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Unit 2

External Macro Environment

The External forces which are not close to the company but have considerably influences on their

marketing systems, are called macro environment. The company operates in a larger macro

environment which shapes opportunities and poses threats or problems to it. A change in anyone of

these forces can cause changes in one or more of the others, hence they are inter-related. They are

dynamic forces ie they are subject to change and that too at an increasing rate. These forces are

largely uncontrollable by management but they are not totally uncontrollable. A company may be

able to influence these forces to some extent. These forces include the following:

1. Demographic EnvironmentThe demographic environment includes the characteristics of the human population in

terms of its size, density, location, age gender, race, occupation, mobility trends, birth rate,

death rate, religious components and other statistics. The demographic environment is of

great interest to the marketers because it involves people, and people constitute markets.

The changing life cycle, habits, tastes of the population have potential for the marketers to

explore. For eg when both husband and wife go for jobs, the demand for fast foods,

electronic home appliances that make housekeeping easier.

2. Economic EnvironmentPeople alone do not make a market, they must have buying power(money) to spend and

willingness to buy with those money. The economic environment consists of those factors

that influence consumer buying power, spending patterns and marketing strategies. The

marketing environment is of critical importance to marketers because business cycle

(consisting of 3stage: Prosperity, Recession, and Recovery) and other economic factors (such

as inflation, productivity, shortages, the value of the rupee, unemployment and resource

availability) have a tremendous effect on prices and incomes. This effects consumers real

purchasing power as well as their confidence in purchasing. Economic changes may effect

different organisations in unequal ways. Hence they had to prepare the marketing

programmes and strategies according to their individual requirements.

3. Natural and physical environment (ecological)The natural environment includes the earths natural renewal resources (such as forests,

agriculture etc) and finite non-renewable resources (such as oil, coal, minerals, stones etc),

weather or climatic conditions, land and water resources, which quite often change the leveland type of resources available to a marketers for his production purposes. For eg India does

not have enough petroleum resources and therefore we have to import petrol and other

petroleum products. Shortage in this resources have a lot of implications for companys

consuming petroleum products. Weather conditions do affect marketing programmes and

strategies. For eg summers increases demand for soft drinks, air coolers, air conditioners and

Cold-Winter result in greater sales of woollen wears, room heaters and tea/coffee.Water

shortage affects many businesses. Shortages and high cost of traditional energy (oil) has

compelled many companies to search for practical ways to harness solar, nuclear, wind and

other forms of energy. Consumers have become ecology conscious. They prefer to buy

environmental friendly products. Various govt agencies play an active role in environmental

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protection. Unless the provisions of various laws marketers shall have to consider all these

factors while formulating their marketing policy, programmes and strategies. The primary

threat of the natural environment to marketers is that of resource shortages for existing and

new products. However such a threat hides within itself. A silver lining of market

opportunities to auto companies introduce newly designed, energy efficient vehicles to

recapture market; appliance manufacturer promotes new, energy efficient products and

new companies come up to capitalise as the energy conservation needs of both the

businesses and homes.

4. Technological environmentIt involves the application of knowledge based discoveries encompassing the related

concepts, tools, techniques and processes of sciences, innovation and invention. Technology

has a tremendous impact on our lifestyles, our consumption patterns and our economic

wellbeing as can be assessed from the effects of such developments as aeroplane, television,

plastic antibiotics, videogames, computers, ledgers etc. They all have their major markets.

New energy sources are being developed to replace traditional facts. One day we will findout methods for making ocean water drinkable and even for commercial travel to the moon.

Technology is a mixed blessing. A new technology may improve our lives in one area while

creating environment and social problems in other areas. The automobile technology gives

us comfort and speed. It also creates traffic jams and air pollution. The television can unfold

recreation, general and market knowledge but it can have adverse effect on psychological

thinking of some family members and on childrens reading habits also their eye sight. Thus

new technologies create new markets, new opportunities and new threats. The marketers

have to watch the following trends in technology:

-fast pace of technological change

-high research and development budget

-companies are concentrating on minor improvements in products and services instead of a

major innovation

-increased govt regulation or born on potentially unsafe product and services.

