CERTIFICATE IN BUSINESS

MANAGEMENT

LESSON 7 – CONSUMER BEHAVIOUR AND SEGMENTATION, TARGETING AND POSITIONING

“Anticipating consumer behaviour is

not an option for marketing mangers:

it is their job description”. Foxal – Gordon University of Keele

TYPES OF MARKETS

Consumer Market

All the individuals and households who buy goods and services for

personal consumption.

Industrial/Business-to-Business or Organisational Market Individuals or groups that purchase a specific kind of product for re-sale,

use directly in producing other products or use in general daily operations

of its business. (organisation consumption)

DEFINITION - CONSUMER BEHAVIOUR

Consumer behaviour can be defined as the decision-making

process and physical activity involved in acquiring, evaluating,

using and disposing of goods and services.

Consumer buyer behavior : the buying behavior of final

consumers, individuals and households, who buy goods and

services for personal consumption.

FACTORS THAT INFLUENCE CONSUMER BEHAVIOUR

Cultural factors

Social factors

Personal factors

Psychological factors

BUYING DECISION PROCESS

NEED RECOGNITION

Occurs when the buyer recognizes a problem or need

triggered by:

Internal stimuli - A person’s normal needs – hunger, thirst

rises to a level high enough to become a drive.

External stimuli - a television advertisement for a vacation in

Singapore or he admires a friend’s new smartphone.

INFORMATION SEARCH

•Family, friends, neighbors •Most influential source of information

•Advertising, salespeople •Receives most information

from these sources

•Mass Media •Consumer-rating groups

•Handling the product •Examining the product •Using the product

Search Internal Memory

Personal Sources

Commercial Sources

Public Sources

Experiential Sources

Internal Search

EVALUATION OF ALTERNATIVES

• How the consumer processes information to arrive at brand

choices: that is, how consumers process information to choose

among alternative brands

• Buyer establishing a set of attributes or criteria against which to

compare the products/brands under consideration.

PURCHASE DECISION

The act by the consumer to buy the most preferred

brand

The purchase decision can be affected by:

Attitudes of others

Unexpected situational factors

POST – PURCHASE EVALUATION

• The satisfaction or dissatisfaction that the consumer feels about the purchase

• Relationship between:

Consumer’s expectations

Product’s perceived performance

• The larger the gap between expectation and performance, the greater the consumer’s dissatisfaction

• Cognitive dissonance is the discomfort caused by a post-purchase conflict

Customer-Driven Marketing Strategy:

Creating Value for Target Customers

A MARKETER’S VIEWPOINT

A market means an aggregate of people, who

as individuals or organisations have a need for a

certain product and the ability, willingness and

authority to purchase such products for

consumption.

REQUIREMENTS OF A MARKET

Need

Ability

Willingness

Authority

+

TARGET MARKETING

MARKET

SEGMENTATION

MARKET

TARGETING

MARKET

POSITIONING

MARKET SEGMENTATION

Dividing a market into smaller groups with distinct needs,

characteristics, or behaviour that might require separate marketing

strategies or mixes.

(Philip Kotler – 13th edition)

Its objective is to design a marketing mix that precisely matches the

expectations of customers in the targeted segment

VARIABLES/BASES OF SEGMENTING A CONSUMER MARKET

Bases/Variables for

Segmenting a Consumer Market

Demographic

Segmentation

Geographic

Segmentation

Psychographic

Segmentation

Behavioural

Segmentation

Demographic Segmentation

GENDER

AGE

FAMILY SIZE

NATIONALITY

RELIGION

EDUCATION

INCOME

OCCUPATION

Age – Milk powder, soap, toys, insurance, savings, medicine,

cosmetics (skin repair, remove wrinkles),

Gender – clothing stores for boys and girls, Hero Honda targeting

bikes for young women, Cosmetics (face wash, perfumes, creams)

Income – restaurants, Hotels, Banks, Apartments, Automobile

(TATA)

