2. Ways marketers segment
consumer groups?
Process of classifying customers into groups with different
needs, characteristics or behaviours.
Marketers analyse four different bases to segment the
market:
1. Geographical segment
2. Demographic segment
3. Psychographic segment
4. Behavioural segment
3. Geographical Segment
where are consumers located = country, states and cities?
These can be researched to understand needs of particular
region i.e. regionalised approach to production
4. Demographic Segment
understanding characteristics such as age, gender, family,
income, occupation, education, religion, ethnicity and
nationality.
These variables strongest influences of creating overall
profile of target market as they have a measurability and
strong likenesses that can be concluded from each
characteristic.
5. Psychographics Segment
Includes the social class, lifestyle and personality
Social class impacts strongly on type of product they enjoy
or prefer
Businesses typically have social class in mind when they
design their product or service
Lifestyle choices and preferences impact on marketing mix.
6. Behavioural Segment
to understand what consumers know and feel about a
product and how they will respond to the product
Attitude of consumer is important aspect
marketers are also concerned with knowing when a person
is likely to buy or have the idea that they need to buy termed
“occasion segmentation” use this segmentation to have
product available at the right time.
Benefit segmentation whereby marketers aim to understand
the benefits desired by consumer.
7. Market Targeting
Once business has engaged with the market segmentation
process they next need to decide on which segments of the
market they will focus their attention.
To do this, businesses need to evaluate and select a target
market.
Evaluating the market segment involves analysing three
elements:
1. Size and growth
2. Structural attractiveness and company objectives
3. Resources
8. Size and Growth
Selecting segments of the market that have appropriate
growth rate and size
This is based on sales, sales projections and profit margins
will help the business to meet their organisational objectives
9. Structural Attractiveness
Within this an analysis of the competitors, power of buyers,
and suppliers all need to be considered
If market is flooded with similar products may be structurally
unattractive
If buyers hold the power and can affect pricing maybe
unattractive too
Power of suppliers can impact structural attractiveness;
where suppliers are large without much competition, may
hold power to restrict supply and control prices
10. Resources
Objective of a business combined with the resources
available to the business can contribute to how an
organisation will evaluate the suitability of a market segment.
If market segment does not fit the organisational objectives
and resources despite the size, growth and structural
attractiveness the business might choose a different better
suited market segment to concentrate its efforts.
11. Post Market Evaluation
Business will turn its attention to selecting a market segment
or segments
Ultimately the business will choose a target market which is “
a set of buyers with common needs or characteristics that the
company decides to serve.
Three options are open:
1. Undifferentiated marketing
2. differentiated marketing
3. concentrated marketing
12. Undifferentiated Marketing
means business will choose not to consider the market
segment characteristics and differences and instead choose
to blanket the market with their product.
Mass marketing „one size fits all‟ style approach
Advantages include cheap production and advertising
Disadvantages might cost in terms of losing business to
competitors who can provided more tailored product/service
13. Differentiated Marketing
Takes on a more personalised view of the right product for
the right segment.
Production and advertising more expensive
advantages include sales are usually higher than in
undifferentiated marketing. Brand loyalty is usually also
higher as consumer are more loyal to a brand that has been
tailored to best meet their needs.
14. Concentrated Marketing
This approach is suited where businesses do not have
marketing capabilities to use differentiated marketing
approach or where many submarkets with special needs
exist.
Businesses in this situation develop a specialisation and
greater in-depth understanding of their product and how
consumers use their product.
Resources are limited
example apple targets personal user segment with its ipod,
Dell computers and business users and personal
15. Product Positioning and
Differentiation
Product positioning occurs after the business has
determined to which segment that will target.
Product positioning is the way consumers define or
understands features of product
Consumer have position in mind for product and have a
comparison in mind for alternative products
Role of marketer to assign a value proposition for the
product which is how the business will differentiate their
product from the competition.
16. Various strategies for positioning a product are available to
marketers.
The process of differentiating and positioning a product
involves four steps:
1. Identifying a set of possible value differences
2. Selecting the right competitive advantage
3. Selecting an overall positioning strategy
4. Developing a positioning statement
** Once these steps have been followed, marketer can
implement the strategy and begin to communicate their
decisions with target market.
17. Identify a set of Possible value
differences
Brand Positioning can be achieved through a process of
mapping out the competition in the minds of consumers.
Marketer will also identify possible competitive advantages,
whereby the business achieves an advantage over
competitors based on offering the best solution to the
consumers needs. This might be through lower prices, better
quality, or some other factor that creates an advantage.
18. Overall Positioning Strategy
Where the price continuum will meet somewhere along the
price continuum.
The value proposition of a brand is important here, providing an
answer as to why the consumer would choose to buy this
product or brand.
In one positioning strategy they will receive a higher quality
product and pay a higher price
Another strategy promises comparable or better quality with
competition but with similar or lower price
Another position suggest same quality for a lower price
A business might try to offer lower price this however affects
profit considerably.
19. Summary of Positioning
Developing a positioning statement is the last step in
differentiating and positioning a product/brand.
Position of brand should be concisely articulated in a
positioning statement
The statement should include target segment, and their
needs, the brand name and its objectives and how it differs
from competition.
This statement can then be used in delivering the
differentiated product and communicating its position to the
target market.