5. Political and legal environmentIt involves the legislation, govt policies and interpretation of laws; that require firm to

operate under competitive conditions and to protect consumer rights, political changes

bring a new policy and laws relevant to industry. Many areas of business are brought under

one or the other law and the marketer cannot escape from the influence of these laws. The

tax laws like VAT, excise and income tax etc have direct bearing on the cost and price of the

products and services. In most cases the marketers comply with laws and regulations. Non-

compliance may spoil firms reputation and hurt profits. However marketers can attempt to

control forces in the political legal environment through industry groups, trade associations

political action committee and public opinion.

6. Social and cultural environmentIt includes the dimensions of relationship between marketing and society including its

culture. It involves our social behaviour, lifestyles, basic values and beliefs and perception

and preferences. Religion is also an important component of culture which has implication

for marketers for eg Hindus worship cow, therefore the products made out of beef do not

have demand among them. There are many social and cultural changes that have significantmarketing implications as follows:

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- Consumers environmental consciousness- Changing role of women in families, jobs, etc- Increased invests in health, nutrition and physical health.- Convenience- Impulse buying ie no advance planning purchases- Consumerism ie awareness to consumer rights and safeguards- To measure current social issues, these are marketing ethics, and social responsibility.

Controllable and Uncontrollable marketing environment

The marketing environment may also be classified broadly into two types. One is called controllable

environment which include these forces that can be controlled to a larger extent by the firm, such as

marketing policies, strategies and procedures. Controllable factors are easily adaptable to various

changes when combine together these factors are called marketing mix promotion. For eg if the

current medium of advertisement is not effective, the firm is quite free to decide to stop it and

switch over to some new one, more suitable medium advertisement.

Another type of environment is called Uncontrollable environment. This environment includes

forces that cannot generally be influenced and controlled by the firm, though they affect it and its

efforts. The external macro environmental forces are largely uncontrollable by management, though

they are not totally uncontrollable. The external micro environmental forces are generally

uncontrollable but they can be influenced more than the macro forces.

It may be noted that marketing management cannot always affect environmental forces and

therefore has to simply watch and react to the environmental changes. For eg the economic forces,

the demographic forces, the natural forces and the major cultural forces cannot be successfullyinfluenced by the firm. However the smart and alert marketing managers always try, whenever

possible to take a proactive rather than reactive approach to the marketing environment.

Market and Market Segmentation

The term market refers to a place where several shops of sellers may be located. Economists use

the term to refers to a collection of buyers and sellers who transact a particular product or range of

products, such as computer market, fashion goods market, electronic home appliances market, two

wheeler market etc. but marketers consider sellers as constituting industry and the buyers as

constituting the market. For marketers a market consists of all the potential customers sharing a

particular need or want, who might be willing and capable to engage in and exchange to satisfy that

want or need. Thus if there are 200 varieties of products in a country, there are 200 distinct markets.

In this sense a market may be spread throughout the breadth and length of the country or the whole

world.

William Stenton and others: A market is people or organisations with wants to satisfy, money too

and the willingness to spend it.

Boone and Kurtz: A market is the set of all actual and potential buyers of a product and services.

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Pride and Ferrel: Market is a group of people who as individual or as organisation, have need for

product in a product class ----and have the ability, willingness and authority to purchase such

products.

Types of Market

Kinds of buyer groups-

1. Consumer market(B2C): Individuals or households who buy products and services for theirpersonal and household use and benefit, and donot buy products for the main purpose of

making profit. For eg person purchasing bread, butter etc.

2. Industrial or Business market(B2B or Organisation market): All individuals and business,industrial or institutional organisation who buy goods and services. for directly or indirectly

using them in the production of other products and services. for resale or for reselling

them either to ultimate consumers or industrial consumers. For eg firm purchasing raw

materials etc.

Meaning of Market Segmentation

Segmentation is the process of matching marketing mix offers to the differences in the ways in

which group of customers will respond. In other words market segmentation is the process of

dividing the total market into parts (submarkets or segments) each of which tends ot be

homogeneous in all significant aspects. Thus a market segment refers to a sub market of the market

which is homogeneous in all significant aspects. Each marketing programs (marketing mix) aims at

different market segment, in short market segmentation is the process of dividing the

heterogeneous market into homogeneous sub markets.

Kotler and Armstrong: Market segmentation is dividing a market into distinct groups of buyers with

different needs, characteristics or behaviour who might require separate products or marketing mix.

