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WEEK 06

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WEEK 06

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  1. WEEK 06 SEGMENTATION, TARGETING & POSITIONING STRATEGIES

  2. At the end of this chapter, students will be able to: • Judge the importance of the role of market segmentation • Define market segmentation • Describe the concept of a market segment • Evaluate the criteria for effective segmentation • Identify the bases for segmentation • Assess the finer segmentation strategies • Identify the major areas of analysis of market segments • Gain knowledge about market targeting strategy • Explain the meaning of positioning and understand the relationship between positioning concept and positioning strategy. Chapter Aims Topics

  3. THE MARKETING STRATEGY PROCESS • Market segmentation • the company identifies bases for segmenting a market • Forming a measurement for effective segmentation • Target marketing • The company develops segment profiles of the selected segments • the company then selects target segments • Market positioning • the company develops positioning for each target segments and then develops a marketing mix for each segment

  4. Definition of Market, Market Segment & Market Segmentation Fish market Night market Market Shown above are types of market which can be found here often. What does market means? Topics

  5. Definition of Market, Market Segment & Market Segmentation A market is people or organizations with needs or wants and with the ability and the willingness to buy. Topics

  6. Definition of Market, Market Segment & Market Segmentation A market segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. Topics

  7. Market Segmentation Definition of Market, Market Segment & Market Segmentation Segmentation is the arts of segregating, dividing, separating and grouping our selected big market into a smaller size market that has at least one similar characteristic. The main objective is to ease the process of understanding the nature of the market and easily target the products with that particular market. Market segmentation by age group Fully segmented market No market segmentation Topics

  8. Market Segmentation Segmenting Consumer Markets In marketing, these four terms would always be referred to as the variables of market segmentation. What comes to mind when you hear the term demographic, geographic, psychographic or behaviouristic? Topics

  9. Geographic Demographic Psychographic Behaviourial Market Segmentation Segmenting Consumer Markets Topics

  10. Market Segmentation Segmenting Consumer Markets Geographic • segmenting markets by region of a country or the world, market size, market density, or climate. • Market also can be segment using state, province and city • Example: • Johor Laksa • Asam pedas Melaka • Ipoh Hor Fun • Penang Fried Kuey Teow Proton and Perodua cars exported to United Kingdom will have a different version of cars than that is offered in Malaysia. Topics

  11. MarketSegmentation Segmenting Consumer Markets Demographic • Divide whole market into small groups based on consumer characteristics such as by • Age (Foods, health product, clothes) • Gender (Magazine, clothes, cosmetics) • Income (Car, house) • Ethnic (Foods) • Family-Life Cycle (Car, house, food) Topics

  12. Market Segmentation Segmenting Consumer Markets Demographic • Age and life-cycle • Markets can be segmented based on age and life-cycle stage differences. • Proton satria and Inspira are targeted to young drivers • Anlene Milk Drink is targeted to senior citizen and late adult consumers Dutch Lady markets several brands and products of its formula milk targeted to different age segments. Topics

  13. Market Segmentation Segmenting Consumer Markets Demographic • Gender • Gender has long been used for segmenting markets for clothing, hair dressing products, cosmetics and magazines. • Men and women have different preferences for such products. “Wanita” magazines are meant for women, “Maskulin” magazines are meant for men. Topics

  14. Market Segmentation Segmenting Consumer Markets Demographic • Religion • In international market, it is extremely important for the marketers to understand the cultures and norms of a particular country in their promotional campaign. • Local sensitivity must be taken into account. Kelantan has imposed a rule on female artists to wear the hijab when taking part in promotional activities. Topics

  15. Market Segmentation Segmenting Consumer Markets Demographic • Income • Income level influences consumers’ wants and determines their buying power. • Income level indicates their purchasing power. • BMW is targeted to high income consumers • Proton is targeted to middle income and lower income consumer In a huge shopping complex, there are several types of shops targeting people from different income levels, such as a CK Boutique for high-income groups and Reject shop for the middle-income groups. Topics

  16. Market Segmentation Segmenting Consumer Markets Psychographic • Divide a market into various groups such as • Personality • Social class • Lifestyles • Examples: • KFC is targeted to consumers who nourish and appreciate family relationship • Nescafe is targeted to consumers who have happy lifestyle Topics

  17. Market Segmentation Segmenting Consumer Markets Psychographic • Personality • Personality reflects a person’s traits, attitudes, and habits. • Product for car drivers that are thought to be • Nationalistic • Economical • Conservatives • Modern • High status • Sporty • Feminine • Masculine Topics

  18. Market Segmentation Segmenting Consumer Markets Psychographic • Lifestyles • Lifestyle segmentation divides people into groups according to the way they spend their time, the importance of the things around them, their beliefs, and socioeconomic characteristics such as income and education. • Product for Single customers • Product for Married customers with no children • Product for Married customers with children • Product for Newly married customers • Product for Middle-aged married customers • Product for Older-aged married customers The new Satria Neo advertisement that seems to appeal to young and active people as well as to the trendsetters. Topics