Demographic Segmentation

Geographic Segmentation

COUNTRY

REGIONS

STATES

DISTRICTS

DENSITY

Geographic Segmentation

Automobiles, Hotels, Banks, Modern Trade, Consumer

electronics, Food, Clothing

Psychographic Segmentation

SOCIAL CLASS

LIFESTYLE

PERSONALITY

Dilmah – T- Bars – for sophisticated trendy upscale

youth

Starbucks

Clothing – Levis

Housing

Psychographic Segmentation

Behavioural Segmentation

PURCHASE OCCASION

USER STATUS

USEAGE RATE

BENEFITS SOUGHT

LOYALTY STATUS

Occasions – orange as a morning drink, Coca-colas “Good

Morning” campaign for diet coke, Coke for parties, festivals

Benefits – Toothpaste, Restaurants

Behavioural Segmentation

Measurable Ability to measure size, purchasing power

Accessible Segments can be effectively reached and served.

Substantial Segments are large or profitable enough to serve.

Differential Segments must respond differently to different marketing mix elements

& programs.

Actionable Effective programs can be designed

to attract and serve the segments.

Effective Segmentation Criteria

Benefits of Market Segmentation

Satisfying and delighting customers

Customer Retention

Target marketing communications

Segment Leadership

Better understanding of the competitors

Creates competitive advantage

Effective Resource Allocation

Increases profitability

MARKET TARGETING

Market segmentation reveals the firms market-segment

opportunities.

The organisation now has to evaluate the various

segments and decide how many and which ones to

serve. (Selecting)

EVALUATING MARKET SEGMENTS – THE

PROCESS OF MARKET SELECTION

Segment size and growth

Analyze current sales, growth rates and expected profitability

for various segments.

Segment structural attractiveness

Consider effects of: competitors, availability of substitute

products and, the power of buyers & suppliers.

Company objectives and resources

Company skills & resources needed to succeed in that

segment(s).

Look for competitive advantages.

MARKET TARGETING

Selecting Target Market Segments

Target market consists of a set of buyers who share

common needs or characteristics that the company

decides to serve

Target Marketing Strategies

UNDIFFERENTIATED MARKETING

A strategy, in which an organisation decides to ignore market segment differences and target the whole market with one offer.

Mass marketing Focuses on common needs rather than what’s different Designing a single marketing mix for entire market

Whole Market Marketing Mix

DIFFERENTIATED MARKETING

A strategy in which an organisation decides to target several market segments and designs separate offers for each

Targeting two or more segments by developing a marketing mix for each

Goal is to achieve higher sales and stronger position

More expensive than undifferentiated marketing

CONCENTRATED MARKETING

A strategy in which an organisation goes after a large share of one or few segments or niches • Limited company resources • Superior knowledge of the market • More effective and efficient

Segment 1

Marketing Mix

Segment 2

Segment 3

INDIVIDUAL OR CUSTOMIZED MARKETING Individual or customized marketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations.

Customer 1

Marketing Mix 2 Customer 2

Marketing Mix 3 Customer 3

POSITIONING

Positioning is arranging for a market offering to

occupy a clear, distinctive and desirable place relative to competing products in the minds of the target consumers.

(Philip Kotler – 13th edition)

Positioning Variables

Benefit positioning

Ceylinco Insurance - “On the spot claims payment”

Mortein coil - a good night sleep for 12 hours

Signal – strong teeth and prevention of decay

Close-up – long lasting fresh breath and dazzling white

Product category leader

Panadol is the leader in the pain reliever market

Vim is the leader in the scouring powder market

Positioning Variables

Against the Competitor

Paracetamol and Panadol

Coke and Pepsi

Munchee and Maliban

Dialog and Mobitel

Signal vs Clogard

Avis rental cars – we are no: 2, we try harder

Positioning Variables

Unique Selling Proposition

LG Door Cooling Refrigerators - This technology is a patent for LG.

Apple Macintosh – for graphic users

Positioning Variables

Quality/Price positioning

IBM

3M

Rolex

Apple iphone

Positioning Variables

TEXT BOOKS TO REFER

Principles of marketing – Phillip Kotler 15th edition

Principles and practice of Marketing – David

Jobber 17th edition

Principles of Marketing – Frances Brassington

Marketing – Concepts and Strategies – Dibb Simkin

Essentials of marketing – Jim Blythe