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Segmentation and Targeting Market - Coggle Diagram
Segmentation and Targeting Market
Market
Current and potential customers with needs or wants,
and the ability and willingness to buy
Composed of consumer and business markets
Exchange resources (usually money) for desired
products or services
The importance of
market segmentation
Market
segmentation
The process of diving a market into meaningful,
relatively similar and identifiable segments or groups
Market
segment
A subgroup of people or organizations sharing one or more characteristics that cause them to have similar products needs.
Mutiple ways to segment a market
No segmentation
Fully segmented
Markets segmentation by gender: M, F
Market segmentation by age group
Why use segmentation?
Groups of people or organisations have different
product needs and preferences
Market segmentation helps marketers define
customer needs and wants more precisely
Segmentation helps decision makers define more
accurate marketing objectives
Performance can be evaluated better when
objectives are precise.
The steps in segmenting a market
Step 1: Selecting a market or product category for study
An existing market
A related market
A new market
Step 2: Choosing a basis or bases for segmenting consumer markets
A set of characteristics common to individuals, groups or organisations that can be used to segment a market
Geographic
Segmentation of markets by geographic characteristics such as: region, country, market size, market density, climate
Demographic
Segmenting markets by: age, gender, income, ethic background, family life cycle (determined by a combination of age, marital status and the presence or absence of children)
Psychographic
Market segmentation on the basis of personality, motives, lifestyles and geo-demographics (neighbourhood lifestyle categories)
Benefit
The process of grouping customers into market segments according to the benefits they seek from the product
Usage-rate
Dividing a market by the amount of product bought or consumed
80/20 principle
20 per cent of all customers generate 80 per cent of the demand
Step 3: Selecting a segment to become a target market: Four basic criteria
Substantiality
segment must be large enough to warrant a special marketing mix
Identifiability and measurability
segments must be identifiable and their size measurable
Accessibility
members of targeted segments must be reachable with marketing mix
Responsiveness
unless segment responds to a marketing mix differently, no separate treatment is needed
Step 4: Targeting strategies
Undifferentiated targeting
The market is viewed as one big entity with no individual segments and thus requires a single marketing mix
Advatages
Potential savings on production/ marketing costs
Disadvantages
Unimiagnative product offerings
Company more susceptible to competition
Concentrated targeting strategy
Used to select one segment (niche) for targeting marketing efforts
Advantages
Concentration of resources
Can better meet the needs of a narrowly defined segment
Allows some small firms to
better compete with larger firms
Strong positioning
Disadvantages
Segments too small, or changing
Large competitors may more effectively market to niche segment
Multi-segment targeting strategy
A strategy that chooses two or more well-defined market segments and develops a distinct marketing mix for each
Advantages
Greater financial success
Economies of scale in
production/marketing
Disadvantages
High costs
Cannibalisation
Step 5: Positioning strategy
Positioning
The process of developing a specific marketing mix to influence current and potential customers’ overall perception of a brand, product line or organisation
Product differentiation
A positioning strategy that some organisations use to distinguish their products from those competitors
Positioning bases
Attribute
Price and quality
Use or application
Product user
Competitor
Product class
Repositioning
Changing the appeal of a product or brand so that it can compete better in relation to rival brands or in a new market segment
Segmentation in a social market
Social marketing integrates the concepts of marketing with other approaches to influence behaviours that benefit individuals and communities for the great social good; for example, anti-smoking campaigns in Australia