Segmentation and Targeting ATM Semester 2 Lecture 1 By Sanemkhan Nurillaeva

Target market strategies Customer Profiles Agenda Segmentation PITA Model Target market strategies Customer Profiles

Target Marketing Process Target marketing strategy consists of 3 separate steps Dividing the market into meaningful segments Selecting segments Design a unique marketing mix for each segment (Solomon, et.al, 2013)

1. Segmentation

Segmentation: Definition Market Segmentation Dividing a market into distinct groups of buyers with different needs, characteristics or behavior, who might require separate products or marketing mixes. (P. Kotler) The process of dividing a larger market into smaller pieces based on one or more meaningful , shared characteristics (Solomon, et.al, 2013)

Psychographic /Lifestyle Segmenting consumer markets Behavioural End use Benefits sought Usage rate Loyalty Attitude Readiness to purchase Geographic Region County size City size Density Climate Demographic Age Gender Race Ethnicity Marital status Family size Family life cycle Income Psychographic /Lifestyle Social Class Activities Interests Opinions

Social Class Social Grade Description % HRP population (UK) AB Higher & intermediate managerial, administrative, professional occupations 22.17 C1 Supervisory, clerical & junior managerial, administrative, professional occupations 30.84 C2 Skilled manual occupations 20.94 DE Semi-skilled & unskilled manual occupations, Unemployed and lowest grade occupations 26.05 Office of National Statistics (2011)

Population Density in Uzbekistan UN Office for the Coordination of Humanitarian Affairs (2009)

Population in Uzbekistan

Population in Uzbekistan Age structure: 0-14 years: 24.9% (male 3,693,838/female 3,514,734)  15-24 years: 20.5% (male 3,008,779/female 2,934,534)  25-54 years: 43% (male 6,178,921/female 6,255,715)  55-64 years: 6.8% (male 926,129/female 1,036,576)  65 years and over: 4.8% (male 588,881/female 791,609) (2014 est.)

2. PITA model

PITA = Population*Incidence*Times*Amount PITA Model Companies are most fascinated by increasing sales to present customers and finding attractive customer segments. Sales volume is a simple mathematical formula. Understanding the formula should help unlock some possibilities on how to generate new sales volume. PITA = Population*Incidence*Times*Amount

PITA = Population*Incidence*Times*Amount PITA Model PITA = Population*Incidence*Times*Amount P – Population, a number of targeted people I – Incidence is the proportion of the target population that has (or would) purchased what you are selling T – Times, frequency of purchase A – Amount of money consumers (or merchants) are willing to pay.

PITA Model Example Trombopol –medicine used in order to prevent heart attacks Target: Uzbek Male 55-64 years (≈927,000) PITA= 927,000*5%*12times a year* 6000 sums= 3.3372 bln UZS

3. Targeting

Targeting: Definition Targeting –Evaluating attractiveness of each potential segment and decide which of these groups marketers will invest resources in to try to turn them into customers (Solomon, et.al, 2013) Target market – The customer group or groups selected by the firm

Targeting Strategies There are 4 main Targeting Strategies (Solomon, et.al, 2013) 1. Undifferentiated Marketing 3. Concentrated Marketing 2. Differentiated Marketing 4. Customized Marketing

1. Undifferentiated Marketing Company concentrates on common needs which must be greater than the needs that separate them Whole Market Marketing mix Company

Undifferentiated Marketing Example Organization Marketing mix Target market Everybody Product Price Promotion Place Post Office

2. Differentiated Marketing Company develops a separate marketing mix to meet the needs of each segment Marketing mix 1 Marketing mix 2 Marketing mix 3 Segment 1 Segment 2 Segment 3 Company

UMS tariffs in Uzbekistan Differentiated Marketing Example UMS tariffs in Uzbekistan

Differentiated Marketing Example Marketing mix 1 Marketing mix 2 Marketing mix 3 Businessmen Students Young Entrepreneurs

3. Concentrated Marketing Company focuses its efforts on offering one or more products and to a single segment using certain marketing mix Marketing mix Segment 1 Segment 2 Segment 3 Company

Concentrated Marketing Example Marketing mix Industrial Cars Luxury Sport Cars Family Cars

4. Customized Marketing Company often works in B2B sector with one or few large clients and develops a product and services that only these clients will use. Marketing mix 1 Marketing mix 2 Marketing mix 3 Customer 1 Customer 2 Customer 3 Company

Customized Marketing Example Marketing mix 1 Marketing mix 2 Marketing mix 3 Supermarket Construction Group Factory

4. Customer Profiles

Customer Profile: Definition Customer/Segment –Description of the “typical” customer in that segment. Once a marketer has identified a set of usable segments, it is helpful to generate a profile of each to really understand segment members’ needs and to look for business opportunities (Solomon, et.al, 2013)

Customer Profile Example Jasur: Male 20-25, Student from Tashkent, Uzbek Websites TV Channels Entertainment Games Places to eat Shopping Hobby

Customer Profile Example Jasur: Male 20-25, Uzbek Web Sites: Facebook OK.ru YouTube Gazeta.UZ Afisha.Uz Games: PES 2016 Dota Candy Crash Saga War Craft Channels to watch: ТНТ Yoshlar MY5 МУЗ ТВ Places to Shop: Korzinka.uz MAKRO Poytaht Entertainment: Bowler Premier Hall Hobby: Playing Football Places to Eat: Bibigon BBQ Burger PlovSamsa.uz Caramel coffee and pastry

Customer Profile Determining Customer Profile shows customer destinations, shopping and eating habits, interests, activities and media preferences. This information helps to find ways of “catching” target customers through marketing communications of the company.

Reading Brassington F. and Pettit S. (2003) Principles of Marketing, Pitman Publishing. Chapter 5 Jobber, D.(2001) Principles and Practice of Marketing, McGraw Hill. Chapter 7 P.Kotler, Principles of Marketing,3rd European edition,2002, Prentice Hall. Chapter 9 and 10 Solmon, M. et al (2013) Marketing: Real People, Real Decisions, 2nd European ed. Pearson Education Chapter 6