Boone and Kurtz: Market segmentation is the process of dividing the total market into several

relatively homogeneous groups with similar product interests based on such factors as demographic

or psychographic characteristics, geographic location, and perceived product benefits.

Market Segmentation Decision Process

Market segmentation is one of the most important strategic tools that a marketing manager has for

matching market offers to customer preferences. Segmentation is more likely to be successful if a

step by step approach is used. Segmentation strategy is the result of applying a systematic, analytic

and decision making process which contains the following steps:

1. Forming segments: there are two important consideration in identifying segments whichmay be outlined as follows:

-whether segment deformed by aggregating individual customers or by separating a product

market into segments(breakdown approach). A firm might use build up approach to group

individual customers, to form segments with similar needs. This approach is practically

useful in markets that contain a relatively small number of buyers, such as industrial market.

People with needs and wants for a given product type are aggregated into groups with

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similar responses to a particular market offer. In order to aggregate people into groups, it is

necessary first to identify the product market.

Breakdown approach is widely used informing segments. To accomplish such a breakdown

the product market must be well designed. The breakdown approach requires a basis for

dividing the market. The breakdown approach requires identifying a basis for dividing the

market. For eg dividing the product market based on amount of use.

-Identifying segmentation bases: Infact segmentation begins when a company seeks basis on

which to identify markets. These bases are one or more characteristics of potential buyers

that allow classification for further analysis. In this way each segments contains customers

who respond similarly to specific marketing mix alternative. Customers in different market

segment respond differently.

2. Developing relevant profiles for each segmentsOnce each segmenthave been identified, marketers should seek further understanding of

customers in each segments. Such kind of a deeper analysis ofcustomer is required in order

to more accurately match customers needs with marketing offers. Characteristics thatexplain the similarities among customers within each segments as well as account for

differences among segments must be identified. Thus the task at this stage is to develop

profile of the typical customers in each segment, such profiles might include lifestyle

patterns, attitudes towards products attribute and brands, brand preferences product used,

habits, geographic location and demographic characteristics.

3. Evaluating market segmentsAfter forming and profiling the segments, marketing manager should evaluate the profiet

contribution expected from each segments. In this connection the following steps are to be

taken:

- Forecasting segment potential: segmentation analysis requires prediction demand foreach component of a product market rather than for the product market as a whole.

Segment potential sets upper limit on the demand that can be expected from a segment

and when multiplied by market share determines, maximum sales potential. This step is

the preliminary go or no go , decision points for marketing manager because he must

determine whether the total sales potential in each segments is sufficient to justify

further analysis.

- Analysing competitive position(forecasting probable market share):Segment potential does not always translate into profit for a company. A segments

contribution to corporate sales and profits depends partly as the position of key

competitors in the segment. An analysis of the competitors serving each segment is

needed to help the marketing managers strategically evaluate the strengths and

weaknesses of their positions. Hence after estimating the segment potential, the

proportion of demand that the company may capture must be forecasted.

- Analysing segment potential for goal achievement:The marketing manager has to whether the marketing programme needed to reach a

segment will create or reinforce customer product and brand attitudes consistent with

corporate image and objectives.

4. Selecting specific market segments or selecting target markets:At this stage marketing management should select the most suitable market segments forthe company that will be target markets for it.

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It may be noted that when a company decides to enter all or at least most segments

in a product market it is called full-coverage market segmentation. Generally large

organisations adopt this type of market segmentation. On the other hand when only one or

a few segments in a product market are selected as target market it is known as Limited

coverage market segmentation. Generally smaller firms adopt this type of market

segmentation. In both the cases a specific marketing mix is used for each segment.

Role or importance of Market segmentation (Benefits)

In marketing a product it is not possible to appeal buyers in that particular market. The buyers are

numerous, widely scattered and varied in their buying requirements and buying practices. Some

competitors may be in a better position to serve a particular segment of the market. Each company

has to identify the most attractive segment of the market which it can serve effectively. Market

segmentation is significant because it has the following advantages:

1. Consistent with marketing concept: marketing segmentation is customer oriented. Insegmenting we first identify the needs of the customer within a submarket and then decidewhether it practical to develop a marketing mix to satisfy those needs. Thus market segment

is consistent with the modern marketing concept.

