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MARKET SEGMENTATION
TARGETING
AND
POSITIONING
BY B .W MAINA
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MARKET
1. PLACE
Market place where buyers and sellers meet toexchange goods and services e.g. Wakulima Market
.
2. SITUATION
Set of conditions consisting of buyers and sellers of acertain product Economics definition
3. DEMANDMarket demand for a particular good.
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MARKET : MARKETERS VIEWPOINT
Buyers with :
Needs to satisfy with a product they want
Money or income to spend which constitutes purchasingpower giving them the ability to buy
Willingness to spend money to buy the good or servicein question
Buyers constitute the market
Sellers constitute the industry
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MARKET : MARKETERS DEFINITION
A market consists of all potential
customers sharing a particular needor want who might be willing and able
to engage in exchange to satisfy that
need or want
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TARGET MARKETING
Process of dividing the market into
major market segments , evaluatingthem , and selecting and targeting
one or more segment, and deciding
on the companys positioning in eachmarket
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TARGET MARKETING PROCESS
In target marketing , the seller engages in:
1. Market segmentation
Identifies the segments comprising the market
2. Market targeting
Selects or aims at one or more of the segments afterevaluation
3. Product positioning
Develops product and marketing mixes tailored toeach segment
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RATIONALE FOR TARGET MARKETING
1. CONSUMER DIVERSITY OR HETEROGENEITY
Buying habits and requirements are
heterogeneous
Different tastes and preferencesConsumers widely scattered /spread
geographically
Consumers may be too numerousDifficult to serve all these consumers through
mass marketing
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RATIONALE FOR TARGET MARKET(CONT.)
2. SCARCITY OR RESOURCES AVAILABLE TO FIRM
Lack of resources and energy to serve everywhere
Difficulties in competing everywhere sometimesagainst superior odds
Easier to serve smaller than larger market due tobetter focus and concentration
More efficient and effective use of resources
Enables firm to match organizational capabilities with
specific groups of customersFirms perform better by identifying and concentratingon the most attractive parts of the market
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MARKET SEGMENTATION
Consists of taking the total heterogeneousmarket for a product and dividing into severalsub markets or segments , each of whichtends to be homogeneous in all significantaspects
Involves taking the whole market and dividing it
into homogeneous units with similarcharacteristics such that they react uniformly togiven stimuli in the market
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MARKET SEGMENTATION(CONT)
Entails developing different demand schedules/curvesfor each market segment instead of having only one forthe entire market
Groups together in the same segment consumers withsimilar needs which minimises differences amongconsumer groups and makes it easier to serve them
Represents the ultimate extension of the marketingconcept starting with consumers and what they want,and recognizing that not all people are alike and that onemans meat is one mans poison
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MARKET SEGMENTATION AND CUSTOMIZATION
Products may be tailor-made or custom-madefor consumers recognizing each consumer isunique and constitutes a market by himself
In industrial marketing products may be madeaccording to buyers specification
In consumer markets customization is possiblebut difficult as consumers are too numerous andquantities taken by each consumer too small
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ADVANTAGES OF MARKET
SEGMENTATION
Easier to develop and implement a suitable market mix(4ps)for each segment since marketing mix variablescan be tailored to appeal to specific customer groups
Marketing effort can be focused on customers with thegreatest purchase interest instead of scattering iteverywhere
Possibility of concentrating on the market in depth
Easier to understand customer needs and respondappropriately
Easier to develop and adjust product to demand Ensures more efficient use of marketing resources
Easier to match organizational capabilities with customergroups
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ADVANTAGES OF MARKET
SEGMENTATION (cont)
Easier to understand customers better end developcustomer profile
Ability to identify marketing opportunities
Easier too build customer relationship to promote repeat
purchases Easier to monitor competitors activities
Easier to get in-depth knowledge of the segment throughmarketing research
Possible to specialize in products or services for smallsegments
Price discrimination can be undertaken in differentsegments to increase profitability .
