25.11.19 - Market segmentation PDF

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Summary

A combination of the lecture notes and textbook information. All definitions and information....

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25.10.19

Marketing

Market segmentation

The importance of market segmentation o Market: people or organisations with needs/wants and the ability along with willingness to buy a product or service o Market segment: a subgroup of people or organisations sharing one or more characteristics that cause them to have similar product needs o Market segmentation: the process of dividing a market into meaningful, relatively similar and identifiable segments or groups. Uses environmental scanning and market research. o Markets have a variety of product needs/preferences o Marketers can define customer needs o Decision makers can define objectives and allocate resources accurately o Different consumers have different tastes o Feeds into strategic planning and target marketing strategy o Use marketing mix to target markets through environmental scanning: understand conditions such as political, economic etc. o Build customer satisfaction. o Links to marketing concept; integrates all organisational activities to increase customer satisfaction and benefiting organisation’s long-term goals. o Can be used to create customer value

Bases for segmentation -

Geographic Demographic Psychographic Benefit sought Usage rate

o Markets are segmented for 3 reasons: - Enables the identification of groups of customers with similar needs. Can analyse the behaviour of these groups - Provides information enabling specific matching of the design of marketing mixes with the characteristics of the segment - Helps marketers satisfy customer demand and meet organisation’s objectives

25.10.19

Marketing

Criteria for segmentation: o A segmentation scheme must produce segments that meet the 4 criteria: 1. 2. 3. 4.

Sustainability – segment large enough to warrant a special marketing mix Identifiability and measurability – segments must be identifiable Accessibility – members of targeted segments must be reachable with marketing mix Responsiveness – no special treatment needed

Strategies for selecting target markets 1. Undifferentiated strategy: - Views the market as one big market with no individual segments and thus requires a single marketing mix - Broad appeal: treat market as universal whole with marketing mix. - Maximum satisfaction for the whole market -

Advantages: potential savings on production and marketing costs, EofS. Disadvantages: Susceptible to competition, unimaginative.

2. Concentrated strategy: - Used to select one segment of a market for targeting efforts - Niche competitive advantage or differentiated. -

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Advantages: concentration of resources, meets narrowly defined segments and improve satisfaction, small firms able to compete, premium prices, exclusive brand image and strong positioning Disadvantages: Segments too small and large competitors may still target niche segmented and take market share.

3. Multisegmented strategy: - Chooses 2 or more well defined market segments and develops a distinct marketing mix for each -

Advantages: Financial success and EofS Disadvantages: high costs and cannibalization (over segmenting may take away market share from existing brands you own) Costs: Product design, production, promotion, marketing research and management

Positioning

25.10.19

Marketing

o Developing a specific marketing mix to influence potential customers’ perception of a brand, product line or an organisation....