FOUR ERAS IN THE HISTORY OF MARKETING• Exchange process Activity in which two or more parties give

something of value to each other to satisfy perceived need.

Marketing defined as:

“Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value

with others”

1 - 3Core Marketing Concepts

Consumer Buying Process

(1) Need recognition(2) Information collection(3) Evaluation of alternatives(4) Purchase decision(5) Post purchase behaviour

Segmentation, Targeting and Positioning

What customer to serve? Companies have to be selective, cannot serve

everyone. Segment the market to choose who to serve

How to serve? How the company will differentiate and

position itself in the market3 steps in Target Targeting:

Market SegmentationIdentify bases for

segmenting the marketDevelop segment

profiles

Target MarketingDevelop measure of

segment attractivenessSelect Target

segments

Market PositioningDevelop positioning for target segmentsDevelop a marketing

mix for each segment

Segmentation

Market Segmentation: Dividing a market into distinct groups of buyers who have distinct

needs, characteristics, or behavior and who might require separate products or marketing mixes

Segment: A group of consumers who respond in a similar way to a given set of marketing efforts. Can be:

geographic, demographic, psychographic, behavioral.

SegmentationGeographic Segmentation:

Dividing a market into different geographical units such as nations, states, regions, counties, cities or neighborhoods.

May operate in different geographic regions but cater to the respective needs of segments

Many companies “localizing” their product, advertisements, promotions etc.

Segmentation

Demographic Segmentation: Dividing the market into groups based on demographic

variables such as age, sex, family size, family life cycle, income, occupation, education, religion, race and nationality

Most popular bases for segmentation: Consumer needs/wants/usage vary closely with demographic

variables They are easier to measure

Different types of Demographic Segmentation: Age and Life-Cycle Stages: needs/wants change with age.

Examples: Clothing line, Insurance products Gender: largely used in cosmetics, clothing, toiletries and

magazines. Example: Hugo Boss, L'Oreal, Chen One, Bonanza Income Groups: dividing into different income groups. Used

by companies such as Automobiles, clothing, cosmetics, financial services, travel etc. Example: Toyota and Lexus, Mobilink: Jazz and Indigo

Segmentation

Psychographic Segmentation: Dividing a market into different groups based on

social class, lifestyle or personality characteristics People in same demographic segment can have

different psychographic attributes Lifestyle segmentation: Based on the notion that

people buy products that reflect their lifestyle – Rolex, Lawrencepur etc.

Segmentation

Behavioral Segmentation: Dividing a market into groups based on consumer

knowledge, attitude, use or response to a product By occasion: buyers are grouped according to

occasion when they get the idea to buy,actually make their purchase or use the purchased items – weddings, Valentine’s day, “TCS Sentiments Express”, Ramadan, Eid etc

Benefits Sought: groups buyers according to the different benefits they seek from the product. Shampoos – anti-dandruff, color care, conditioning etc.

Segmentation

Behavioral Segmentation – contd User Status: Segmented according to groups of:

Nonusers Ex-users Potential users First time users Regular users Market share leader tries to attract potential users Smaller firms: attract leader’s customers to themselves

Usage Rate: Light, medium or heavy product users Heavy users – usually low but high in consumption. It’s good to have few heavy users than several light users but

companies try to spend more on attracting light customers Loyalty Status: how loyal customers are to particular brand

Completely loyal, somewhat loyal or non-loyals Helps companies to devise strategies to improve positioning for

somewhat loyals, attract non-loyals and study behavior patterns of completely loyals.

Segmentation

Can we use multiple segmentation bases?Examples?Requirements of Effective Segmentation:

Measurable: Should have right data for the segment

Accessible: can be effectively reached and served. Substantial: Profitable enough Differentiable: distinguishable and should

respond differently to different marketing mix Actionable: effective marketing programs/plans

can be designed for them.

Target Marketing

Evaluate the segments: Segment size and growth: whether it is

profitable or not The largest and fastest-growing might not be the most

profitable one Segment structural attractiveness: too many

competitors? Actual or potential substitutes? Power of buyers? Powerful suppliers?