2. More efficient use of resources: the company does not need to waste its marketing effortsover the entire area. It can concentrate on a specific segment. By tailoring marketing

programmes to individual market segments, the marketing managers can do a better

marketing job and make more efficient use of marketing resources.

3. Proper attention: segmentation helps the company to pay proper attention to particularareas or parts. As the company is not treating all the customers alike, it can take care of

specific requirements of each segment more effectively.

4. Rapid growth: By developing strong positions in specialised market segments, small andmedium sized firms can grow rapidly. For eg GM Pens (international) pvt ltd Madras, a

franchisee of Reynolds, France and Rotomac Pens pvt ltd (Kanpur) both have established

themselves as leaders in the market for ball-pens over short period of time.

5. More effective strategy: Even very large companies with sufficient resources to engagethemselves inmass marketing supported by expensive national advertising companies are

abandoning mass marketing strategy. These companies adopt market segmentation as a

more effective strategy to reach the fragments or parts of a product market. In fact an

attempt to attract everyone may drive the marketer to failure. Even a seemingly functional

product like toothpaste is aimed at specific market segments. For eg Colgate focuses on

tooth decay prevention. Close-up hints at enhances sex appeal; neem and babool ensures

effective care of gums and teeth; pepsodent highlight checks on germs threat and so on.

6. More successful marketing mix: Owing to market segmentation, each of the elements ofmarketing mix can be designed in accordance with requirements of the target market and

thereby the marketing programme may be made successful.

Michael Porter says that the competitive advantage of the firm lies in being

everything to a select few. To be everything to everyone is a sure recipe for a strategic failure.

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Basic requirements or conditions for effective segmentation

Market segmentation cannot be used in all cases. For eg if all salt buyers buy the same amount of

salt each month believing that salt is salt and want to pay the same price then the firm could not

benefit from segmenting the salt market. The goal of segmentation is to divide a market so that each

segment responds to a different or unique marketing mix. To achieve his goal i.e. to be effective and

useful market segmentation must meet the following requirements or characteristics.

1. Measurability

It is the degree to which the size, purchasing power and profiles of the market segments can be

measured. The market segment must be measurable in terms of size and purchasing power. Certain

segmentation variables are difficult to measure. For e.g. It is difficult to measure the size of the

segment of teenage smokers who smoke primarily to rebel against their parents. The segment of left

handed people is hard to identify and measure. The desire for ecologically compatible products is

a characteristic that is not easily measured nor could the data be easily obtained.

2. Accessibility

It refers to the degree to which the market segment can be effectively reached---- sound. It means

that marketers must be able to effectively promote and serve the market segment.

3. Sustainability or largeness

It refers to the degree to which the market segments are large or profitable to serve. The market

segment must be sufficiently large to be potentially profitable otherwise various diseconomies

(higher cost) may arise in production, marketing, inventory holding etc. a segment should be thelargest possible homogeneous group of consumers worth going after ----with a definite market

programme. For eg it may not be profitable for an automobile manufacturer to develop cars for a

category of persons whose height is more than 7feet because the number of such person will be

few, similarly in segmenting most of the consumer market a firm must not develop to brought a

series of styles, colours, sizes and prices, because the production and inventory cost would make it

impractical.

4. Action-ability or Matching capabilities

It is the degree to which effective marketing programme can be designed for attracting and serving

the segment. The number of segments must match the firms marketing capabilities. For eg one

small two wheeler manufacturer identify 8 market segments but its staff was too small to develop

separate marketing programmes for each segment. In such a case it will not be an effective

segmentation.

Bases or criteria for market segmentation

Consumer market

Market segmentation means dividing the market (buyers) into several homogeneous sub-markets or

segments or parts. An important question in this regard is as to what should be the basis of

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segmenting the market. In-fact there is no single way to segment a market. The marketer has to try

different segmentation variables to view the structure of the market.

The four commonly used basis for segmenting consumer market are, geographic, demographic,

psychographic and behavioural variables.

(1) Geographic SegmentationIt calls for dividing market into different geographical units such as nation, states, regions,

cities, neighbourhoods etc. Company may decide to operate in one or a few geographical

areas, or to operate in all areas but pay attention to geographical differences in the needs

and wants of the local population. Geographic characteristics are measurable and accessible.

