CERTIFICATE IN BUSINESS
MANAGEMENT
LESSON 7 – CONSUMER BEHAVIOUR AND SEGMENTATION, TARGETING AND POSITIONING
“Anticipating consumer behaviour is
not an option for marketing mangers:
it is their job description”. Foxal – Gordon University of Keele
TYPES OF MARKETS
Consumer Market
All the individuals and households who buy goods and services for
personal consumption.
Industrial/Business-to-Business or Organisational Market Individuals or groups that purchase a specific kind of product for re-sale,
use directly in producing other products or use in general daily operations
of its business. (organisation consumption)
DEFINITION - CONSUMER BEHAVIOUR
Consumer behaviour can be defined as the decision-making
process and physical activity involved in acquiring, evaluating,
using and disposing of goods and services.
Consumer buyer behavior : the buying behavior of final
consumers, individuals and households, who buy goods and
services for personal consumption.
FACTORS THAT INFLUENCE CONSUMER BEHAVIOUR
Cultural factors
Social factors
Personal factors
Psychological factors
BUYING DECISION PROCESS
NEED RECOGNITION
Occurs when the buyer recognizes a problem or need
triggered by:
Internal stimuli - A person’s normal needs – hunger, thirst
rises to a level high enough to become a drive.
External stimuli - a television advertisement for a vacation in
Singapore or he admires a friend’s new smartphone.
INFORMATION SEARCH
•Family, friends, neighbors •Most influential source of information
•Advertising, salespeople •Receives most information
from these sources
•Mass Media •Consumer-rating groups
•Handling the product •Examining the product •Using the product
Search Internal Memory
Personal Sources
Commercial Sources
Public Sources
Experiential Sources
Internal Search
EVALUATION OF ALTERNATIVES
• How the consumer processes information to arrive at brand
choices: that is, how consumers process information to choose
among alternative brands
• Buyer establishing a set of attributes or criteria against which to
compare the products/brands under consideration.
PURCHASE DECISION
The act by the consumer to buy the most preferred
brand
The purchase decision can be affected by:
Attitudes of others
Unexpected situational factors
POST – PURCHASE EVALUATION
• The satisfaction or dissatisfaction that the consumer feels about the purchase
• Relationship between:
Consumer’s expectations
Product’s perceived performance
• The larger the gap between expectation and performance, the greater the consumer’s dissatisfaction
• Cognitive dissonance is the discomfort caused by a post-purchase conflict
Customer-Driven Marketing Strategy:
Creating Value for Target Customers
A MARKETER’S VIEWPOINT
A market means an aggregate of people, who
as individuals or organisations have a need for a
certain product and the ability, willingness and
authority to purchase such products for
consumption.
REQUIREMENTS OF A MARKET
Need
Ability
Willingness
Authority
+
TARGET MARKETING
MARKET
SEGMENTATION
MARKET
TARGETING
MARKET
POSITIONING
MARKET SEGMENTATION
Dividing a market into smaller groups with distinct needs,
characteristics, or behaviour that might require separate marketing
strategies or mixes.
(Philip Kotler – 13th edition)
Its objective is to design a marketing mix that precisely matches the
expectations of customers in the targeted segment
VARIABLES/BASES OF SEGMENTING A CONSUMER MARKET
Bases/Variables for
Segmenting a Consumer Market
Demographic
Segmentation
Geographic
Segmentation
Psychographic
Segmentation
Behavioural
Segmentation
Demographic Segmentation
GENDER
AGE
FAMILY SIZE
NATIONALITY
RELIGION
EDUCATION
INCOME
OCCUPATION
Age – Milk powder, soap, toys, insurance, savings, medicine,
cosmetics (skin repair, remove wrinkles),
Gender – clothing stores for boys and girls, Hero Honda targeting
bikes for young women, Cosmetics (face wash, perfumes, creams)
Income – restaurants, Hotels, Banks, Apartments, Automobile
(TATA)
Demographic Segmentation
Geographic Segmentation
COUNTRY
REGIONS
STATES
DISTRICTS
DENSITY
Geographic Segmentation
Automobiles, Hotels, Banks, Modern Trade, Consumer
electronics, Food, Clothing
Psychographic Segmentation
SOCIAL CLASS
LIFESTYLE
PERSONALITY
Dilmah – T- Bars – for sophisticated trendy upscale
youth
Starbucks
Clothing – Levis
Housing
Psychographic Segmentation
Behavioural Segmentation
PURCHASE OCCASION
USER STATUS
USEAGE RATE
BENEFITS SOUGHT
LOYALTY STATUS
Occasions – orange as a morning drink, Coca-colas “Good
Morning” campaign for diet coke, Coke for parties, festivals
Benefits – Toothpaste, Restaurants
Behavioural Segmentation
Measurable Ability to measure size, purchasing power
Accessible Segments can be effectively reached and served.
