Designing a Customer-Driven Marketing Strategy and Target Marketing

1. Designing a Customer-Driven Marketing Strategy and Target Marketing Mrs. Saira Sajad

2. Major Steps in Target Marketing • Market Segmentation • Target Marketing • Market Positioning

3. Market Segmentation Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mix.

4. Target Marketing The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.

5. Market Positioning Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the mind of target consumers

6. What is Market Segmentation? Segmentation

7. What is Market Segmentation? • Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mix. • Market Segmentation is breaking down heterogeneous mass market into more homogeneous submarkets. • Marketer’s assume that consumers within segments should respond similarly to particular marketing actions. • Consumer response should be different between different segments.

8. Why segment the market?

9. Why segment the market? • Customers have diverse needs, wants and buying behaviors which differ from other customers. • One firm cannot satisfy everyone’s needs. • Organizations have different strengths and competitive advantages in different areas. • Marketer’s should focus on what they do best. • It can create better marketing opportunities for organizations • It may be more profitable for organizations.

10. Types of Market Segmentation • Consumer Market Segmentation • Business Market Segmentation • International Market Segmentation

11. Consumer Market Segmentation • There is no single way to segment a market. A marketer has to try different segmentation variables, alone and in combination to find the best way to view the market structure.

12. Consumer Market Segmentation Variables • Consumer market can be segmented through the following variables; • Geographic segmentation • Demographic segmentation • Psychographic segmentation • Behavioral segmentation

13. Geographical Segmentation • Dividing a market into different geographical units such as nation, province, regions, countries, cities and climate etc.

14. Geographic Segmentation Variables • Continents or World Regions-Africa, Asia, Europe • Countries-Afghanistan US, Pakistan • Province- kabul, Jalalabad, Herat • City or Metro Size- under 5000 people, 5000-19,999 • Climate- Tropical, Temperate, Cold.

15. Demographic Segmentation • Dividing the market into groups based on demographic variables such as age, gender, etc.

16. Demographic Segmentation Variables • Age • Gender • Family size • Family life cycle • Income • Occupation • Education • Religion • Race • Generation • Nationality

17. Demographic segmentation • Age- Under 6 years old, 6-12, 13-19, 20-29,30-39,40-49,50+ • Gender- Dividing a market into different groups based on gender (male/female). For example- NIKE has recently capture the women sports shoes market. • Family life cycle- Single, Young married, Married with children • Income- Dividing a market into different income groups. (high, medium and low income groups) • For example Honda presenting Motor cycle for low income and car for high income groups.

18. Demographic segmentation • Occupation- employed, unemployed, self employed. • Education- Grade school or less, high school, graduated from high school, post graduate from university, Doctorate. • Religion- Muslims, Christens, Jewish, Buddhist. • Family Size- 1-2 persons, 3-4 persons, more than 4 persons • Nationality- Afghani, Pakistani, French, British, Canadian, Japanese.

19. Psychographic Segmentation • Dividing a market into different groups based on social class, lifestyle and personality characteristics etc.

20. Psychographic Segmentation Variables • Social class- There are 3 major social classes i.e. Upper, Middle and lower class. • Lifestyle- It may be different on the basis of income, community, religion etc. Different customers adopt different lifestyles. • Personality- There may be different personalities of customers like Calm, Dynamic, Aggressive

21. Behavioral Segmentation • Dividing a market into groups based on consumer use, knowledge, attitude or response to a product.

22. Behavioral Segmentation Variables • Occasions • Benefits • Attitude Toward the Product • User Rates • Loyalty Status • Readiness Stage

23. Behavioral segmentation • Occasion-When the buyers get the idea to buy. (occasional buyers) • Benefit- Dividing a market into groups according to the different benefits that consumers seek from the product. For example- free bag with a laptop. Or discount on software or free delivery. • User Loyalty status- A market can also be segmented by consumer loyalty. For Example-Consumer can be loyal to brand (Nokia), stores (Imperial Store) and companies (Toyota).

24. Behavioral segmentation • Usage rate- Markets can also be segmented into light, medium and heavy usage of products. • Attitude Toward the Product- For some companies or products customers show favorable attitude and for some products, they show unfavorable attitudes.

25. Business Market Segmentation • Business markets can be segmented on the basis of various consumer market variables and some other variables like operating variables, purchasing approaches etc. • For example: American Express focuses on convincing new merchants, building relationships with old customers, and offering benefits to corporate such as insurance plan, travel discounts etc.

26. Demographics Operating Variables Business Marketers Use Many of the Same Consumer Variables, Plus: Purchasing Approaches Situational Factors Personal Characteristics Bases for Segmenting Business Markets

27. Bases for Segmenting Business Markets Demographic segmentation Business markets can be segmented on the basis of Industry, company size and location etc. For Example; Textile, Sugar and FMCG (Fast Moving Consumer Goods) are different industries, so there raw material and machinery will be available in different business markets. Operating variables Business markets can be segmented on the basis of Technology, usage status and customer (business) capabilities. For Example; Computers, mobile phones and electronics are technology based products as compared to juices and furniture. So on the basis of technology, business market will be different.

