Market Sgmentation b. w Maina[Presentation]

7/29/2019 Market Sgmentation b. w Maina[Presentation]

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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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Market Sgmentation b. w Maina[Presentation]

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