Chapter 3 - Marketing Segmentation PDF

CHAPTER 3: MARKETING SEGMENTAT ION LEARNING OUTCOMES 1.After studying this chapter, you should be able to: ❧ Explain the principles of market segmentation. ❧ Explain the characteristics of market segmentation. ❧ Discuss the market segmentation strategies for both consumer and business-to-bu...

CHAPTER 3: MARKETING SEGMENTAT ION LEARNING OUTCOMES 1.After studying this chapter, you should be able to: ❧ Explain the principles of market segmentation. ❧ Explain the characteristics of market segmentation. ❧ Discuss the market segmentation strategies for both consumer and business-to-business markets  DEFINITI ❧ Market ON Segmentation – involves dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate marketing strategies or mixes. (Kotler & Armstrong, 2017) STP MODEL CHARACTERISTICS OF MARKET SEGMENTATION Measurable the size, purchasing power, and profiles of the segments can be measured. Accessible the market segments can be effectively reached and served. Substantial the market segments are large or profitable enough to serve. Differentiable the segments are conceptually distinguishable and respond differently to different marketing mix elements and programmes. Actionable effective programmes can be designed for attracting and CONSUMER MARKET SEGMENTATION VARIABLES SELECTING TARGET MARKET SEGMENT After evaluating different segments, the company must decide which and how many segments it will target. A target market consists of a set of buyers who share common needs or characteristics that a company decides to serve. Market targeting can be carried out at several different levels.  SELECTING TARGET MARKET SEGMENT Mass Marketing/Undifferentiated Individual Marketing Marketing Focus on individuals wants and needs Offer the same products for everyone Also known as One-to-one marketing Engage in mass production, mass and customized marketing distribution and mass promotion Seller offer customized product to Largest potential market which leads to consumer economies of scale Local Marketing Niche Marketing Focus on local consumer groups Narrowly defined customer group cities, neighbourhoods and seeking a specific stores distinctive mix of benefits Reflects a growing trend – Usually divided into sub-segments grassroots marketing Many online start-ups aimed at SELECTING TARGET MARKET SEGMENT Differentiated (segmented) marketing A market-coverage strategy in which a firm targets several market segments and designs separate offers for each. By offering product and marketing variations to segments, companies hope for higher sales and a stronger position within each market segment SEGMENTING BUSINESS MARKETS ❧ Business-to-business (B2B) markets compared to consumer markets: ❧ More complex decision-making unit ❧ Buyers are more rational ❧ Products are often more complex ❧ Have smaller target audiences ❧ Involves personal relationships with clients ❧ Buyers are long-term buyers ❧ Markets drive innovation are less than consumer markets ❧ Markets have fewer behavioral and needs-based segments SEGMENTING BUSINESS MARKETS  SEGMENTING BUSINESS MARKETS ❧ Kotler and Keller (2015) suggest questions to be asked In segmenting B2B markets: Demographic – which industry, the company size, location Operating variables – technology, user or non-user status, customer capabilities Purchasing approaches – purchasing organization, power structure, nature of existing relationship, general purchase policies, purchasing criteria SEGMENTING BUSINESS MARKETS ❧ Situational factors – urgency, specific application, size of orders ❧ Personal characteristics – buyer-seller similarity, attitudes towards risk, loyalty ❧ Sequential segmentation can categorize business buyers into three: first-time prospects, novices and sophisticates SEGMENTING BUSINESS MARKETS There are also three types of selling approach for business buyers: 1. price-oriented customers, 2. solution-oriented customers 3. strategic-value customers STP - GDPB END OF THE SESSION Q&A  SELECTING TARGET MARKET SEGMENT Mass Marketing/Undifferentiated Individual Marketing Marketing Focus on individuals wants and needs Offer the same products for everyone Also known as One-to-one marketing Engage in mass production, mass and customized marketing distribution and mass promotion Seller offer customized product to Largest potential market which leads to consumer economies of scale Local Marketing Niche Marketing Focus on local consumer groups Narrowly defined customer group cities, neighbourhoods and seeking a specific stores distinctive mix of benefits Reflects a growing trend – Usually divided into sub-segments grassroots marketing Many online start-ups aimed at Group Work – Product & Marketing Channel identification for each segment List 3 products and choose appropriate marketing strategy with justification Mass Marketing/Undifferentiated Individual Marketing Marketing 1. 1. 2. 2. 3. 3. Niche Marketing Local Marketing 1. 1. 2. 2. 3. 3.