Segmentation, Targeting & Marketing Mix Lecture 5

The STP Process Segmentation Target Segment Market Positioning Develop segment profiles Target Segment Select target segments p. 311 Market Positioning Develop positioning for each segment Develop the offer for each segment

Three Major Steps in Target Marketing Market segmentation Dividing a market into distinct groups of buyers with different needs, characteristics or behaviour who might require separate products or marketing mixes Market targeting Evaluating each market segment’s attractiveness and selecting one or more of the market segments to enter Market positioning Setting the competitive positioning for the product and creating a detailed marketing mix p. 312 Overall demand for a product or service at any point of time is fixed. The number of existing and potential customers provides an organisation with a specific size of business opportunity. A broader definition of market should be used to enable a business manager to consider all opportunities.

Market Segmentation Markets consist of many segments in some cases. A company may differentiate products and marketing strategy for every segment or concentrate its marketing activities on only one or a few segments. For example: DeBeers, "A diamond is forever", N.W. Ayer & Son, 1948. They adopted the SAME advertising campaign for their chosen segment/s. What do those segments include? Cigarette companies have developed sophisticated campaigns targeting men, women, and children in different socioeconomic segments. Many of these strategies circumvent the Indian tobacco advertising ban.

Market Segmentation All customers are NOT the same Market segmentation groups together customers with similar needs so that offers are developed to maximise the delivery of superior value. Must be: Measurable Accessible Large enough Three Major Steps in Target Marketing Today’s companies are moving away from mass marketing and product-variety marketing and towards target marketing. Target marketing can help sellers to find their marketing opportunities more efficiently. As a result of the increasing fragmentation of Australian mass markets into hundreds of micromarkets, each with different needs and lifestyles, target marketing is increasingly taking the form of Micromarketing—a form of target marketing in which companies tailor their marketing programs to the needs and wants of narrowly defined geographic, psychographic or behaviour benefit segments. Three major steps in target marketing: Market segmentation Dividing a market into direct groups of buyers who might require separate products or marketing mixes; the process of classifying customers into groups with different needs, characteristics or behaviour. Market targeting Evaluating each market segment’s attractiveness and selecting one of more segments to enter. Market positioning Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers; formulating competitive positioning for a product and creating a detailed marketing mix.

Bases for Segmenting Consumer Markets H A R T E I S 1. Demographic 3. Behavioural 2. Geographic 4. Psychographic

Bases for Segmenting Consumer Markets Geographic Segmentation calls for dividing the market into different geographical units such as nations, regions, states, municipalities, cities or neighbourhoods Demographic segmentation Consists of dividing the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race and nationality

Bases for Segmenting Consumer Markets Psychographic segmentation Buyers are divided into different groups based on socioeconomic status, lifestyle or personality characteristics Behavioural segmentation Divides buyers into groups based on their knowledge of the product, their attitude towards it, the way they use it and their responses to it

SEGMENTING BUSINESS AND GOVT MARKETS Bases for Segmenting Business Markets Demographics Personal Characteristics Situational Factors Operating Variables Purchasing Approaches

Major segmentation variables for Business markets

MARKET TARGETING STRATEGIES Product Life Cycle: Introduction Growth Maturity Decline

Market Targeting Strategies Undifferentiated marketing whole market one mix Differentiated marketing several market segments several mixes Concentrated marketing one market segment one ideal mix

ACTIVITY: Choose ONE and identify its key segments and targeting strategy

Marketing Mix Product: Product Positioning: Principle uses of Positioning in Marketing: As a diagnostic tool for defining and understanding the relationship between the product and marketing Identifying market opportunities Making decisions to pre-empt or respond to competitive moves

Marketing Mix 1. Product: Product differentiation: Perceptible (obvious), Hidden difference (Trident gum- artificial sweetener), Induced (services such as insurance and banks using different campaigns to stand out—HSBC) Product branding: Individual (Dettol- Reckit Benckiser), Family (Salman’s), Generic (Hyperstar store products).

Perceptual Mapping PERCEPTUAL MAPPING CAN BE USED TO: Show how (potential) customers view a company’s current or potential offering. Show how customers view competitors' offerings. See what kind of offering different segments see as ideal. See what offerings are likely to appeal to which segments. Help with combining and segmenting—by revealing which segments view the market in similar (or dissimilar) ways.

Perceptual Mapping Prestige Performance High Low High Low Subaru WRX * Audi A4 * High BMW 323 * Mercedes C 230 * VW Beetle * Hyundai Excel * Prestige Low High Low Performance

Marketing Mix 2. Price: 3. Distribution: 4. Promotion: Psychological Pricing: Luxury and high-end products/services. 3. Distribution: Direct: E.g., Tupperware- Sells directly to customers. Business officials selling to other businesses. Indirect: Intensive (Bought everywhere- Milk, chips etc), Selective (Available at selected outlets- Travel Tickets, Levi’s jeans) and Exclusive (Available in small numbers: Ferrari) 4. Promotion: Combination of MARCOM (Marketing Communication) includes public relations, personal selling, sales promotion, and direct marketing.