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PROBLEMS OF SEGMENTATION
Difficult to select the most appropriate
segmentation variable
Costs may increase due to many
segments e.g. inventory , advertising
promotional costs
Small segments may be unprofitable
Lack of economies scale
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MARKET SEGMENTATION VARIABLES
OR FACTORS
Market segmentation may be based on the
following:
Geographic segmentation
Demographic and social- Economic
segmentation
Social class or Psychographicsegmentation
Behavior : Product-related segmentation
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GEOGRAPHIC SEGMENTATION
Market divided into different geographicalunits eg
Provinces, regions or districts soft drinks
Rural versus urban bakeries, newspapers
Company concentrates in one geographic
area instead of operating nationally
Useful in initially defining markets
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DEMOGRAPHIC AND SOCIO-ECONOMIC
SEGMENTATION
Uses population characteristics such as:
Age babies, young, teenager, old e.g. clothes, toys,music
Sex male, female e.g. clothes, hairdressing
cosmetics,magazines which appeal to men or women Health condition/concernsdiet foods, low-tar
cigarettes, clubs
Family size products packaged in family sizes
Marital status married, single, divorced e.g.contraceptives,counseling,family planning
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DEMOGRAPHIC AND SOCIO-ECONOMIC
SEGMENTATION (cont)
Income-low, medium,high income groups e.g. cars,houses, hotels, clubs
Occupation teacher, lawyer, doctor, judge, banker
Education primary, secondary, college e.g. training
courses, books, jobs Religion Catholic, Protestant, Muslim e.g. clothes,food, books, radio and TV station
Ethic group e.g. FM radio stations, food, clothes
Race/Nationality e.g. Food such as Indian, Chinese;
clothes.*The above factors are the most popular bases for
distinguishing between customer groups
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Social class lower, middle, upper
Lifestyle swingers, high fashion, traditionalist,sophisticate, luxurious living.
Personality ambitious, aggressive, detached,intelligent, social
Products can be designed to appeal to particularsocial classes or lifestyle e.g.. Clothing, luxury
cars, leisure activities, hobbies, games (golf),schools (academies), homes, hospitals, politicalparties, reading habits, mobile phone tariffs.
SOCIAL CLASS- PSYCHOGRAPHIC
SEGMENTATION
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BEHAVIOURAL:PRODUCT-
RELATED SEGMENTATION Benefits sought - quality, economy,convenience, prestige,
durability, comfort, safety, taste.
Use occasion - regular vs special occasion e.g.. Flower giving(Valentines Day, Hospital, Weddings, Funeral); Business vs.vacation air travel; normal wines vs. champaigne for celebrations.
User status non-user, ex user, potential user, first-time user,regular user e.g. airlineflier vs. non flier; drug users rehabilitationprogrammes could focus on regular users to quit the habit or todiscourage non- users
Usage rate light, medium, heavy users e.g.. Coffee and beerdrinkers, cigarette smokers, bank accounts.
Loyalty status none, medium, strong, e.g. supermarket loyaltycards
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BEHAVIOURAL:PRODUCT-
RELATED SEGMENTATION (cont)
Readiness stage- unaware, aware,informed, interested e.g. HIV tests, paptests, breast screening.
Attitude towards the product-enthusiastic, positive, negative, indifferent,hostile, eg voting for a party
Application by professionals oramateurs e.g. golf clubs, cameras, car(rally cars), sports shoes
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PRODUCT LIFE CYCLE AND MARKET
SEGMENTATION
Consider the products life cycle (PLC) Most products have a distinct life cycle:
Introduction, Growth, Maturity, Saturation andDecline
Needs and lifestyles change leading to changesin demand requiring revision of strategies formarket segmentation especially in terms ofproduct differentiation eg in
Introductory phase No competition hence no need
for differentiationGrowth stage Competitive strategy required andproduct may be differentiated.
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REQUIREMENTS FOR EFFECTIVE
SEGMENTATION
For effectiveness, the market segments should exhibit the followingcharacteristics:
Measurability segment should ideally be quantifiable.
Accessibility segment must be accessible i.e.. can be reached
Substantiality segment should be large enough to allowprofitability operations
Actionability it should be possible to formulate effectiveprogrammes for attracting and serving the chosen segments
Responsiveness segment should be willing to react to the uniquemarketing programmes developed e.g. willingness to buy in
response to variations in marketing mix Differentiability segments should be conceptually distinguishable
and respond differently to different marketing mix.
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MARKET TARGETING
Market targeting is the process by which the firmidentifies and selects one or more marketsegment(s) requiring a separate marketing mix.
