MM271 Introduction to Marketing Topic 4 Identifying Market Segments & Targets.
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Transcript of MM271 Introduction to Marketing Topic 4 Identifying Market Segments & Targets.
MM271MM271Introduction to MarketingIntroduction to Marketing
Topic 4
Identifying
Market Segments & Targets
2-2-22
Learning ObjectivesLearning Objectives
By the end of this lecture, you will know
Explain what market segmentation is, when to
use it, and the five steps involved in segmentation.
Recognize the different factors used to segment
consumer markets
Develop a market-product grid to use in
segmenting and targeting a market.
Understand how marketing managers position
products in a market.
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1. An Overview1. An Overview
Segmentation aggregate prospective buyers into groups
(segments) that:have common needs; and
respond similarly to a marketing action of a firm
Targeting Evaluate the attractiveness of various segments Decide how many and which segments to enter
Positioning Define a product so that consumers will perceive it
to be different from other competing products
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1. An Overview1. An Overview
Choose the bases of segmentation &group buyers into segments
Develop a market-product grid& estimate the size of market
Pick the right one!!
Assess the attractiveness ofthe segments
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2. Segmentation2. Segmentation
2.1 Segmentation Variables – Consumer Market
GEOGRAPHIC
DEMOGRAPHIC
PSYCHOGRAPHIC
BEHAVIORAL
RegionDensity
Community
AgeFamilyGenderIncome
EducationOccupation
LifestylePersonality
OccasionsBenefitsUser statusUsage rateAwareness
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2. Segmentation2. Segmentation
2.1 Segmentation Variables – Consumer Market Geographic
For marketers operate in more than one geographic area
Easy to localize marketing mix activities
Some companies seek to find untapped geographic areas E.g. countries, states, provinces, regions, cities, districts
DemographicMost commonly used easy to observe & measure
Age: may not related to one’s need & buying power Gender: used for clothing, cosmetics, toiletries, magazines;
now spread to cars, deodorants, sports & financial services Income: used for car, boat, clothing, financial service, travel
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2. Segmentation2. Segmentation
2.1 Segmentation Variables – Consumer Market Psychographic
People in same demographic group may have very different psychographic characteristics
Lifestyle segmentation is gaining popularity as people are buying products to express their way of living
Personality: marketers are trying to associate products with their target market’s personality type
BehavioralBased on consumer knowledge, attitudes, uses or responses to a product
Some believe behavioral variables are the best starting point for segmenting markets
Occasion: when does one learn about, buy, or use a product? Benefit: the product attributes that are useful to consumers User/usage: frequency & volume of purchase & use
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2. Segmentation2. Segmentation
2.2 Develop Market-Product Grid Step 1
Classify the company’s available product into different categories
E.g.: breakfast, lunch, snacks, dinner
Step 2Line up different market segment against the number of product categories
Step 3Estimate the market size in each cell (market-product combination)In terms of sales revenue or number of customersCould use crude “guest estimates” if formal marketing research has yet to be conducted
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3. Targeting3. Targeting
3.1 Assessing the attractiveness of each segment Market size Expected growth Company’s competitive position
Level of competition
Substitute products
Power of buyers
Powerful suppliers
Cost of reaching the segment Compatibility with the company’s objectives &
resources
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3. Targeting3. Targeting
3.2 Targeting Strategies Undifferentiated strategy
Differentiated strategy
ConcentrationSingle-segment concentrationProduct specializationMarket specialization
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3. Targeting3. Targeting
3.2 Targeting Strategy Undifferentiated Strategy
1 product fits allignore market segment differencesmodern marketers have strong doubts about this strategy
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3. Targeting3. Targeting
3.2 Targeting Strategy Differentiated strategy
Different product offerings for different market segmentsHope to attain higher sales & market position in each oneHigher production & marketing costs
Product 1 Product 2 Product 3
Segment 1
Segment 2
Segment 3
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3. Targeting3. Targeting
3.2 Targeting Strategy Concentrated strategy – Single segment
One product goes after one market segmentHope to achieve strong market position in the segment for greater knowledge, know-how & reputationHigher risks if the market of the particular segment suddenly turns negative Product 1 Product 2 Product 3
Segment 1
Segment 2
Segment 3
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3. Targeting3. Targeting
3.2 Targeting Strategy Concentrated strategy – Product Specialization
Product 1 Product 2 Product 3
Segment 1
Segment 2
Segment 3
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3. Targeting3. Targeting
3.2 Targeting Strategy Concentrated strategy – Market Specialization
Product 1 Product 2 Product 3
Segment 1
Segment 2
Segment 3
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3. Targeting3. Targeting
3.2 Targeting strategies Factors of considerations:
Company resources Limited resources
The degree of product variability Standardized product
Product’s life-cycle stage Early stages
Market variability Similar tastes & preferences
Competitors’ marketing strategies Be careful of using opposites
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4. Positioning4. Positioning
4.1 Positioning for Competitive Advantage Definition
Create meaningful differences that distinguish one from its competitors
Steps:Identify possible competitive advantage
Choose the right competitive advantage
Communicate & deliver the chosen position
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4. Positioning4. Positioning
4.2 Identify possible competitive advantage
Competitive advantage
An advantage over competitors gained by offering consumers superior value through:
Lower prices
More benefits that justify higher prices
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4. Positioning4. Positioning
4.2 Identify possible competitive advantage Ways for creating differentiation
PRODUCT
SERVICES
PERSONNEL
CHANNELSIMAGES
ORGANIZATION/HERITAGE
USER/USAGE
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4. Positioning4. Positioning
1 I M P O R T A N TI M P O R T A N T
2 S U P E R I O RS U P E R I O R
3 P R E E M P T I V EP R E E M P T I V E
4.2 Identify possible competitive advantage Criteria for selecting differentiation premise
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4. Positioning4. Positioning
4.3 Select the right competitive advantage Perceptions of consumers
Which attributes are important for a particular product?
How do the consumer judge the existing products according to the important attributes?
Perceptual mapIllustrate two important attributes of a product class
Display the relative position of different products or brands in the minds of consumers on the map
Identify the location in which the company wish to “position”