28. Cont… Purchasing approaches Business markets can be segmented on the basis of Regular purchases and occasional purchases. For Example; Some type of raw materials are regularly purchased by different businesses like stationary, papers, paints etc but some raw materials like sugarcane, cotton will be purchased occasionally in the season. Situational factors Business markets can be segmented on the basis of Urgency, specific application and size of order. For Example; Some businesses are very big businesses, therefore their size of order for raw materials are also very big, so such markets may be segmented which are selling products in larger quantity only or in wholesale, not in retail.

29. Cont… Personal characteristics Business markets can be segmented on the basis of Buyer-seller similarity, attitudes toward risk, loyalty. For Example; If the buyer (Businessman of sugar mill) makes a contract with seller (Farmer of sugarcane) that for next 10 years , he will provide a specific quantity of raw material to him on a specific price. So in this regard, the buyer (Business) reduces his risk and he created loyality.

30. International Market Segmentation • “Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries.” • Geographical Segmentation • Economic Factors Segmentation • Political & Legal Factors Segmentation • Cultural Segmentation

31. Bases for Segmenting International Markets Geographic Location Cultural Factors Economic Factors Factors Used to Segment International Markets Political and Legal Factors

32. Bases for Segmenting International Markets Geographic segmentation For Example; World market can be segmented by geographic location, grouping countries by region such as Western Europe, Middle East, South Asia etc. Economic factors World market can also be segmented on the basis of economic factors i.e. Population income or level of economic development. For example-countries might be grouped by population income level or by their overall level of economic development. Political and legal factors World market can also be segmented by political and legal factors, such as the type and stability of the Government, monetary regulations, amount of bureaucracy etc. Cultural factors World market can also be segmented by Language, religion, values, attitudes, customs, behavioral patterns

33. Target Marketing

34. Target Marketing • Target market: A set of buyers sharing common needs or characteristics that the company decides to serve. • After successfully segmented the market the firm now must evaluate the various segments and decide how many and which segment it can serve best.

35. Steps in the Target Marketing Process • Evaluating Market Segments • Selecting Target Market Segments

36. Evaluating Market Segments • In evaluating different market segments, a firm must look at three factors: • Segment size and growth Analyze sales, growth rate and expected profitability. • Segment structural attractiveness Consider effects of Competitors, Availability of Substitute Products and the Power of Buyers & Suppliers. A segment is less attractive if it already contain strong and aggressive competitors or substitute products. • Company’s objectives and resources Even if a segment has the right size and growth and is structurally attractive, the company must consider its own capability, compatative advantage, objectives and resources.

37. Selecting target market segments • After evaluating different segments, the company must decide which and how many segments it will target. • A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve. • Buyers have unique needs and wants, a seller could potentially view each buyer as a separate target market. Then a seller might design a separate marketing program for each buyer. • Companies can target very broadly , very narrowly or some where in between. • There are four different types of strategies which the marketers apply while selecting target market segments.

38. Target Marketing Strategies • Targeting broadly targeting narrowly

39. Undifferentiated Marketing • A firm might decide to ignore market segments and target the whole market with one offer. This mass marketing focuses on what is common in the needs of consumers rather than on what is different. • For Example; Nestle offers mineral water for the entire market without any change for different customers attributes.

40. Company Marketing Mix Market A. Undifferentiated Marketing

41. Differentiated Marketing • A firm decides to target several market segments and design separate offers for each. • For Example; Head & Shoulders design separate nature of shampoo for different types of customer needs.

42. Company Marketing Mix 1 Segment 1 Company Marketing Mix 2 Segment 2 Company Marketing Mix 3 Segment 3 B. Differentiated Marketing

43. Concentrated (Niche marketing) • A third market coverage strategy is specially appealing when company resources are limited. Instead of going after a small share of a large market, the firm goes after a large share of one or few smaller segments. • For Example; Pepsi offers Diet Pepsi (Pepsi Max) for Diabetes patients and diet conscious people.

44. Segment 1 Company Marketing Mix Segment 2 Segment 3 C. Concentrated Marketing

45. Micromarketing (Local or Individual Marketing) • The practice of tailoring products and marketing program to the needs and wants of specific individuals. • Individual marketing has also labeled one to one marketing. • For example. Dell is doing individual marketing, by taking the order of every individual and prepare the computer accordingly for each customer.

46. Company Marketing Mix Individual Customer D. Custom Marketing Strategy or Micromarketing Strategy

47. Market Positioning

48. Market Positioning Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the mind of target consumers

49. Positioning for Competitive Advantage Product’s Positioning “The place the product occupies in consumers’ minds relative to competing products” i.e. Volvo positions on “safety”. Marketers must: • Plan positions to give products the greatest advantage • Develop marketing mixes to create planned positions

50. Choosing and Implementing a Positioning Strategy • Step 1. Identifying a set of possible competitive advantages. i.e. Competitive Differentiation, which may be of product, service, personnel and image etc. • Step 2. Selecting the right competitive advantage suitable to your organizational objectives and capabilities. • Step 3. Effectively communicating and delivering the chosen position to the market by different effective promotional medias.