Substantial Segments are large or profitable enough to serve.
Differential Segments must respond differently to different marketing mix elements
& programs.
Actionable Effective programs can be designed
to attract and serve the segments.
Effective Segmentation Criteria
Benefits of Market Segmentation
Satisfying and delighting customers
Customer Retention
Target marketing communications
Segment Leadership
Better understanding of the competitors
Creates competitive advantage
Effective Resource Allocation
Increases profitability
MARKET TARGETING
Market segmentation reveals the firms market-segment
opportunities.
The organisation now has to evaluate the various
segments and decide how many and which ones to
serve. (Selecting)
EVALUATING MARKET SEGMENTS – THE
PROCESS OF MARKET SELECTION
Segment size and growth
Analyze current sales, growth rates and expected profitability
for various segments.
Segment structural attractiveness
Consider effects of: competitors, availability of substitute
products and, the power of buyers & suppliers.
Company objectives and resources
Company skills & resources needed to succeed in that
segment(s).
Look for competitive advantages.
MARKET TARGETING
Selecting Target Market Segments
Target market consists of a set of buyers who share
common needs or characteristics that the company
decides to serve
Target Marketing Strategies
UNDIFFERENTIATED MARKETING
A strategy, in which an organisation decides to ignore market segment differences and target the whole market with one offer.
Mass marketing Focuses on common needs rather than what’s different Designing a single marketing mix for entire market
Whole Market Marketing Mix
DIFFERENTIATED MARKETING
A strategy in which an organisation decides to target several market segments and designs separate offers for each
Targeting two or more segments by developing a marketing mix for each
Goal is to achieve higher sales and stronger position
More expensive than undifferentiated marketing
CONCENTRATED MARKETING
A strategy in which an organisation goes after a large share of one or few segments or niches • Limited company resources • Superior knowledge of the market • More effective and efficient
Segment 1
Marketing Mix
Segment 2
Segment 3
INDIVIDUAL OR CUSTOMIZED MARKETING Individual or customized marketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations.
Customer 1
Marketing Mix 2 Customer 2
Marketing Mix 3 Customer 3
POSITIONING
Positioning is arranging for a market offering to
occupy a clear, distinctive and desirable place relative to competing products in the minds of the target consumers.
(Philip Kotler – 13th edition)
Positioning Variables
Benefit positioning
Ceylinco Insurance - “On the spot claims payment”
Mortein coil - a good night sleep for 12 hours
Signal – strong teeth and prevention of decay
Close-up – long lasting fresh breath and dazzling white
Product category leader
Panadol is the leader in the pain reliever market
Vim is the leader in the scouring powder market
Positioning Variables
Against the Competitor
Paracetamol and Panadol
Coke and Pepsi
Munchee and Maliban
Dialog and Mobitel
Signal vs Clogard
Avis rental cars – we are no: 2, we try harder
Positioning Variables
Unique Selling Proposition
LG Door Cooling Refrigerators - This technology is a patent for LG.
Apple Macintosh – for graphic users
Positioning Variables
Quality/Price positioning
IBM
3M
Rolex
Apple iphone
Positioning Variables
TEXT BOOKS TO REFER
Principles of marketing – Phillip Kotler 15th edition
Principles and practice of Marketing – David
Jobber 17th edition
Principles of Marketing – Frances Brassington
Marketing – Concepts and Strategies – Dibb Simkin
Essentials of marketing – Jim Blythe
Top Related