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02.10.2012

Target Marketing Process (STP)
Identify markets with unfulfilled needs

Segmentation, Targeting and Positioning
Albert CARUANA Ph.D.

Determining market segmentation

Selecting market to target

Positioning through marketing strategies

Customer-Oriented Marketing Strategy • Segment market:
– Divide larger market into groups of people with similar demands and responses.

Market
• Generic definition: A market is a group of people with purchasing power who are willing to spend money to satisfy their need • Product Market: consists of a group of people with similar needs who satisfy their needs through the purchase of particular products.

• Target marketing:
– Evaluate segments and select one or more segments to enter.

• Positioning:
– Create clear, distinctive and desirable place relative to competing products in minds of target customers.

Market Segmentation
• Segmentation: the subdividing of a market into homogenous subsets of customers, where any subset can be selected as a market target to be reached with a distinctive marketing mix – Consumer Segmentation – Industrial Segmentation

Consumer Segmentation Geographic
• • • • State Region Country size Climate

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02.10.2012

Consumer Segmentation Demographic
Most often used because: • correlate well with sales • easy to identify and measure • used to describe advertising media audiences

Consumer Segmentation Demographic
– Age - Young , middle age, senior – Gender – Type of Household - single, traditional – Family size – Family Life Cycle – Occupation, Education, Income – Nationality, Religion, Race

Geo-Demographic

Digital maps show racial divides in US cities
Detroit Chicago

One dot = 25 people • White people •Black people •Asians •Hispanics

Consumer Segmentation
• Psychographic
– Personality - macho image eg Marlboro – Lifestyle - people often use products to make statements about themselves

• Behavioural
– usage – Usage rate - in packaged goods 50% of users account for 80 to 90% of purchases – Benefits sought - eg Toothpaste

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If you like your eggs…
• Sunny Side Up - You are an optimist and easy going. • Over Easy - You are precise and know what you want. • Hard Boiled (Hard Cooked) - You are a no-nonsense type, quick to form an opinion. • Scrambled - You are agreeable and steady, go with the flow. • Soft Boiled (Soft Cooked) - You are gentle, sensitive, neat, not easy to please. • Poached - You are orderly and likes things in their place. • Omelet - You enjoy taking risks! http://www.dailymail.co.uk/news/article2210304/How-eggs-reveal-personality.html

Bases for Segmentation
INDUSTRIAL • Product • Geographic • End-user application: Operating/process variables • Company demographics • Personal characteristics of buyers • Situational factors • Buying criteria

Requirements for Segmentation
Most markets contain a variety of segments.
• Measurable (distinguishable) - Can the size of the market segment be measured? – if it cannot be defined it cannot be measured – if it cannot be measured sales cannot be estimated

Requirements for Segmentation
• Accessible - Is the segment identified accessible? Can it be reached effectively and efficiently? – distribution – with advertising and promotions. Utilisation of mass media is only viable if a segment is sufficiently large • Compatible - Can effective marketing programs be developed to attract and serve the segment identified? – with resources of the company

• Sizeable - Is the market segment large and profitable enough to serve? – large enough to support independent marketing effort – marketing only guarantees to serve needs that can be met at a profit

All requirements must be met

Advantages
• Strengthens market position • Increases profit by:
– identification of new product opportunities
• e.g. Shampoo, watches

Disadvantages
• Involves risks as a result of higher marketing costs
– R&D and MR Costs –...
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