Unit 1: MARKETING SEGMENTATION (2) 18/05/2018

SEGMENTING INDUSTRIAL MARKETS Strategies used for industrial markets (as opposed to consumer markets): By location Customer size – the size of a company by turnover and/or staff numbers can give an idea on needs Usage rates Industry classification – the nature of the business Product use 18/05/2018

Targeting and positioning Segmentation: identifying which groups (segments) of consumers will respond to which types of marketing activity Targeting: the organisation will use this information to select those segments best suited to what it offers Positioning: research will discover why certain consumers buy certain products – this allows an organisation to develop those products and promote them to the optimum advantage 18/05/2018

Targeting strategies Once various segments have been identified, a marketer will need to choose the organisational targeting strategy to ensure each segment is targeted with the product/service they are most likely to want/buy/need 18/05/2018

Niche/concentration strategy Targeting one specific, well defined segment within the market Advantage: can work well, especially with smaller firms who have smaller budgets and less resources Disadvantage: all your eggs in one basket – what happens if people stop buying that product/ service? 18/05/2018

Mass/undifferentiated strategy Targeting the whole market with a single product/service, based on the assumption that all customer needs are basically similar Advantage: can produce product/service on a large scale, which means lower production costs and lower selling prices to customers Disadvantage: do all customers want the same standard product or today, are more prepared to pay a premium for a specialist product for them specifically? 18/05/2018

Differentiated/selective strategy Target each identified segment with a specifically chosen product/service and marketing mix, especially designed for that segment Advantage: Tailoring the product/service and marketing mix to the specific needs to increase satisfaction and enhance customer loyalty = profit Disadvantage: can become confusing for customers in an identified segment, if are targeted with several such products at any one time. Also more expensive to target several specific segments at any one time 18/05/2018

Further reading P415- p451 Principles of Marketing; Kotler et el (2005) 18/05/2018