There are many instances in which markets for consumer goods and services may be

segmented on geographic basis, such as when consumer tastes or style preferences vary

among regions. For eg Rice and rice products have been preferred food in southern India,

though they also accepted in other parts of country. Residence location within a geographic

area is an important geographic variable. Urban dwellers may have more need for cars and

scooters and their rural counterpart. Sub-urban residents spend proportionately more on

lawn and garden care then do the rural and urban residents. Climate is another important

factor. For eg cities situated in sea-shore are not good markets for woollen wears. As

compared to the northern cities, it may be noted that geographic segmentation is useful

only when regional preferences exists. Moreover, even then geographic sub-divisions of the

overall market tend to be rather larger segments and often too heterogeneous(different) for

effective segmentation, without consideration of additional factors.

(2) Demographic or Socio-Economic SegmentationsIt is the most common basis for segmenting consumer market. It involves dividing the

market into segments or groups on the basis of demographic i.e. the vital statistics that

describe a population. Popular demographic variables or characteristics include age, gender

family size, family life cycle stage, income, occupation, education, religion and nationality.

Demographic variables are the most popular basis for distinguishing customer groups

because, customer wants, need and usage rates often vary closely with the demographic

variables.

Demographic variables are easier to measure then most other types of variables. Changes in

demographics give rise to new market and eliminate others. Even when the target market is

described in non-demographic terms such as personality or behaviour, its demographic

characteristics must be known in order to assess the size of the target market and to reach itefficiently. The most commonly used demographic variables may be discussed as follows:

A. Segmenting by age and life cycle stageConsumer wants, needs and capacities change with age. For eg Children of 6 months age

differ from children of 3 months age in their food requirements, and consumptions

potential. A toy manufacturer realised this and designed 12 different toys to be used by

babies sequentially as they grew from the age of 3 months to 1 year.

Family life cycle stage is a major determinant of buyer behaviour, and thus can be a

useful basis for segmenting consumer market. Family cycle is the process of family

formation and dissolution. 3 general categories of various life stages are: new singles,,

new couples, and new parents. Young married couples with no children typically spend

large shares their income on clothing, transport and recreation. Married couples with

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childrens find larger portions of their budgets going for food, education, clothing of the

children.

B. Segmenting by Gender

Gender is an obvious variable for segmenting the market for certain products that are sex specific.For many years market segmentation by gender has been an obvious choice for products such as

clothing shoes personal care items cosmetics magazine hair dressing etc. however in recent years

more industries have discovered making opportunities for sex segmentation. The automobile

industry has turned to sex segmentation and has tried to offer a two wheeler specially meant for

women. In fact a no. of woman working outside the home has increased dramatically all over the

world. The lifestyles and buying behaviour of working woman are quite different from those who are

simply housewives or home makers. These facts are significant to the marketers.

C. Segmenting by income and Expenditure patterns:

As market includes buyers with purchasing power, a common method of segmenting the consumer

market is on the basis of income. Marketers should analyse the spending patterns of people at

different levels, marketers of products and services such as automobiles; clothing; cosmetics and

travel segments by income. Accordingly segmentation could be made in terms of low, middle, and

higher income groups. Price may be the sole criterion to fit into a particular income group it is more

so at the lower levels of income. As the income goes up, other non-economic considerations or

bases have a greater influence. Mass market retailers are in their appeals at middle income groups.

By contrast fashionable speciality shops in clothing and jewellery target high income group or

shoppers.

3. Psychographic segmentation: In addition to the traditionally used variables of age, sex, family

lifecycle stage, income and population size and location, psychographic segmentation has proved

equally significant. Under this segmentation buyers are divided into different groups generally on

the basis of social class, lifestyle, personality etc. generally used psychographic(psychological)

variables or characteristics may be briefly discussed as follows:

A. Segmenting by social class: The most commonly used indicators of social class include level of

education, type of occupation and the type of neighbourhood a person lives in. thus social class is a

composite psychographic measure. Social classes are generally divided into Upper Class, Middle

Class(White colour working class) and Lower class( Blue colour working class)-6 classes. A persons

social class has a considerable influence on those persons preferences in cars, clothes, reading

habits, home furnishings, leisure activities, as well as on his choice in many product categories.

