Genesis Management Services Pty Ltd gmservices.com.au
genesis
SERVICES
EXPERIENCE
MARKET SEGMENTATION AND TARGETING
1. Introduction
Three Stages
Mass marketing is where a seller mass produces one product to attract everyone (undifferentiated marketing....not practised much any more).
Product differentiated marketing is where the seller produces two or more products designed to look different from each other and competitor's products (with separate marketing programmes).
Target marketing is where a seller distinguishes between segments, chooses one or more to concentrate on, and develops a marketing mix to satisfy them.
The benefits of target marketing are:
Spot market opportunities.
Fine-tune prices, distribution channels and promotional mix.
Definitions
Market segmentation is the act of dividing a market into distinct and meaningful groups of buyers who might merit separate products and/or marketing mixes.
Target marketing is the act of selecting one or more of the market segments and developing a positioning and market mix strategy for each.
2. Market Segmentation
Requirements for Effective Segmentation
Measurability (size & purchasing power)
Accessibility (reach and service)
Substantiality (large &/or profitable)
General Approach
no market segmentation, complete segmentation, segmenting by income class, age class, or income-age class.
Patterns of preference segments are:
(a) Homogenous preferences where consumers have roughly the same preference.
(b) Diffused preferences where preferences are scattered evenly throughout space.
(c) Clustered preferences is where preferences are grouped together (called natural market segments).
Bases for Segmenting Consumer Markets
Geographic segmentation
Demographic segmentation (age, sex, family size, family life-cycle, income occupation, education, religion, race & nationality).
(a) Age and life-cycle stage segmentation (consumer wants & capacities change with age and stage of family development).
(b) Sex segmentation (e.g. clothing, hair dressing, cosmetics, magazines, cigarettes).
(c) Income segmentation (e.g. automobiles, boats, clothing, cosmetics & travel).
(d) Multivariable segmentation uses two or more demographic variables to break up the market.
Psychographic segmentation (buyers divided into groups on the basis of social class, life-style, or personality characteristics).
(a) Social class (e.g. cars, clothes, home furnishings, leisure activities, reading habits and retailers).
(b) Life-style uses people's attitudes, interests & opinions to group them into common life-styles.
(c) Personality (develop products with brand personalities which correspond to consumer personalities).
Behaviouristic segmention (product-related segmentation by attitude, use or response to an actual product or its attributes).
(a) Purchase occasion (e.g. season of year, holiday).
(b) Benefits (according to what benefit consumers derive from using the product).
(c) User status (non-users, ex-users, potential users, first-time users & regular users).
(d) Usage rate (light, medium & heavy users).
(e) Loyalty status (hard-core loyals, soft-core loyals, shifting loyals and switchers).
(f) Stages of buyer readiness (unaware, aware, informed, interested, desirous, intend to buy).
(g) Marketing factors (e.g. price and price deals, product quality, service).
Bases for segmenting Industrial Markets
Industrial buyers can also be segmented geographically, & by several behaviouristic variables (benefits sought, user status, usage rate, loyalty status, readiness stage & marketing factor sensitivity).
By end user (e.g. military, industrial & commercial).
Customer size
Macrosegmentation & then microsegmentation.
3. Target Marketing
Undifferentiated Marketing
Differentiated Marketing
Concentrated Marketing
Choosing Market Selection Strategies
Certain factors can narrow the choice, e.g. company resources, product homogeneity, stage in product lifecycle, market homogeneity, competitive marketing strategies.