UNIVERSITY OF GUYANA MARKETING SEGMENTATION MODULE 5
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1 UNIVERSITY OF GUYANA MARKETING SEGMENTATION MODULE 5 ERIC M. PHILLIPS (MBA, CTP, BSc. Eng.) SEPT-DECEMBER 2013
2 MKT 1101.MARKETING MANAGEMENT
3 MARKETING MANAGEMENT 1101 OVERVIEW COURSE OUTLINE AND APPROACH ABSTRACT THINKING, THE PHILLIPS VISION MAP AND THE MARKETING ALPHABET MARKETING AND MARKETS CONSUMER BEHAVIOR MARKETING MIX (4 Ps / 7 Ps) MARKETING MANAGEMENT (5 APPROACHES) MARKETING RESEARCH SWOT/PEST / 5 FORCES ANALYSES SEGMENTATION, TARGETING, POSITIONING PRODUCT, BRAND,PRODUCT LIFE CYCLE, PRODUCT MANAGEMENT PRICING PROMOTIONS (ADVERTISING) PLACE (DISTRIBUTION CHANNELS) BOSTON CONSULTING GROUP MATRIX, PRODUCT PORTFOLIO PORTER S 3 GENERIC STRATEGIES AND STRATEGIC MARKET PLANNING ANSOFF MATRIX INTERNATIONAL MARKETING MANAGEMENT I AM THE PERFECT PRODUCT (INDIVIDUAL ASSIGNMENT MARKETING PRINCIPLES) GROUP PROJECT (A MARKETING PLAN FROM A COMPANY)
4 THE GARDEN OF EDEN?
5 EDUCATION? SRI SATHYA SAI BABA The end of education is character.
6 MARKETING & YOU Marketing is an exciting subject. A Way of Life. We humans are walking, talking Marketers.
7 SUBLIMINAL MARKETING?
8 WE HAVE FOUND THE FOUNTAIN OF YOUTH
9 GLOBAL WARFARE
10 PERCEPTION VERSUS REALITY
11 THE CUSTOMER IS ALWAYS RIGHT
12 WHICH COLOUR ARE YOU?
13 ADVERTISING THE SEVEN DEADLY SINS LUST- Excessive sexual desire GLUTTONY- over consumption of anything GREED- Excess acquisition of wealth SLOTH- Sadness WRATH- uncontrolled feelings of hatred and anger PRIDE- excessive love of self ENVY- Resentful
14 CANCER IS SUCH A SWEET SORROW
15 OVERARCHING DEFINITION PHILIP KOTLER and GARY ARMSTRONG..PRINCIPLES OF MARKETING (14 TH EDITION) MARKETING IS CREATING AND CAPTURING CUSTOMER VALUE MANAGING PROFITABLE CUSTOMER RELATIONSHIPS
16 THE MARKETING PROCESS
17 TYPES OF MARKETING? You see a gorgeous girl at a party. You go up to her and say: "I am very rich. Marry me! " - That s DIRECT MARKETING You re at a party with a bunch of friends and see a gorgeous girl. One of your friends goes up to her and pointing at you says: " He s very rich. "Marry him." - That s ADVERTISING You see a gorgeous girl at a party. You go up to her and get her telephone number. The next day, you call and say: " Hi, I m very rich. "Marry me - That s TELEMARKETING"
18 We are going global Cultural forces Political/legal forces 6 Geography and Infrastructure 7 Political/ legal forces Foreign environment (uncontrollable) 1 Domestic environment (uncontrollable) Price Promotion 5 (controllable) Product Channels of distribution Economic climate Structure of distribution Economic forces 7 2 Competitive structure 4 Competitive Forces 3 Level of Technology Environmental uncontrollables country market A Environmental uncontrollables country market B Environmental uncontrollables country market C
19 BRAZIL
20 CHINA B AND COUNTING
21 LIFE LESSON? GOD, GRANT ME THE SERENITY TO ACCEPT THE PEOPLE I CANNOT CHANGE; THE COURAGE TO CHANGE THE ONE I CAN; AND THE WISDOM TO KNOW THAT PERSON IS ME.