Company’s objectives and resources: segment vs. strategy of company, company may lack resources to cater to the segment.

Target Marketing

Target Market: The process of evaluating each market segment’s attractiveness

and selecting one or more segments to enter Target profitably generate the greatest customer value and

sustain it over time. Target marketing can be carried out at several different levels

Differentiated (segmented)

marketing

Undifferentiated (mass)

marketing

Concentrated (niche)

marketing

Micromarketing (local or

individual marketing)

Targeting Broadly Targeting Narrowly

Target Marketing

Undifferentiated (Mass) Marketing: A market-coverage strategy in which a firm decides to

ignore market segment differences and go after the whole market with one offer

Focus on commonality rather than differences Utility goods (KESC) etc But in general, difficult as no one solution for all is

possible Competition will soon oust such firms

Target Marketing

Differentiated Marketing: A market-coverage strategy in which a firm decides

to target several market segments and designs separate offers for each.

Most of the firms engage in this: Mobilink, Ufone, Nokia, Unilever, Banks etc.

Advantages: May give company higher sales and better position

within a segment Disadvantage:

Costly and time-consuming

Target Marketing

Concentrated (niche) Marketing: A market-coverage strategy in which a firm goes after a

large share of one or a few segments or niches. From small share of large market to large share of one or

few segments Bentley, Rolls Royce, Ferrari, Rolex, Café Flo Advantages:

Strong market position because of greater knowledge of segment and reputation

Effective marketing: fine-tuning products, prices and programs to carefully defined segments

Efficient marketing: targeting the products/services, channels, communication towards customers that it can serve best and profitably.

Small segments and less competitive, therefore higher revenue

Many companies start as nichers and become big players whereas at times large companies introduce niches.

Disadvantages: High Risk

Target Marketing

Micro Marketing: The practice of tailoring products and marketing programs

to the needs and wants of specific individuals and local customer groups

Includes Local marketing and Individual marketing Local Marketing: Tailoring brands and promotions to the

needs and wants of local customer groups – cities, neighborhoods, and even specific stores e.g. A-1 Karak chai, Halal food shops etc

Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers Also known as “customized marketing”, “one-to-one marketing”,

“mass customization” etc. High end luxury cars e.g. Maybach, Dell, Designer Clothing, Wedding

dresses etc. Common in Business-to-business firms as well.

Sees individual in every customer rather than seeing customer in every individual

Target Marketing

Choosing a Target Marketing Strategy depends on: Company Resources Product variability (how much variation is there in

design, models etc) Product Life Cycle Stage Market Variability (buyer tastes and preferences) Competitors’ Marketing Strategies

Positioning

Product Position/positioning: Arranging for a product to occupy a clear, distinctive

and desirable place relative to competing products in the minds of target consumers

Nokia: Connecting People Nike: Just Do It Malaysia Truly Asia

Why Position? : Competitive Advantage Also simplifies the buying process

Consumers may position with or without marketer’s help but marketers can’t leave things on consumers’ own perception.

What you position is what you promise and what you promise you should deliver or else: Disaster

Developing a Positioning Strategy

1. Analyze Competitors’ Positions: Current picture of competitors: who they are and how

they are perceived by target market Not only in your own product categories but

substitutes as well

2. Identify Competitive Advantage Give consumers reason to prefer your brand over

competitor’s Can be on various dimensions: Price, status, service,

product feature, people etc.

Developing a Positioning Strategy

3. Finalize the Marketing Mix Put the pieces together of each element in

marketing mix Marketing mix elements should match the

selected segment4. Evaluate the target market’s

responses and modify the strategy Target marketing is an ongoing process Segment might need to be changed or people in

the segment may have changed Monitory the changes and adjust positioning

strategies Repositioning: Redoing a product’s position to respond

to marketplace changes.

Keys to Successful Positioning

Successful Positioning

Clarity

The idea must be clear to be

remembered easily

Credibility

The selected position/advantage should be credible

in the minds of target customers,

close to reality

Consistency

Lasting, without any confusion

Competitiveness

Substantial reason to prefer your brand

over competitors