STP Marketing Management Professor E. Soriano III

What exactly is segmentation? It is a unique group of customer (or potential customers) who share some common characteristics that make them different from other groups of customers Some segments have different needs, require different versions of the same product, pay different prices, buy in different places, can be reached by different media Customers and prospective customers can be grouped together or ‘segmented’ in lots of different ways… age, sex, where they live, how they live, what they earn, and so on…

Industrial markets Customers and prospective customers are generally segmented by the actual type of business, its size location or even culture on how they operate Segmentation can also cover the heavy and light users of a particular product or service or whether they are loyal to a particular brand or supplier

Knowing your customer Allocate time to know your customers as each segment that is chosen or targeted needs to be treated differently in some way. Segmenting and selecting the best target segments is called target marketing This is a vital marketing skill

Knowing what is happening in your marketplace In the 60’s, we had mass marketing In the 70’s segmentation became more popular In the 80’s target marketing became so precise that narrower, smaller segments or niche markets emerged In the 90’s one to one grew as technology spread and named individuals where targeted directly through database marketing’s mail and telesales Marketers today satisfy smaller and smaller segments, right down to individual requirements

Mass Customization New millennium strategy that will compel many products and services to tailor-made their offerings to thousands and even millions of individual requirement i.e. newspapers, publications and websites Caution: More than one individual is often involved in the decisions to buy, to vote or to behave in some way i.e. children influence parents, in turn they are influenced by their peers and advisers’ at school or playground

Decision Making Units Segmentation needs to focus on DMU and ask the question … who is involved in making the final decision to buy or not to buy? It is made up of starters or initiators, advisers, deciders, purchasers and end users. DMU’s are important in organizational markets i.e. Purchasing, Board, etc.

Why Bother with segmentation and target marketing? It not only reduce waste but also help boost sales and find the best prices Some people are more likely to buy your product, service or idea than other people Time spent carefully segmenting and accurately targeting helps to find those people. Without segmentation, the likelihood of success reduces

Stay close to your customers! It also helps to see the target customers more effectively It allows the marketer to break up the market, focus on the best segments and find new customers who might otherwise have been lost in the madding crowd Sloppy targeting not only waste resources but it can also damage an organizations’ reputation The closer understanding of customer needs helps protect an organizations’ existing customer base from the inevitable onslaught of competitors and their offerings

How do you select your target market? Size Profitability Growth Competition Resources required

What will you employ as your broad strategy? Undifferentiated Marketing… the mass marketing approach that ignores differences among segments Differentiated Marketing …operating in two or more segments by offering different marketing mixes for each segment Concentrated marketing.. Focus on one marketing mix in just one segment YOU CAN NEVER BE ALL THINGS TO ALL!

What is Positioning? How a brand or company is positioned or perceived in the minds of a target group of customers Gillette was originally positioned as exclusive for males Due to demographics and behavioral elements, San Miguel Beer is now repositioned to include female drinkers Johnson’s Baby shampoo was repositioned for the young and the adult How can you position Drilling machines like Black & Decker to women?

Positioning Strategy Effective positioning requires an in-depth understanding of the market, its needs, its segments and the target market selected Positioning strategy is based on whether it is A. Required by the market B. Distinctive C. Sustainable