  19. Market Segmentation Segmenting Consumer Markets Behavioural • Divides buyers into group according to their knowledge, attitudes, response, and uses towards a product based on several variables: • Social occasions • Value & benefit • Consumption level • user status • brand loyalty • Toothpaste Product for customers that concerned about the clean white teeth, fresh breath and maximum protection against cavities (benefit segmentation). • Products for first time users, former users, potential users, medium users and heavy users (volume segmentation) • Cigarettes for heavy smokers, moderate smokers, new smokers and quitting smokers • Telecommunication services package for heavy caller, heavy SMS user. • Price charges on regular customers, members, and non-members Topics

  20. Market Segmentation Segmenting Consumer Markets Behaviouristic • Special Occasions • Divide the market into groups according to special occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item. Valentine’s Day and Mother’s Day are actually designed and promoted to increase the sale of flowers, cards, and other gifts. Topics

  21. Market Segmentation Segmenting Consumer Markets Behaviouristic • Value & Benefit • value & Benefit segmentation is the process of grouping customers into market segments according to the benefits and value they seek from the product. Huggies introduced Huggies Pull-Ups Pants, a diaper designed to help mummies catch up with active and growing babies. Topics

  22. Market Segmentation Segmenting Consumer Markets Behaviouristic Consumption Level Consumption level segmentation divides a market by the amount of product bought or consumed. Such categories used to differentiate its consumers are former users, first-time users, light or irregular users, medium users, and heavy users. Topics

  23. Market Segmentation Segmenting Consumer Markets Behaviouristic User status Markets can be segmented into non-users, ex-users, potential users, first-time users, and regular users. A beauty centre : - needs to come up with an advertisement that appeals to be safe to potential users. - focuses on attracting current users from slipping away from their products and services. Topics

  24. Market Segmentation Segmenting Consumer Markets Behaviouristic Brand loyalty Brand loyalty often is defined based solely on consumers' patterns of repeat purchase behavior.  “Rotators or soft-core” may stick to two or more brands. In Indonesia, Unilever has received Indonesia Best Brand Award (IBBA) 2009 organized by SWA magazine and MARS marketing research institution for its variety of products. The survey conducted by SWA and MARS also considers five aspects which also includes brand loyalty. Topics

  25. CRITERIA FOR EFFECTIVE SEGMENTATION 5 6 4 3 2 1 DISTINGUISHABLE REASONABLE REACHABLE ACTIONABLE SUBSTANTIAL MEASURABLE

  26. CRITERIA FOR EFFECTIVE SEGMENTATION It should be possible to identify customer groups by measuring size and purchasing power of the segments. Data about the customers must be available to further target them. 1 2 MEASURABLE SUBSTANTIAL These market segments should be large and profitable enough to serve. Worth paying attention to, and being addressed to with a tailored marketing programs

  27. CRITERIA FOR EFFECTIVE SEGMENTATION Effective marketing program can be designed to attract and serve these market segments. Too small and too big could bring trouble and ineffectiveness due to failure to implement the actions. 3 4 ACTIONABLE REACHABLE It should be possible to effectively reach and serve market segments. If we fail to reach them or they failed to get us, the segmentation is not effective especially during the promotional activities.

  28. CRITERIA FOR EFFECTIVE SEGMENTATION The market segments are diverse and therefore, distinguishable. They respond differently to different marketing actions 5 6 DISTINGUISHABLE REASONABLE Too small and too big segmentation is ineffective. Don’t be greedy to serve the big size segment. Don’t be too stingy to serve small segment because it will be not worthy.

  29. Market Targeting Targeting is the act of evaluating and comparing the identified segments, and then selecting one or more of them as the prospects with the highest potential Topics

  30. Market Targeting Evaluating the Target Market • Three factors must be considered: • segment size and growth • segment competitiveness • company objectives, goals and resources Topics

  31. Market Targeting Selecting Target Market Segments A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve. Topics

  32. Market Targeting Target Market Strategy • Four basic categories of target marketing strategy are: • Non-differentiated marketing • Differentiated marketing • Focused & Concentrated marketing • Micro marketing Topics

  33. Market Targeting Target Market Strategy • Non / Undifferentiated marketing • A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. Coca-Cola uses the appeal youthful fun in its global advertising. Its sponsorship programme is global and is adapted to events that are popular in specific countries such as soccer in other parts of the world versus football in the United States. Topics

  34. Market Targeting Target Market Strategy • Differentiated marketing • A market-coverage in which a firm decides to target several market segments and designs separate offers for each. Procter and Gamble markets six different laundry detergent brands, which compete with each other on supermarket shelves. Topics

  35. Market Targeting Target Market Strategy • Concentrated marketing • Offers smaller companies an opportunity to compete by focusing their limited resources on serving niches that may be unimportant to or overlooked by larger competitors. In cosmetics, the Chanel and other cosmetic brands that target upscale prestige segment of the market have used this approach successfully. Topics