22
23 MARKET RESEARCH VERSUS MARKETING RESEARCH
24 THE MARKETING RESEARCH PROCESS
25 THE BOSTON MATRIX Market Growth High Problem Children Stars Dogs Cash Cows Low Market Share High
26 PRODUCT PORTFOLIO MATRIX
27 Sales/Profits PRODUCT LIFE CYCLES AND THE BOSTON MATRIX PLC and Profits PLC Profits Losses Break Even Time
28 Developing Growth Strategies Existing markets Existing products Market Penetration New products Product Development New markets Market Development Diversification
29 KNOWLEDGE IS POWER KNOW THYSELF
30 MARKET RESEARCH WHO AM I?...WHAT AM I?
31 5 THINGS PEOPLE REGRET THE MOST NEAR DEATH I WISH I D HAD THE COURAGE TO LIVE A LIFE TRUE TO MYSELF, NOT THE LIFE OTHERS EXPECTED OF ME. I WISH I HADN T WORKED SO HARD. I WISH I D HAD THE COURAGE TO EXPRESS MY FEELINGS I WISH I HAD STAYED IN TOUCH WITH MY FRIENDS. I WISH THAT I HAD LET MYSELF BE HAPPIER.
32 MODULE OUTLINE Market Segmentation Market Targeting Differentiation and Positioning
33 GOALS OF THE MODULE 1. LEARN THE 3 STEPS OF TARGET MARKETING; MARKET SEGMENTATION; TARGET MARKETING AND MARKET POSITIONING 2. UNDERSTAND THE MAJOR BASES FOR SEGMENTING 3. KNOW HOW COMPANIES IDENTIFY ATTRACTIVE MARKET SEGMENTS AND CHOOSE TARGET MARKETING STRATEGY 4. REALIZE HOW COMPANIES POSITION THEIR PRODUCTS FOR MAXIMUM COMPETITIVE ADVANTAGE IN THE MARKETPLACE
34 WHAT IS MARKETING?
35 OUR ABSTRACT VIEW OF A MARKET MASLOW S HIERARCHY
36 THE 3 STEPS IN MARKET SEGMENTATION, TARGETING, AND POSITIONING Market Segmentation 1. Identify segmentation variables and segment the market 2. Develop profiles of resulting segments Market Targeting 3. Evaluate attractiveness of each segment 4. Select the target segment(s) Market Positioning 5. Identify possible positioning concepts for each target segment 6. Select, develop, and communicate the chosen positioning concept
37 SEGMENTATION, TARGETING AND POSITIONING
38 STEPS IN MARKET SEGMENTATION, TARGETING, AND POSITIONING 6. Develop marketing mix for each target segment 5. Develop positioning for each Target segment Market Positioning 3. Develop measures of Segment attractiveness 2. Develop profiles of resulting segments 1.Identify bases for segmenting the market 4. Select the target segments Market Targeting Market Segmentation 38
39 MARKET SEGMENTATION MARKET SEGMENTATION IS THE PROCESS THAT COMPANIES USE TO DIVIDE LARGE, HETEROGENEOUS MARKETS INTO SMALL MARKETS THAT CAN BE REACHED MORE EFFICIENTLY AND EFFECTIVELY WITH PRODUCTS AND SERVICES THAT MATCH THEIR UNIQUE NEEDS
40 MARKET SEGMENTATION 1. THE ANALYTICAL DIVISION OF THE MARKET INTO DISCRETE GROUPS OF CUSTOMERS THAT SHARE COMMON ATTRIBUTES. 2. THE IDENTIFICATION OF SUBSETS OF BUYERS WITHIN A MARKET WHO SHARE SIMILARITIES, NEEDS AND WHO HAVE SIMILAR BUYING PROCESSES.
41 MARKET SEGMENT 1. A subgroup within the market who share certain relevant characteristics 2. A group of customers with certain characteristics in common & whose needs can be met with a distinct marketing mix 3. Three basic questions Who is buying? What do they buy? When do they buy?
