. User: the actual consumer/user of the product. Factors Influencing Consumer Behaviour 14 Internal Factors – these are the different personal factors that influence consumers as they make their purchase decisions. The factors will be different from one person to the other and they include: perception, learning, motivation, personality, attitudes and beliefs. Factors Influencing Consumer Behaviour, 2 16 External Factors – these are factors outside of each consumer that influence the choices consumers make e.g. social influences from family, friends, reference groups, opinion leaders and cultural factors. If marketers want to be successful, they have to understand these influences and address them in their marketing efforts e.g. marketers may use influencers to reach all those consumers who follow the influencer. Consumer Decision-Making Process 18 When deciding what to buy, consumers go through several sequential steps to make their decisions. The time taken to complete the steps may vary from seconds to even years. Marketers must understand what is required at each step so that they can try and influence consumers and help them make the final purchase choices. The steps involved include: (i) Need recognition, (ii) Information search, (iii) Alternative evaluation, (iv) Purchase decision, and (v) Post-purchase behavior. Step 1 – Need Recognition 19 The buying process begins when a consumer recognizes a need or a problem that requires a solution. This need can be triggered by internal factors (such as physiological or psychological needs) or external factors (such as advertisements or social influences). An example is when a person realizes that they are hungry and need something to eat. Step 2 – Information Search 20 In this step, the consumer searches for information on different options available to satisfy the identified need. Information can come from: Internal Search e.g. memory, thinking etc. External Search e.g. word of mouth, store visits, trials etc. Information gathered during this stage can come from different sources Step 3 – Alternative evaluation 21 In this step, consumers evaluate different alternatives to find a solution for their problems or needs. They consider various factors such as price, quality, brand reputation, features, and benefits. Consumers may compare products or services based on these attributes to determine which one best meets their requirements. Step 4 – Purchase decision 22 After evaluating the available alternatives, consumers make a purchase decision. They choose a specific product or service based on their preferences, budget, perceived value, and other factors. The purchase decision can be influenced by personal preferences, recommendations, previous experiences, or marketing efforts Step 5 – Post purchase behaviour 23 After purchasing a product or service, consumers reflect on and evaluate their purchase decision. They evaluate whether the product or service meets their expectations and provides the desired benefits. This evaluation can affect future buying decisions and their perception of the brand or company. The evaluation may result in a regret if the product disappointed them or the customer may be happy to purchase again if the product pleased them. Marketing Research Defined 5 Marketing research is the process of gathering, analysing marketing information and interpreting the results to inform marketing decisions. It helps to answer questions such as:  who the customers are,  what segments are there to be served?  what products / services can the company offer?  the company can provide;  who are the competitors and what they offer. This information helps the company decide who its target customers are going to be; what it is going to offer; where, how and for how much. Marketing Research Defined 7 It is impossible to gather data from every person in a population, so information can be collected from a small part of the population called a sample. The information collected during a research process is called data. Data in Marketing research is typically divided into qualitative and quantitative data. Qualitative Data 8  this type of data is descriptive and subjective. It describes consumers’ feelings, emotions, preferences or attitudes towards particular products or services.  The data cannot be easily measured in numbers.  When researchers collect this type of data, the samples tend to be smaller because of the large data that needs to be collected.  Characteristics of Qualitative Data 9 Qualitative data is descriptive in nature It focuses on people’s emotions or thoughts and is subjective – two people may see the same thing differently The tools for collecting qualitative data are: questionnaires, interviews or observations Questions for qualitative data are open-ended e.g. “ what do you think of…” Responses tend to be long and descriptive Because of the long responses, sample sizes for qualitative data tend to be smaller as it would be difficult to analyse large volumes of data. Quantitative Data 10  This type of data is collected through the 'yes' or 'no' types of questions and is measured in numbers.  Results can be summarised in graphs, tables or charts.  Samples can be large as the data can easily be analysed using Microsoft Excel, SPSS and other electronic tools. Characteristics of Quantitative Data 11 Quantitative data is in numbers, Data is collected using structured instruments such as questionnaires (paper or electronic). Data can easily be processed in numerical forms to produce summaries in graphs, charts and other visual formats. The validity of the data can be verified. The data is therefore objective Data collection procedures can be repeated as it is highly reliable. Because of the ease of processing, this is often used for large samples  Selected Types of Quantitative Data 14 Counter – the numbers of variables Measurement of physical objects – size, length, width, volume etc. Projection of data: data estimating future trends e.g. a sales person can project how many people may buy a particular product using algorithms and other mathematical analysis tools. Quantification of qualitative entities: Some qualitative data can be summarised into numbers e.g. how many people agreed with a given statement. The Marketing Research Process 15 Collecting, sorting and analysing data to make marketing decisions follows a structured process. The steps involved in collecting and analysing data is called the Marketing Research Process. The main steps involved in the Marketing Research Process are:  Defining the research problem and research objectives  Developing a research plan  Implementing the research plan  Analysing the research findings The steps are discussed in more detail in the following slides Step 1 – Defining