MRS. SAIRA SAJAD

Designing a Customer-Driven Marketing

Strategy and Target Marketing

Major Steps in Target Marketing

Market Segmentation

Target Marketing

Market Positioning

Market Segmentation

Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mix.

Target Marketing

The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.

Market Positioning

Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the mind of target consumers

What is Market Segmentation?

Segmentation

What is Market Segmentation?

Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mix.

Market Segmentation is breaking down heterogeneous mass market into more homogeneous submarkets.

Marketer’s assume that consumers within segments should respond similarly to particular marketing actions.

Consumer response should be different between different segments.

Why segment the market?

Why segment the market?

Customers have diverse needs, wants and buying behaviors which differ from other customers.

One firm cannot satisfy everyone’s needs.

Organizations have different strengths and competitive advantages in different areas.

Marketer’s should focus on what they do best.

It can create better marketing opportunities for organizations

It may be more profitable for organizations.

Types of Market Segmentation

Consumer Market SegmentationBusiness Market SegmentationInternational Market Segmentation

Consumer Market Segmentation

There is no single way to segment a market. A marketer has to try different segmentation variables, alone and in combination to find the best way to view the market structure.

Consumer Market Segmentation Variables

Consumer market can be segmented through the following variables;

Geographic segmentation Demographic segmentation Psychographic segmentation Behavioral segmentation

Geographical Segmentation

Dividing a market into different geographical units such as nation, province, regions, countries, cities and climate etc.

Geographic Segmentation VariablesGeographic Segmentation Variables

Continents or World Regions-Africa, Asia, EuropeCountries-Afghanistan US, PakistanProvince- kabul, Jalalabad, HeratCity or Metro Size- under 5000 people, 5000-

19,999Climate- Tropical, Temperate, Cold.

Demographic Segmentation

Dividing the market into groups based on demographic variables such as age, gender, etc.

Demographic Segmentation Demographic Segmentation VariablesVariables

Age Gender Family size Family life cycle Income Occupation Education Religion Race Generation Nationality

Demographic segmentation

Age- Under 6 years old, 6-12, 13-19, 20-29,30-39,40-49,50+

Gender- Dividing a market into different groups based on gender (male/female).For example- NIKE has recently capture the women sports shoes market.

Family life cycle- Single, Young married, Married with children

Income- Dividing a market into different income groups. (high, medium and low income groups)

For example Honda presenting Motor cycle for low income and car for high income groups.

Demographic segmentation

Occupation- employed, unemployed, self employed.

Education- Grade school or less, high school, graduated from high school, post graduate from university, Doctorate.

Religion- Muslims, Christens, Jewish, Buddhist.

Family Size- 1-2 persons, 3-4 persons, more than 4 persons

Nationality- Afghani, Pakistani, French, British, Canadian, Japanese.

Psychographic Segmentation

Dividing a market into different groups based on social class, lifestyle and personality characteristics etc.

Psychographic Segmentation Psychographic Segmentation VariablesVariables

Social class- There are 3 major social classes i.e. Upper, Middle and lower class.

Lifestyle- It may be different on the basis of income, community, religion etc. Different customers adopt different lifestyles.

Personality- There may be different personalities of customers like Calm, Dynamic, Aggressive

Behavioral Segmentation

Dividing a market into groups based on consumer use, knowledge, attitude or response to a product.

Behavioral Segmentation VariablesBehavioral Segmentation Variables

Occasions Benefits Attitude Toward

the Product User Rates Loyalty Status Readiness Stage

Behavioral segmentation

Occasion-When the buyers get the idea to buy. (occasional buyers)

Benefit- Dividing a market into groups according to the different benefits that consumers seek from the product.For example- free bag with a laptop. Or discount on software or free delivery.

User Loyalty status- A market can also be segmented by consumer loyalty. For Example-Consumer can be loyal to brand (Nokia), stores (Imperial Store) and companies (Toyota).

Behavioral segmentation

Usage rate- Markets can also be segmented into light, medium and heavy usage of products.

Attitude Toward the Product-For some companies or products customers show favorable attitude and for some products, they show unfavorable attitudes.

Business Market Segmentation

Business markets can be segmented on the basis of various consumer market variables and some other variables like operating variables, purchasing approaches etc.

For example: American Express focuses on convincing new merchants, building relationships with old customers, and offering benefits to corporate such as insurance plan, travel discounts etc.

DemographicsDemographics

Operating VariablesOperating Variables

Purchasing ApproachesPurchasing Approaches

Situational FactorsSituational Factors

Personal CharacteristicsPersonal Characteristics

Business Marketers Use

Many of the Same Consumer Variables, Plus:

Bases for Segmenting Business Markets

Bases for Segmenting Business Markets

Demographic segmentationBusiness markets can be segmented on the basis of Industry, company size and location etc.For Example; Textile, Sugar and FMCG (Fast Moving Consumer Goods) are different industries, so there raw material and machinery will be available in different business markets.

Operating variablesBusiness markets can be segmented on the basis of Technology, usage status and customer (business) capabilities.For Example; Computers, mobile phones and electronics are technology based products as compared to juices and furniture. So on the basis of technology, business market will be different.

Cont…

Purchasing approaches

Business markets can be segmented on the basis of Regular purchases and occasional purchases.

For Example; Some type of raw materials are regularly purchased by different businesses like stationary, papers, paints etc but some raw materials like sugarcane, cotton will be purchased occasionally in the season.

Situational factorsBusiness markets can be segmented on the basis of Urgency,

specific application and size of order.For Example; Some businesses are very big businesses,

therefore their size of order for raw materials are also very big, so such markets may be segmented which are selling products in larger quantity only or in wholesale, not in retail.