Consequently many companies select one or two social classes as target market and then develop a

product and marketing mix to reach those segments.

B. Segmenting by lifestyle (aio-activity interest opinion): It refers consumers mode of life i.e., how

an individual operates on daily basis. Lifestyle relates to activities interests, opinions. It reflects how

a person spends his time and what his beliefs are on various social economic and political issues.

Consumers lifestyles are regarded as composites of their individual psychological makeups- their

needs, motives, perceptions and attitudes. Peoples lifestyles undoubtedly affect what products they

buy and what brands they prefer. Marketers are aware of this fact and they attempt to segment

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their market on the basis of lifestyle characteristics. For e.g. a manufacturer of blue jeans may design

jeans styled for a specific male group.

C. Segmenting by personality: an individuals personality characteristics are usually described in

terms of distinctive traits that influence behaviour. Successful market segmentation strategies based

on personality have been used for products such as cosmetics,cigarettes, insurance and liquor.

4. Behavioural segmentation:

Under behavioural segmentation buyers are divided on the basis of their product related behaviour,

their knowledge, attitude, use or response to it. Severalmarketers believe that behavioural variables

are the best starting point for building market segments. In this category the following bases are

adopted to segment the market:

a. Segmenting by occasion: buyers can be grouped according to occasions when they get theidea to buy or actually make their purchases. For e.g. tourist travel is influence by occasions

related to festivals vacations etc. a tourist bus operator can specialize in serving people

during one of these occasions. This type of segmentation helps firms to build up product

usage. For e.g. fruit juice is consumed most often at breakfast, but fruit growers have

promoted drinking of fruit juice as a cool and refreshing drink at other times of the day or in

tourist areas

b. Segmenting by benefits desire: A powerful form of segmentation is to group buyersaccording to different benefits that they seek from the product. A United States research has

found four benefit segments in the toothpaste market: economic, medicinal, cosmetics,

taste.----psychographic and behavioural characteristics. For e.g. the people seeking to

prevent decay of teeth tended to have large families, where heavy toothpaste users andwere conservative. In this segmentation it is critical to know and determine as to how

important the benefits are and how many consumers seek each one.

c. Segmenting by user status: Some markets may be segmented into groups of non-users, exusers, potential users, first time users and regular users of a product. Company which enjoys

the larger share of the market may be particularly interest in attracting potential users.

Whereas smaller firms will focus on attracting current users. Potential and regular users

require different types of marketing appeal.

d. Segmenting by usage rate: Another bases for market segmentation is the rate at whichpeople use or consume a product. As such markets can be segmented into light, medium

and heavy user groups

e. Segmenting by loyalty status:--- are loyal to brands, stores, and other entities. Hence amarket can be segmented by consumer loyalty patterns. Today brand loyalty is one of the

most popular ways to segment markets. Once brand loyal consumers are identified(such as

by sending out application forms to be filled in), databases can be built which will allow

marketers to communicate with customers through cost effective direct mail. Buyers can be

divided into four groups according to their loyalty patterns: (1. Hard core loyalist- who buy

one Brandon the time, 2. Soft core loyalist- who are loyal to two or three brands all the time,

3. Shifting loyalists- who shift from one brand to another, they may be called shifters

4.Switchers- who show no loyalty to any brand)

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Each market is made up of above 4 types of buyers and to approach buyer groups different

marketing strategies are required. A brand loyal market is one with a high percentage of the

buyers showing hard-core brand loyalty. Thus toothpaste, bread and butter, kitchen items

seemed to be fairly high brand loyal markets.

f. Segmenting by buyer readinessA market may be segmented on the basis of groups of people in different stages of readiness

to buy a product. Such segment may be divided like this:

1 People unaware of the product

2 People aware of the product

3. People informed about the product

4. People interested in the product

5. People wanting the product

6. People intending to buy the product

The relative numbers at each stage make a big difference in designing the marketing

programmes.g. Segmenting by attitude toward product

Consumers in a product market may be classified by degree of their enthusiasm for the

product. Five attitude classes can be distinguished: enthusiastic, positive, indifferent,

negative and hostile. If a door to door campaign for a product is adopted by the marketer,

sales personnel who are involve in the campaign can assess the attitude of the households

and decide about the time to be spending with them.

