MARKET SEGMENTATION

TARGETING

AND
POSITIONING
BY B .W MAINA

MARKET
1. PLACE Market place where buyers and sellers meet to exchange goods and services e.g. Wakulima Market SITUATION Set of conditions consisting of buyers and sellers of a certain product Economics definition DEMAND Market demand for a particular good.

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3.

MARKET : MARKETERS VIEWPOINT

Buyers with : Needs to satisfy with a product they want Money or income to spend which constitutes purchasing power giving them the ability to buy Willingness to spend money to buy the good or service in question Buyers constitute the market Sellers constitute the industry

MARKET : MARKETERS DEFINITION

A market consists of all potential customers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want

TARGET MARKETING
Process of dividing the market into major market segments , evaluating them , and selecting and targeting one or more segment, and deciding on the companys positioning in each market

TARGET MARKETING PROCESS

In target marketing , the seller engages in: 1. Market segmentation Identifies the segments comprising the market

2.

Market targeting Selects or aims at one or more of the segments after evaluation Product positioning Develops product and marketing mixes tailored to each segment

3.

RATIONALE FOR TARGET MARKETING

1. CONSUMER DIVERSITY OR HETEROGENEITY

Buying habits and requirements are heterogeneous Different tastes and preferences Consumers widely scattered /spread geographically Consumers may be too numerous Difficult to serve all these consumers through mass marketing

RATIONALE FOR TARGET MARKET(CONT.)

2. SCARCITY OR RESOURCES AVAILABLE TO FIRM Lack of resources and energy to serve everywhere Difficulties in competing everywhere sometimes against superior odds Easier to serve smaller than larger market due to better focus and concentration More efficient and effective use of resources Enables firm to match organizational capabilities with specific groups of customers Firms perform better by identifying and concentrating on the most attractive parts of the market

MARKET SEGMENTATION
Consists of taking the total heterogeneous market for a product and dividing into several sub markets or segments , each of which tends to be homogeneous in all significant aspects Involves taking the whole market and dividing it into homogeneous units with similar characteristics such that they react uniformly to given stimuli in the market

MARKET SEGMENTATION(CONT)
Entails developing different demand schedules/curves for each market segment instead of having only one for the entire market Groups together in the same segment consumers with similar needs which minimises differences among consumer groups and makes it easier to serve them Represents the ultimate extension of the marketing concept starting with consumers and what they want, and recognizing that not all people are alike and that one mans meat is one mans poison

MARKET SEGMENTATION AND CUSTOMIZATION

Products may be tailor-made or custom-made for consumers recognizing each consumer is unique and constitutes a market by himself In industrial marketing products may be made according to buyers specification In consumer markets customization is possible but difficult as consumers are too numerous and quantities taken by each consumer too small

ADVANTAGES OF MARKET SEGMENTATION

Easier to develop and implement a suitable market mix (4ps)for each segment since marketing mix variables can be tailored to appeal to specific customer groups Marketing effort can be focused on customers with the greatest purchase interest instead of scattering it everywhere Possibility of concentrating on the market in depth Easier to understand customer needs and respond appropriately Easier to develop and adjust product to demand Ensures more efficient use of marketing resources Easier to match organizational capabilities with customer groups

ADVANTAGES OF MARKET SEGMENTATION (cont)

Easier to understand customers better end develop customer profile Ability to identify marketing opportunities Easier too build customer relationship to promote repeat purchases Easier to monitor competitors activities Easier to get in-depth knowledge of the segment through marketing research Possible to specialize in products or services for small segments Price discrimination can be undertaken in different segments to increase profitability .

