Segmentation, targeting, positioning.pdf

Module 4 Segmentation, Targeting and Positioning 1. What is the Concept of Market and Target Marketing? Knowing the Market Market is group of people with heterogeneous needs and wants Can’t appeal to all consumers and businesses and so marketers identify and understand part is total market to which...

Module 4 Segmentation, Targeting and Positioning 1. What is the Concept of Market and Target Marketing? Knowing the Market Market is group of people with heterogeneous needs and wants Can’t appeal to all consumers and businesses and so marketers identify and understand part is total market to which it can offer the most value. Introduction For successful marketing, we need to identify and understand potential customer’s and their needs Consumer markets consistent of households and individuals that buy for private consumption Market segmentation enables organisation to form a segment with common features rather than market to everyone. Organisation develops most effective marketing mix for each segment known as target marketing concept 2. What Does Targeting Mean? Target Marketing Choice of marketing strategy involves degree of compromise between the necessity to respond to specific individual customer desires and the objective of achieving the lowest possible production and marketing costs. Target Marketing is based on three premises - Individual buyers or groups can be identified - Sellers understand the need of buyers - Sellers seek to have their offer to meet the needs of target buyers Mass Marketing; Buyers have common needs, wants, demands - Single product offerings is created, communicated, delivered to meet needs of most in market - Undifferentiated approach to marketing - Mass marketing captures large markets at low cost per unit, ensuring high levels of profitability - Characteristic of commodity products and global mass products e.g. salt One-to-One Marketing; Buyers have unique needs, wants, demands - Appeals to each customer by providing customised offering to meet individual needs e.g. haircut, accountant, advisory - Small business take one to one approach - Results in high unit costs and more restricted market - Conditions form a basis of a focus or niche strategy Target Marketing: Target Specific Subgroups; Market contains subgroups - When choosing target markets, org will consider 1) It’s own resources, 2) Market demand, 3) Competition - With a differentiated targeting strategy, an org identifies a range of market segments which cover the majority of the total market - e.g. different types of toothpaste - For each segment, a unique marketing mix is tailored. - Could be used to appeal to a group of students. Product and Market Specialisation Small orgs with limited resources typically use a specialised approach to marketing; - Product Specialisation - Market Specialisation - Product Market Specialisation Specialisation works if; 1 Market is characterised by wide needs and preferences 2 Clear segments and product categories are identified 3 Market is clearly divided 4 Market segments are profitable enough 5 Segments are actionable 3. How Companies Segment, Target and Position their Products and Services? The Target Marketing Process Target Marketing Process is fundamental for any org Process involves 3 strategies; 1 Segmentation 2 Targeting 3 Positioning Is it substantial? What is size of market? Is it rational for within timeframe and budget? Incl. aim for percentage of market wanting to reach. 4. How Could Segmentation Be Conducted 1 Market Segmentation; Two steps 1 Identify variables to define meaningful segments - Segmentation variables are characteristics buyers have in common and are related to purchasing behaviour - Possible variables of segmenting fall into four broad categories; 1 Geographic - Climate, local population density, region, topography, urban, suburban, rural 2 Demographic - Related to quantifiable social characteristics of populations - Age, ethnicity, household composition, income, gender 3 Psychographic (psychology + demographic) - Based on consumer characteristic - Based on differences in; - Psychological traits - Geodemographics - Lifestyles 4 Behavioural - Indicator of market segments and their purchasing behaviour - Benefit expectations, brand loyalty, occasion, price sensitivity, volume of usage. - Segmenting Business Markets - Business markets are characterised by small numbers of buyers, each displaying a close relationship with the seller - Traditional segmentation variables less relevant - Customised or one to one best suited - Demographic equivalent relates to industry - Geographic indicator of buyers in certain area. - Effective Segmentation Criteria - Segments must be evaluated to ensure segment is worthwhile pursuing by analysing; - Measurability - Accessibility - Substantiality - Practicability 2 Profile segment so they can be assessed in second stage of target marketing process - Describes potential customer in market segment, common features shared and how they differ between segments - Segment profiles are usually described in a range of segmentation variables 2 Market Targeting - Market targeting involves systematic examination of possible market segments; Potential sales of each Potential revenue Ability to satisfy expectation - Requires understanding of competitors, how their offerings are seen by target segments - Important to know that no company can satisfy everything 1 Evaluate Potential Segments - Involves analysis of; - Sales potential - Competitive situation - Cost Structure - SWOT 2 Select Target Markets - Estimate market potential in each to determine sales volumes and if profitability is sustainable - Selecting particular market segments is at heart of marketing concept - Org is no longer referring to individual buyer or mass market, its referring to segments 5. How do we Position Brands as Marketers and how do we Re-Position Brands? 3 Market Positioning - Describes how markets perceive the organisation’s offer relative to competing offers - How customers distinguish the organisation and its products from competitors or available alternatives - Positioning is based on customer perception - Can correspond with product’s objective characteristics - Determine Positioning for Each Segment - To determine appropriate positioning for products, org needs to undertake market research to understand positioning in the minds of market segments - Common technique for determining positioning is conceptual mapping: showing how competing brands relate to each other in terms of attributes. - Analysing Current Positioning - Establish current positioning based on analysis - Commonly used positioning variables; - Attributes - Use/Application - Product user - Price and quality - Product class - Determine Marketing Mix for Each Segment - Marketing mix for each segment should - Be consistent with desired positioning - Be internally consistent - Be sustainable long term. When elevating relevant market segments we need to consider competition, costs and estimated sales.