Meaning and Definition of target market

Sellers have reached target market concept after passing through several stages

Initially there was mass marketing ie the sellers adopted mass market strategies which aims at all

the potential buyers in a product market, using the same marketing mix to appeal to the needs or

wants or aspirations of all of them. In mass marketing the seller mass produces, mass distribution,

and mass promotes. At one time coca cola produce only one drink for the whole market with the

hope that it would appeal to everyone. Then the sellers realise that only one product with certain

features would not satisfy the variety of buyers. Hence they entered into second better stage of

product variety.

Product marketing: In this type of marketing the seller produces two or more products that have

different features, style, quality, sizes etc. for eg later, coca cola produce soft drinks packaged in

different sizes and containers. LG manufactures several types of televisions and washing machines(ie

different models) to offers variety to the buyers rather than to appeal to different parts of the

market. This philosophy of several varieties (models) of a product is based on the arguments that

consumers have different needs and they seek variety and change.

The third stage of marketing development is known as target marketing

Target market has been defined as follows:

Kotler and Armstrong: a target market is consists of a set of buyers who shares common

needs or characteristics that the company decided to serve.

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Devid cravens and others: target market is a group of existing and potential customers within a

particular product market toward which an organisation directs its marketing efforts.

William Stantun and others: Whether it is large or small the group of customers(people or

organisations) for whom the seller designs the particular marketing mix is a target market.

Boone and Kurtz: Target market is a group of people toward whom a firm markets its goods, services

or ideaswith a strategy --- their specific needs and preferences.

It may be noted that target marketing is an integral part of the philosophy suggested

by marketing concept. The alternative target market is to try to serve all potential customers in a

medioker fashion and thus to fall short in providing customer satisfaction and achieving

organisational goals. In target marketing the seller identifies the parts or segments of the market,

selects one or more of them and develop products and marketing mixes tailored to each. For eg

some firms market their products only to ultimate consumers or their families, some clothing

manufacturers have targeted within the market for womens cloths or for woollen clothes, somefirms produce only for supplies to the govt., others provides goods and services to retail and

wholesale buyers, and so on.

Guidelines or considerations for target market selection

Whether a segment should be chosen, a target market:

1. Target market be compatible with organisations goals and image.2. To match opportunities represented by target market with companies resources.3. To seek market that will generate sufficient sales volume at a low enough cost to result in an

appropriate profit.

4. To seek a market where competitors are few or week.5. To seek a market that will maintain a permanent clientale.6. Target market be accessible: to advertising media, sales force, distribution channel etc

whether, transport, communication etc

Target market selection process (hint fb

Target market strategies: market coverage strategies or target market selection

The special emphasis in market effort remains primarily on the development of strategies that will

best match product offering to the needs of particular target markets. An appropriate match

between such offerings and needs is vital to the success of the firms market. Three basic strategies

for market coverage or achieving consumer satisfaction are available to the marketers which may be

described as follows:

1. Undifferentiated market strategies or aggregation strategies: It is also known as massmarket strategies or undifferentiated marketing. The selling companies treat its total market

as a single segment. The company then ignores market segment differences and go after the

whole market with one offer. That one offer will focus on what is common in the needs of

the consumers rather than what is different. Thus undifferentiated or mass marketing is a

strategy under which a company produces only one product and markets it to all customers

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using a single market mix. An aggregate markets members are considered to be alike with

respect to demand for the product. Therefore the company designs or develops a single

product and a single promotional programme(ie mass advertising) aimed at entire market.

The company aims to give the product a superior image in peoples mind. For eg Henry Ford

built model-t cars and sold them for one price to everyone. Undifferentiated marketing was

much more common in the past than it is today. Most modern marketers feel the difficulties

that arise in developing a product or brand which will satisfy all consumers.

Merits of undifferentiated marketing: cost economies-lower costs of

production, inventory and transportation; lower costs of advertising, marketing, research and

product management. This is suitable to the firms that are marketing and undifferentiated product

such as salt or sugar. In the eyes of many people salt is salt or sugar is sugar. However there are

some inherent dangers(demerits) in the undifferentiated marketing strategies:

1 threat of competitors offering specialised products to smaller segments of the total market and

better satisfying each segments.

2 problems in foreign markets

2. Differentiated marketing or multiple-segment strategies.