Market Segmentation
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Transcript of Market Segmentation
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1Marketing Management
MKTG1203
Dr. Wade Jarvis
Markets: Segmentation, Targeting and
Positioning.
Learning objectives for this topic
Learning Objectives:
explain the broad concept of a market
understand the target marketing concept
identify market segmentation variables for consumer and
business markets, and develop market segment profiles
select specific target markets based on evaluation of potential
market segments
understand how to effectively position an offering to a target
market in relation to competitors, and develop an appropriate
marketing mix.
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2The market
Market
A group of buyers who have the opportunity,
willingness and ability to purchase a product or
products.
There are many different kinds of markets,
including consumer markets and business markets.
Reseller markers, producer markets, government
markets and institutional markets are examples of
business markets.
Markets are dynamic and difficult to define!
Target marketing
Markets can have a variety of characteristics:
1. Buyers have common wants, needs and
demands.
2. Buyers have unique wants, needs and demands.
3. The market contains subgroups.
Market segments
Subgroups within the total market that are
relatively similar in regards to certain
characteristics.
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3Target marketing
Target marketing
An approach to marketing based on identifying,
understanding and developing an offering for
those segments of the total market that the
organisation can best serve.
Target marketing
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4Target marketing
Mass marketing
Buyers have common wants, needs and
demands. A single product will meet the needs of
most people in the market, with an
undifferentiated approach.
Producing large volumes at a low cost per unit (due
to economies of scale) makes it possible to sell at
a low price and capture very large markets,
ensuring high levels of profitability.
Target marketing
One-to-one marketing
Providing a unique, customised offering to meet individual
customer needs.
A one-to-one approach often results in higher unit costs and a
more restricted market.
One-to-one conditions typically form the basis for a focus or
niche strategy. Many small services businesses take a one-
to-one marketing approach, for example, hairdressers.
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5Target marketing
Differentiated targeting strategy
A marketing approach that involves developing a
different marketing mix for each target market
segment.
Market segmentation forms the basis of target marketing.
A differentiation strategy entails high costs. To achieve
high profits requires higher retail prices, high market
share and strong customer loyalty.
Positioning based more on differentiation by highlighting
a specific feature, a user group or occasion!
Target marketing
Product specialisation: Marketing
efforts are concentrated on offering a
single product range to a number of
market segments.
Market specialisation: Marketing
efforts are focused on meeting a wide
range of needs within a particular
market segment.
Productmarket specialisation:
Marketing efforts are concentrated on
offering a single product to a single
market segment.
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6Target marketing
Market segmentation
Segmentation variables: Characteristics that buyers have in
common and that might be closely related to their purchasing
behaviour.
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7Market segmentation
Segmenting consumer markets
The variables for segmenting consumer markets
fall into four broad categories: demographic,
geographic, psychographic and behavioural
variables.
Effective segmentation involves choosing
segmentation variables that are easy to measure
and readily available, and linked closely to the
purchase of the product in question .
Market segmentation
Geographic segmentation
Market segmentation based on variables related to geography.
Useful geographic variables include: climate, local population, market density, region, topography and urban, suburban, rural footprint.
Geo-demographic segmentation
Combines demographic variables and geographic variables to profile very small areas, such as suburbs.
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8Market segmentation
Demographic segmentation
Market segmentation based on demographic
variables, which are the vital and social
characteristics of populations, such as age,
education and income.
Demographic variables are the most commonly
used variables for market segmentation.
Market segmentation
Psychographic segmentation
Market segmentation based on the psychographic
variables of lifestyle, motives and personality
attributes.
Psychographic segmentation is based on the need
to understand not who you are, but how you live
your life. This is reflected in activities such as
hobbies or choice of entertainment.
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9Market segmentation
Behavioural segmentation
Market segmentation based on actual
purchase and/or consumption behaviours.
Behavioural variables include: benefit
expectations, brand loyalty, occasion, price
sensitivity and volume usage.
Market segmentation
Effective segmentation involves ensuring:
measurability abstract variables can be
difficult to measure
accessibility through distribution and
communication channels
substantiality the segment must be of
sufficient size to allow profitability
practicability segments are only of use if
they can be identified and serviced.
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10
Market segmentation
Market segment profile
A description of the typical potential customer in the market segment (i.e.. the common variables shared by members of market segments and how the variables differ between segments).
Market segments must be sufficiently different from each other for a distinctive offer to be created for each segment, without risk of overlapping segments or sending confusing images and messages.
Market targeting
Market targeting: The selection of target markets resulting from an
evaluation of identified market segments.
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11
Market positioning
Perceptual map of the
Australian surfwear industry
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12
Positioning Strategies
Against aCompetitor
UsageOccasions
Away fromCompetitors
ProductAttributes
ProductClass
BenefitsBenefitsOffered
Users
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