the Research Problem 16 Marketing research is conducted to answer questions Who are our customers? This may be “what products do our customers want?” Which products or services are demanded more? Marketers therefore have to clearly identify what information need they have Failure to define the research agenda clearly and accurately will negatively affect the quality of data Step 2 – Developing the Research Plan 19 In this step, marketers clarify the required information will be collected to answer the identified questions The plan includes; type of information required; sources of such information; how those sources will be identified and selected for use in the research process. If the required information already exists in some form, this is called secondary data. Secondary data can be obtained from within the company or can be bought from external agencies. If there is not enough available information to answer the identified research questions, then primary data has to be collected. Step 2 – Developing the Research Plan 20  Primary Data - This is fresh data that is collected specifically to answer a research question. Tools used can be surveys, interviews, observations, focus groups etc. Generally, it takes time and may be more expensive to collect primary data. Primary data is only collected after confirming that there is no secondary data available to answer the research questions.  Secondary data – This data already exists in internal or external sources such as the company’s records, or externally in magazines, newspapers or websites. Before any such data is used, its relevance accuracy and currency has to be verified. Secondary data tends to be cheaper and is the first to be considered before primary data. Step 3 – Developing the Research Plan 23 This step involves developing and deploying the data collection instruments Researchers have to ensure that the data is sound and avoids bias. Researchers have to ask the correct questions to get the correct data. Researchers have to choose the most appropriate data collection instruments. Collecting data can be done by the company’s own employees (in- house) or it can be outsourced from marketing research companies such as SV Digital based in Abu Dhabi or the Middle East Research and Consultancy (Merac). Step 4 – Sorting and Analysing Research Results 24 Once data has been collected, it has to be sorted. Some data may not be valid, so it has to be removed until only complete and valid data is left. The data can then be grouped into categories for easy analysis. The data then has to be analysed i.e. what does it tell us. If the collected data is quantitative, relevant statistical analysis methods (Excel, SPSS etc.) can be used. If the collected data is qualitative, researchers may need to identify relevant themes to get meaning from the data. Tools like NVIVO can be used to analyse qualitative data in themes.  5 A company cannot satisfy everyone’s needs Different customers want different things, and sometimes even though they want the same thing, they may prefer different colours, different sizes etc. Each company can never satisfy ALL customers. It is therefore important for each company to decide which customers it will focus on and which ones it will ignore. If a company tries to satisfy everyone, it may weaken its offer and end up with something that is not specialised and something mediocre “a Jack of all trades is a master of none” Introduction to market segmentation 6 Each company therefore wants to specialise and be the best in certain narrow product or service ranges. Similarly, the company needs to decide which customer groups it will focus on. The company divides the bigger generic market into smaller, manageable segments – this is called “market segmentation” Once the company has divided the market into these smaller segments, it can then decide which ones to target and what products to use for each of the targeted segments.  Market segmentation 9 The process of dividing markets into smaller, homogeneous segments is called “market segmentation” Kotler & Armstrong (2012, p49) define market segmentation as “Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviours, and who might require separate products or marketing programs.” Each of the small groups is called a segment. As an example, the UAE clothing market can be segmented into male adults, female adults, male children, female children to name a few segments. Market segmentation 10 A market segment is a group of customers with relatively similar needs who are likely to have similar preferences for products or services. Each of these segments may require a different product or service. In the UAE, white fabric may be suitable for the male market, while black fabric may be suitable for the female market. The male customers represent a segment for white fabric while the female customers represent a segment for the black fabric. Importance of Market Segmentation 11 Market segmentation allows companies to focus their resources and products at chosen segments rather than offer products to customers who may not need them. Imagine if a clothing organisation was offering black fabric at both men and women in the UAE. Men would not be interested as this is not appropriate for them. Advertising to them about this would be a waste of time unless they were buying for their daughters or wives. Importance of Market Segmentation 12 So market segmentation ensures that companies do not waste their marketing efforts on the wrong customers. Market segmentation heavily relies on accurate Marketing Research - finding out who different customers are, what they want, where they are and what they can afford. Market segmentation benefits both customers and companies and is an important part of marketing planning. Segmentation Variables 15 Market segmentation can be done for B2B markets (selling to companies that want to use products either to resell or to make other products) and B2C markets (selling to individual final consumers for their own final consumption) To segment markets, segmentation variables are used. The most common segmentation variables are: Demographic Geographic Psychographic Behavioural  Demographic Segmentation 16 Demographic Segmentation - dividing markets based on people characteristics such as gender, age groups, family lifecycle, nationality, education levels, social status or culture. Culture is a part of demographic segmentation – it refers to how people live together. It includes language, religious beliefs, role of men vs. women etc. Marketers therefore have to research each country's culture and understand how this affects the types of products or services that can be sold in that culture.  