Cont…

Personal characteristicsBusiness markets can be segmented on the basis of

Buyer-seller similarity, attitudes toward risk, loyalty.For Example; If the buyer (Businessman of sugar mill)

makes a contract with seller (Farmer of sugarcane) that for next 10 years , he will provide a specific quantity of raw material to him on a specific price. So in this regard, the buyer (Business) reduces his risk and he created loyality.

International Market Segmentation

“Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries.”

Geographical SegmentationEconomic Factors SegmentationPolitical & Legal Factors SegmentationCultural Segmentation

Factors Used to Segment

International Markets

Geographic Location

EconomicFactors

Political and Legal Factors

Cultural Factors

Bases for Segmenting International Markets

Bases for Segmenting International Markets

Geographic segmentation For Example; World market can be segmented by geographic

location, grouping countries by region such as Western Europe, Middle East, South Asia etc.

Economic factorsWorld market can also be segmented on the basis of economic factors i.e. Population income or level of economic development.

For example-countries might be grouped by population income level or by their overall level of economic development.

Political and legal factorsWorld market can also be segmented by political and legal

factors, such as the type and stability of the Government, monetary regulations, amount of bureaucracy etc.

Cultural factorsWorld market can also be segmented by Language, religion,

values, attitudes, customs, behavioral patterns

Target Marketing

Target Marketing

Target market: A set of buyers sharing common needs or characteristics that the company decides to serve.

After successfully segmented the market the firm now must evaluate the various segments and decide how many and which segment it can serve best.

Steps in the Target Marketing Process

• Evaluating Market Segments

• Selecting Target Market Segments

Evaluating Market Segments

In evaluating different market segments, a firm must look at three factors:

Segment size and growth Analyze sales, growth rate and expected profitability.

Segment structural attractiveness Consider effects of Competitors, Availability of Substitute Products and the Power of Buyers & Suppliers. A segment is less attractive if it already contain strong and aggressive competitors or substitute products.

Company’s objectives and resourcesEven if a segment has the right size and growth and is structurally attractive, the company must consider its own capability, compatative advantage, objectives and resources.

Selecting target market segments

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 the company decides to serve.

Buyers have unique needs and wants, a seller could potentially view each buyer as a separate target market. Then a seller might design a separate marketing program for each buyer.

Companies can target very broadly , very narrowly or some where in between.

There are four different types of strategies which the marketers apply while selecting target market segments.

Target Marketing Strategies

Targeting broadly targeting narrowly

Undifferentiated Marketing

A firm might decide to ignore market segments and target the whole market with one offer. This mass marketing focuses on what is common in the needs of consumers rather than on what is different.

For Example; Nestle offers mineral water for the entire market without any change for different customers attributes.

CompanyMarketing Mix

CompanyMarketing Mix MarketMarket

A. Undifferentiated Marketing

Differentiated Marketing

A firm decides to target several market segments and design separate offers for each.

For Example; Head & Shoulders design separate nature of shampoo for different types of customer needs.

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

CompanyMarketing Mix 1

CompanyMarketing Mix 1

CompanyMarketing Mix 2

CompanyMarketing Mix 2

CompanyMarketing Mix 3

CompanyMarketing Mix 3

B. Differentiated Marketing

Concentrated (Niche marketing)

A third market coverage strategy is specially appealing when company resources are limited. Instead of going after a small share of a large market, the firm goes after a large share of one or few smaller segments.

For Example; Pepsi offers Diet Pepsi (Pepsi Max) for Diabetes patients and diet conscious people.

Segment 1Segment 1

Segment 2Segment 2

Segment 3Segment 3

CompanyMarketing

Mix

CompanyMarketing

Mix

C. Concentrated Marketing

Micromarketing (Local or Individual Marketing)

The practice of tailoring products and marketing program to the needs and wants of specific individuals.

Individual marketing has also labeled one to one marketing.

For example. Dell is doing individual marketing, by taking the order of every individual and prepare the computer accordingly for each customer.

CompanyMarketing

Mix

CompanyMarketing

Mix

IndividualCustomerIndividualCustomer

D. Custom Marketing Strategy or Micromarketing Strategy

Market Positioning

Market Positioning

Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the mind of target consumers

Positioning for Competitive Advantage

Product’s Positioning “The place the product occupies in

consumers’ minds relative to competing products”

i.e. Volvo positions on “safety”.

Marketers must:Plan positions to give products the greatest

advantageDevelop marketing mixes to create planned

positions

Choosing and Implementing a Positioning Strategy

Step 1. Identifying a set of possible competitive advantages. i.e. Competitive Differentiation, which may be of product, service, personnel and image etc.

Step 2. Selecting the right competitive advantage suitable to your organizational objectives and capabilities.

Step 3. Effectively communicating and delivering the chosen position to the market by different effective promotional medias.

ServicesDifferentiation

i.e. Delivery, Installation, Repair Services,

Customer Training Services

Product Differentiation

i.e. Features, Performance, Style & Design, or Attributes

ImageDifferentiationi.e. Symbols, Atmospheres,

Events

Personnel Differentiation

i.e. Hiring, Training Better People Than

Competitors Do

Identifying Possible Competitive Advantages

Market Segmentation1. Identify bases for segmenting the market2. Develop attractive segments

Market Targeting3. Evaluating Market Segments4. Selecting Target Market Segments

Market positioning5. Develop positioning for target segments6. Develop a marketing mix for each segment

Steps in Market Segmentation, Targeting, and Positioning

End of Chapter