PROBLEMS OF SEGMENTATION
Difficult to select the most appropriate segmentation variable Costs may increase due to many segments e.g. inventory , advertising promotional costs Small segments may be unprofitable Lack of economies scale

MARKET SEGMENTATION VARIABLES OR FACTORS

Market segmentation may be based on the following: Geographic segmentation Demographic and social- Economic segmentation Social class or Psychographic segmentation Behavior : Product-related segmentation

GEOGRAPHIC SEGMENTATION
Market divided into different geographical units eg
Provinces, regions or districts soft drinks Rural versus urban bakeries, newspapers

Company concentrates in one geographic area instead of operating nationally Useful in initially defining markets

DEMOGRAPHIC AND SOCIO-ECONOMIC SEGMENTATION

Uses population characteristics such as:

Age babies, young, teenager, old e.g. clothes, toys, music Sex male, female e.g. clothes, hairdressing cosmetics,magazines which appeal to men or women Health condition/concerns diet foods, low-tar cigarettes, clubs Family size products packaged in family sizes Marital status married, single, divorced e.g. contraceptives,counseling,family planning

DEMOGRAPHIC AND SOCIO-ECONOMIC SEGMENTATION (cont)

Income-low, medium,high income groups e.g. cars, houses, hotels, clubs Occupation teacher, lawyer, doctor, judge, banker Education primary, secondary, college e.g. training courses, books, jobs Religion Catholic, Protestant, Muslim e.g. clothes, food, books, radio and TV station Ethic group e.g. FM radio stations, food, clothes Race/Nationality e.g. Food such as Indian, Chinese; clothes. *The above factors are the most popular bases for distinguishing between customer groups

SOCIAL CLASS- PSYCHOGRAPHIC SEGMENTATION

Social class lower, middle, upper Lifestyle swingers, high fashion, traditionalist, sophisticate, luxurious living. Personality ambitious, aggressive, detached, intelligent, social Products can be designed to appeal to particular social classes or lifestyle e.g.. Clothing, luxury cars, leisure activities, hobbies, games (golf), schools (academies), homes, hospitals, political parties, reading habits, mobile phone tariffs.

BEHAVIOURAL:PRODUCTRELATED SEGMENTATION
Benefits sought - quality, economy,convenience, prestige, durability, comfort, safety, taste. Use occasion - regular vs special occasion e.g.. Flower giving (Valentines Day, Hospital, Weddings, Funeral); Business vs. vacation air travel; normal wines vs. champaigne for celebrations. User status non-user, ex user, potential user, first-time user, regular user e.g. airline flier vs. non flier; drug users rehabilitation programmes could focus on regular users to quit the habit or to discourage non- users Usage rate light, medium, heavy users e.g.. Coffee and beer drinkers, cigarette smokers, bank accounts. Loyalty status none, medium, strong, e.g. supermarket loyalty cards

BEHAVIOURAL:PRODUCTRELATED SEGMENTATION (cont)

Readiness stage- unaware, aware, informed, interested e.g. HIV tests, pap tests, breast screening. Attitude towards the productenthusiastic, positive, negative, indifferent, hostile, eg voting for a party Application by professionals or amateurs e.g. golf clubs, cameras, car (rally cars), sports shoes

PRODUCT LIFE CYCLE AND MARKET SEGMENTATION

Consider the products life cycle (PLC) Most products have a distinct life cycle: Introduction, Growth, Maturity, Saturation and Decline Needs and lifestyles change leading to changes in demand requiring revision of strategies for market segmentation especially in terms of product differentiation eg in
Introductory phase No competition hence no need for differentiation Growth stage Competitive strategy required and product may be differentiated.

REQUIREMENTS FOR EFFECTIVE SEGMENTATION

For effectiveness, the market segments should exhibit the following characteristics: Measurability segment should ideally be quantifiable. Accessibility segment must be accessible i.e.. can be reached Substantiality segment should be large enough to allow profitability operations Actionability it should be possible to formulate effective programmes for attracting and serving the chosen segments Responsiveness segment should be willing to react to the unique marketing programmes developed e.g. willingness to buy in response to variations in marketing mix Differentiability segments should be conceptually distinguishable and respond differently to different marketing mix.