Geographic Segmentation 17 Geographic segmentation – here, markets are divided based on geographic characteristics e.g. cars designed for cold climates need to have good heating systems, while cars designed for hot climates need good and effective cooling systems. Marketers may also need to think about whether customers are in urban or rural locations as well as whether the populations are dense or not. Geographic segmentation may affect the design and nature of products as well as delivery arrangements.  Psychographic Segmentation 18 Psychographic segmentation involves dividing markets based on consumers' personalities, lifestyles, attitudes or social classes. This heavily relies on Marketing Research to uncover people's educational levels and their interests which in turn influence how they live their lives and the types of products or services they buy. This also includes their beliefs and attitudes to life which all influence their pastimes, whether they are active or not; whether they are risk takers or not. These different outlooks influence consumers' choices of products and services.  Behavioural Segmentation 19 Under Behavioural segmentation, markets are divided based on consumers' knowledge of the product, their attitudes towards the product or service as well as the frequency of using the product – heavy users vs. light users. Behavioural segmentation looks at 4 different areas: Purchase occasions – do customers buy on special occasions e.g. birthdays? Benefits sought – what specific benefits do customers look for when they buy? User status – this focuses on product usage rates e.g. light, heavy or non user Customer Loyalty - how frequent do customers buy e.g. airlines have frequent flier miles to reward those who fly regularly Characteristics of good market segments 22 There are 5 criteria to determine effective market segments: 1. Measurable – the size of the market is measurable 2. Accessible – customers can be reached easily though promotion 3. Substantial – segment is justifiable so not to waste resources 4. Differentiable – segments respond differently to different strategies 5. Actionable – identify your abilities to suit a certain segment Introduction to Market Targeting 5 Since a company cannot satisfy all customers with its products, it has to choose which groups of customers it will focus on. After conducting market segmentation, the next step is to the choose which customers or groups of customers the company will focus on. This is called Market targeting or Target Marketing. The purpose of segmentation is to break the market down and group together those customers whose needs are similar. Market Targeting 6 Kotler & Armstrong (2012, p49) define Market targeting as “The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.” The process involves the selection of one or more identified segments for the company to focus on. The company then designs its marketing mix to focus on the needs of customers in the chosen segment(s). Introduction to Market Targeting 7 After segmentation, the market may present a number of different segments, the company then has to choose which segment(s) it wants to focus on. Having segmented the market, a company can decide to focus on one segment with one product or it can have different products for different segments. Decisions to choose how many segments to serve are often influenced by the company’s objectives, the amount of resources it has as well as the attractiveness of different segments available. Target Marketing Approaches 10 When targeting chosen segments, the company has different options such as: 1. Undifferentiated marketing 2. Concentrated Marketing 3. Multi Segment Marketing Undifferentiated Marketing 11 Here the company ignores the different market segments and instead develops a single offer to appeal to the entire market. This approach is often called Mass marketing or undifferentiated target marketing. Undifferentiated Marketing is cheaper as the company does not have to tailor the marketing mix for any one particular segment but offers one generic product for all. The approach is common for products such as Colgate, petrol (gasoline) and other products that tend to be sold in large quantities Concentrated / Niche Marketing 12 In this approach, the company segments the market into a number of segments but selects only one segment to target with a single marketing mix. This is also called niche marketing as it allows the company to specialise and focus on a narrow segment which sometimes may be a single, high net worth client. Rolex are an example as they focus on the luxury segment with their watches and do not offer anything else to other segments.  Multi Segment Marketing 13 In this approach, market segmentation identifies a number of different segments and the company develops a different product for each segment. The benefits of multi-segment marketing is that the company spreads its risk by having multiple products aimed at different markets. An example of multiple segmentation approach is Uni Lever which supplies toiletries such as bath soaps, but also offers food items such as margarine among others.  Market Positioning 16 After selecting a target market, the next thing is differentiation and market positioning. Differentiation is making a company’s products unique from those of competitors. This ensures that customers can identify some unique benefits that attract them to the product (Unique Selling Proposition – USP) Market Positioning 17 Kotler & Armstrong (2012, p48) define market positioning as “Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.” This involves positioning a product in the minds of customers, in relation to competing products. In customers’ minds, they have a hierarchy of which products are rated higher. As an example, Emirati men rank the Nissan Patrol (older version with a stronger suspension) as better suited to the local terrain than a Mercedes GL. Positioning can be influenced by advertising. Perceptual Mapping 18 A perceptual map is a visual display of customers' perceptions of competing products. It helps to see how customers rank different products in their minds based on certain attributes. Below is an example of a perceptual map for sporting shoes. Unique Selling Proposition - USP 19 For customers to choose and buy a particular product from among competing products, it must have something that stands out and attracts customers. This is called a Unique Selling Proposition (USP). A USP differentiates (makes different) the product so that it stands out in the eyes of the customer. Each company must make sure that each product has a USP otherwise it will be difficult to sell to customers. Examples of USPs are: it is very cheap, high quality, reliable, lasts for a long time, it does not break down among others.