Market segmentation reveals the marketsegmentation opportunities facing the firm.
Market targeting entails evaluating the segmentsidentified and selecting the most attractiveone(s)
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MARKET TARGETING :EVALUATION
For proper evaluation it is useful to assess:
The profit potential of the various segments
The strengths and weakness of the firm
Strengths and weakness may be assessed by
considering
Human resource capacities skills, abilities,
competencies and experience
Material resources facilities, equipment
Financial resources money available
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MARKET COVERAGE STRATEGY
Three strategies are available for the firm when
deciding how many market it will serve and how
it will do it .These are:
Undifferentiated marketing strategy
Differentiated marketing strategy
Concentrated marketing strategy
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UNDIFFERENTIATED MARKETING STRATEGY
The firm ignores market segment differences
and goes for the whole market with the product
The focus is on what is common in the needs of
consumers rather than on what is the different The firm designs a product and marketing
programme that will appeal to the broadest
numbers of buyers
The firm relies on mass distribution and mass
advertising
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UNDIFFERENTIATED MARKETING STRATEGY:
ADVANTAGES AND LIMITATIONS
Firm can realise economies of scale leading tolow costs and low prices
Strategy appropriate when market is largelyhomogeneous i.e. buyers has the same tastes,buy similar amounts
Strategy fails to recognize variety in consumertastes and preferences
Strategy inappropriate when competitorspractice active segmentation using differentiatedproducts
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DIFFERENTIATED MARKETING STATEGY
Firm decides to operate in severalsegments of the market
Firm designs separate differentiated offer
for each market segment e.g. cars , toothpastes
A good competitive strategy leading to
higher profits Business costs could,however, increase ifmarkets are small
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CONCENTRATED MARKET STRATEGY
The firm goes after a large share of one or a few submarkets e.g.:
VW concentrating on small car market
Harlequin concentrating on paperback romance novel market
Strategy used when the firms resources are limited Firm can get strong market position in the market
segment served
Firm can get greater knowledge of segments needs
Firm may enjoy economics of scale High risks should the segment turn sour
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FACTORS AFFECTING CHOICE OF
MARKET COVERAGE STRATEGY
1. Company recoursesIf resources are limited use concentrated marketing
2. Product homogeneity
Undifferentiated marketing more suited for
homogeneous products e.g. steel , cementProducts capable of design variation more suited todifferentiation or concentration e.g. cameras , cars
3. Product stage in the production cycle
During introduction of a new product one version
may be launched and undifferentiated orconcentrated marketing may be used
In other stages of PLC use differentiated marketing
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FACTORS AFFECTING CHOICE OF
MARKET COVERAGE STRATEGY (cont)
4.Marketing homogeneityIf buyers have same tastes , buy the sameamounts per period, react in the same wayto market stimuli, use undifferentiated
strategy5.Competitive marketing strategies
If a competitor practises active segmentation, undifferentiated marketing can be suicidal
If competitor practice undifferentiatedmarketing , use differentiated orconcentrated marketing to gain advantage
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PRODUCT POSITIONING
Positioning is the act of designing the companysproduct and marketing mix to fit a given place inthe consumers mind
You position or the place the product in themind of the consumer or prospect
Positioning is what you do to the mind ratherthan the product
For each segment the company develops andcommunicates a product-positioning strategy tocompete effectively
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ADVERTISING AND POSITIONING
In positioning a product , consumer
perception plays a key role
Advertising is a useful tool for positioning
and repositioning as it is greatly influences
consumer perceptions and preferences
Advertisements should be believable
What is portrayed in the ad must be
compatible with the brand
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PRODUCT ATTRIBUTE USED IN POSITIONING
High quality - price used Low in alcohol - for beer;low tar,mild cigarette
Strong or weak
For special occasions
For power Guinness
As clear as your conscience For use with meals or at parties
Taste
For ladies e.g. Redds
Good handling(BMW)
Economical(Nissan) High picture quality Flat TV screen
Reliable
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POSITIONING AGAINST OTHER PRODUCTS
Product may be positioned against other
products,eg
Bic pens and others
Coca cola vs. Pepsi cola
Omo vs. Toss vs. Persil
Colgate vs. Close-up vs. Aquafresh Batteries
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