MARKET TARGETING Market targeting is the process by which the firm identifies and selects one or more market segment(s) requiring a separate marketing mix. Market segmentation reveals the market segmentation opportunities facing the firm. Market targeting entails evaluating the segments identified and selecting the most attractive one(s)

MARKET TARGETING :EVALUATION For proper evaluation it is useful to assess: The profit potential of the various segments The strengths and weakness of the firm Strengths and weakness may be assessed by considering
Human resource capacities skills, abilities, competencies and experience Material resources facilities, equipment Financial resources money available

MARKET COVERAGE STRATEGY

Three strategies are available for the firm when deciding how many market it will serve and how it will do it .These are:

Undifferentiated marketing strategy

Differentiated marketing strategy Concentrated marketing strategy

UNDIFFERENTIATED MARKETING STRATEGY The firm ignores market segment differences and goes for the whole market with the product The focus is on what is common in the needs of consumers rather than on what is the different The firm designs a product and marketing programme that will appeal to the broadest numbers of buyers The firm relies on mass distribution and mass advertising

UNDIFFERENTIATED MARKETING STRATEGY: ADVANTAGES AND LIMITATIONS

Firm can realise economies of scale leading to low costs and low prices Strategy appropriate when market is largely homogeneous i.e. buyers has the same tastes, buy similar amounts Strategy fails to recognize variety in consumer tastes and preferences Strategy inappropriate when competitors practice active segmentation using differentiated products

DIFFERENTIATED MARKETING STATEGY

Firm decides to operate in several segments of the market Firm designs separate differentiated offer for each market segment e.g. cars , tooth pastes A good competitive strategy leading to higher profits Business costs could,however, increase if markets are small

CONCENTRATED MARKET STRATEGY

The firm goes after a large share of one or a few sub markets e.g.:
VW concentrating on small car market Harlequin concentrating on paperback romance novel market

Strategy used when the firms resources are limited Firm can get strong market position in the market segment served Firm can get greater knowledge of segments needs Firm may enjoy economics of scale High risks should the segment turn sour

FACTORS AFFECTING CHOICE OF MARKET COVERAGE STRATEGY

1. 2. Company recourses If resources are limited use concentrated marketing Product homogeneity Undifferentiated marketing more suited for homogeneous products e.g. steel , cement Products capable of design variation more suited to differentiation or concentration e.g. cameras , cars Product stage in the production cycle During introduction of a new product one version may be launched and undifferentiated or concentrated marketing may be used In other stages of PLC use differentiated marketing

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FACTORS AFFECTING CHOICE OF MARKET COVERAGE STRATEGY (cont)

4.Marketing homogeneity If buyers have same tastes , buy the same amounts per period, react in the same way to market stimuli, use undifferentiated strategy 5.Competitive marketing strategies If a competitor practises active segmentation , undifferentiated marketing can be suicidal If competitor practice undifferentiated marketing , use differentiated or concentrated marketing to gain advantage

PRODUCT POSITIONING
Positioning is the act of designing the companys product and marketing mix to fit a given place in the consumers mind You position or the place the product in the mind of the consumer or prospect Positioning is what you do to the mind rather than the product For each segment the company develops and communicates a product-positioning strategy to compete effectively

ADVERTISING AND POSITIONING

In positioning a product , consumer perception plays a key role Advertising is a useful tool for positioning and repositioning as it is greatly influences consumer perceptions and preferences Advertisements should be believable What is portrayed in the ad must be compatible with the brand

PRODUCT ATTRIBUTE USED IN POSITIONING

High quality - price used Low in alcohol - for beer;low tar,mild cigarette Strong or weak For special occasions For power Guinness As clear as your conscience For use with meals or at parties Taste For ladies e.g. Redds Good handling (BMW) Economical (Nissan) High picture quality Flat TV screen Reliable

POSITIONING AGAINST OTHER PRODUCTS

Product may be positioned against other products,eg Bic pens and others Coca cola vs. Pepsi cola Omo vs. Toss vs. Persil Colgate vs. Close-up vs. Aquafresh Batteries

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