  36. Market Targeting Target Market Strategy • Micro marketing • Offers customisation and modification on products as well as the marketing mix strategies to cater the specific requirements of individual customers or segments. • Local marketing • Change and modified the products according • to the local needs like KFC, MC D • One-to-one marketing • The customization of products according to • individual customers such as Dell but it is • difficult and expensive. Topics

  37. Market Positioning What is Market Positioning? Topics

  38. Market Positioning What is Market Positioning? • Positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the mind of target market consumer. Dynamo is positioned as an effective detergent in removing stubborn stains. 4 criteria to select positioning strategies Recognize own product competitive edges (strengths) – product, service, reputation, people Select most appealing edges (strengths) Choose an overall positioning edges (strengths) Communicate the positioning (IMC usage) Topics

  39. Market Positioning Positioning Bases • A variety of bases for positioning are: • Product features • Price and Quality • Use or application • Product user • Product class • User • Competitor Click on each positioning base to know more. Topics

  40. Market Positioning Positioning Bases • A variety of bases for positioning are: • Product features • Price and Quality • Use or application • Product user • Product class • User • Competitor The product can be separated from its competitors based on attributes, features, or benefits. Click on each positioning base to know more. Topics

  41. Market Positioning Positioning Bases • A variety of bases for positioning are: • Product features • Price and Quality • Use or application • Product user • Product class • User • Competitor The price and quality ladder is the most effective of all eight-attribute ladders. Price Quality Price Quality Click on each positioning base to know more. Topics

  42. Market Positioning Positioning Bases • A variety of bases for positioning are: • Product features • Price and Quality • Use or application • Product user • Product class • User • Competitor The product is marketed as when or how it can be used as a strategy to win an empty slot in the customers’ mind. Click on each positioning base to know more. Topics

  43. Market Positioning Positioning Bases • A variety of bases for positioning are: • Product features • Price and Quality • Use or application • Product user • Product class • User • Competitor This strategy indicates that the company clearly can identify and know the consumers and their needs. Click on each positioning base to know more. Topics

  44. Market Positioning Positioning Bases • A variety of bases for positioning are: • Product features • Price and Quality • Use or application • Product user • Product class • User • Competitor • The product class dissociation ladder implies that: • a product or company can be positioned as superior to its competitors • the product is so different compared to its competitors • it almost not fit the same product category Click on each positioning base to know more. Topics

  45. Market Positioning Positioning Bases • A variety of bases for positioning are: • Product features • Price and Quality • Use or application • Product user • Product class • User • Competitor This strategy indicates that the company clearly can identify and know the consumers and their needs. Click on each positioning base to know more. Topics

  46. Market Positioning Positioning Bases • A variety of bases for positioning are: • Product features • Price and Quality • Use or application • Product user • Product class • User • Competitor This strategy to position a product is done by positioning directly against or away from the competitors’ position. Click on each positioning base to know more. Topics

  47. CONCLUSIONS • This chapter recognizes the role of market segmentation in the development and implementation of market-driven strategy. • We examine the concepts of market segmentation and market segment. • We also discuss the issues that concern the segmenting of a market requiring us to identify the bases for segmentation, forming segments, describing each segment, and analyzing and evaluating the identified segment (s). • We also learned about market targeting and positioning strategies.

  48. List of References Subash C. Jain (2004) Marketing: Planning & Strategy, 7th Edition, Thomson. Boone, L., & Kurtz, D. (2009). Contemporary Business. Denvers: John Wiley & Sons, Inc. Cravens, D.W. (2000), Strategic Marketing, 6th Edition, McGraw Hill. Kotler P& Armstrong.G., (2004) Principles of Marketing, 10th edition, Pearson. Kotabe, Masaki & Kristian Helsen (2001). Global Marketing Management 2nd Edition John Wiley & Son. Inc New York. Topics

  49. List of References Ebert, R., & Griffin, R. (2003). Business Essential, 4th Edition. New Jersey: Prentice Hall. Ferrel, O., Hirt, G., & Ferrel, L. (2009). Business: A Changing World. New York: McGraw Hill. khalid, K. e. (2008). Business Management: A Malaysian Perspective. Kuala Lumpur: Oxford University Press. McDaniel, C., & Gitman, L. (2008). The Future of Business. Ohio: Thomson- South Western.(2008). The Future of Business. Ohio: Thomson- South Western. Topics

  50. List of References (n.d.). Retrieved April 13, 2009, from BuckInvestor.com: http://www.buckinvestor.com/basics/economic_systems.shtml (n.d.). Retrieved April 13, 2009, from EconGuru Economics Guide: http://www.econguru.com/econ/production-factors.shtml (n.d.). Retrieved April 13, 2009, from tutor2u: http://tutor2u.net/economics/gcse/revision_notes/basics_factors_of_production.htm Boone, L., & Kurtz, D. (2009). Contemporary Business. Denvers: John Wiley & Sons, Inc. Topics