42 WHY MARKET SEGMENTATION? Procter & Gamble Sells multiple brands within the same product category for a variety of products Has also identified different niches within certain segments Brands feature a different mix of benefits and appeal to different segments Product modifications are useful: Tide offers seven different product formulations to serve different niches needs
43 FIRMS ENGAGE IN SEGMENTATION TO. Develop different strategies for different parts of the market Increase sales & profit from each segment Identify marketing opportunities Dominate certain niche segments Reflect differences in customer tastes Prioritize on those segments most likely to provide a higher return
44 EVALUATION OF SEGMENTS EVALUATING MARKET SEGMENTS segment size & growth segment s structural analysis competition within the segment existing or potential substitute products relative power of buyers / suppliers company s objectives & resources environment, social responsibility, if it is core business, can employ skills & resources superior to those of competition
45 THERE ARE DIFFERENT TYPES OF MARKETS TO SEGMENT SEGMENTING CONSUMER MARKETS SEGMENTING BUSINESS MARKETS SEGMENTING INTERNATIONAL MARKETS
46 MARKET SEGMENTATION Segmenting Consumer Markets Geographic segmentation Demographic segmentation Psychographic segmentation Behavioral segmentation
47 BASES FOR SEGMENTING CONSUMER MARKETS Geographic Region, City or Metro Size, Density, Climate, Nations, counties, villages Psychographic Lifestyle or Personality Demographic Behavioral Age, Gender, Family size, Life cycle, Race, Occupation, Income, Religion, Education, Nationality. Occasions, Benefits, Uses, or Attitudes
48 MARKET SEGMENTATION Segmenting Consumer Markets Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality
49 GEOGRAPHIC SEGMENTATION? IS GEOGRAPHICAL CLIMATE A LEGITIMATE MEANS OF SEGMENTATION FOR MANY PRODUCTS OR SERVICES? NAME SEVERAL EXAMPLES OF PRODUCTS FOR WHICH NEED (AND DEMAND) WOULD VARY ON A GEOGRAPHICAL BASIS.
50 CONSUMER MARKET SEGMENTATION Age and life-cycle stage segmentation is the process of offering different products or using different marketing approaches for different age and life-cycle groups. Gender segmentation divides the market based on sex (male or female)
51 CONSUMER MARKET SEGMENTATION Income segmentation divides the market into affluent or low-income consumers Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits
52 CONSUMER MARKET SEGMENTATION Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product Occasions Benefits sought User status Usage rate Loyalty status
53 SOPHISTICATED CONSUMER MARKET SEGMENTATION Multiple segmentation is used to identify smaller, betterdefined target groups. Geo-demographic segmentation is an example of multivariable segmentation that divides groups into consumer lifestyle patterns
54 MARKET SEGMENTATION Using Multiple Segmentation Bases PRIZM NE classifies every American household into 66 unique segments organized into 14 different social groups. These groups segment people and locations into marketable groups of like-minded consumers that exhibit unique characteristics and buying behavior based on a host of demographic factors
55 MARKET SEGMENTATION Segmenting International markets Geographic location Economic factors Politicallegal factors Cultural factors
56 Market Segmentation Segmenting Business Markets Inter-market segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries
57 MARKET SEGMENTATION Requirements for Effective Segmentation To be useful, market segments must be: Measurable Accessible Substantial Differentiable Actionable
58 Effective Segmentation Measurable Substantial Accessible Differential Actionable Size, purchasing power, profiles of segments can be measured. Segments must be large or profitable enough to serve. Segments can be effectively reached and served. Segments must respond differently to different marketing mix elements & actions. Must be able to attract and serve the segments.
59 HEAVY AND LIGHT USERS OF COMMON CONSUMER PRODUCTS PRODUCT (% USERS) HEAVY HALF LIGHT HALF Soups and detergents (94%) 75% 25% Toilet tissue (95%) 71% 29% Shampoo (94%) Paper towels (90%) 79% 21% 75% 25% Cake mix (74%) Cola (67%) Beer (41%) Dog food (30%) Bourbon (20%) 83% 83% 87% 81% 95% 17% 17% 13% 19% 5%
60 STEP # 2 TARGET MARKETING
61 Selecting Target Market Segments Target market consists of a set of buyers who share common needs or characteristics that the company decides to serve.
62 TARGET MARKETING Valuating Market Segments SEGMENT SIZE AND GROWTH SEGMENT STRUCTURAL ATTRACTIVENESS COMPANY OBJECTIVES AND RESOURCES
63 MARKET TARGETING Target Marketing Strategies
64 TARGET MARKETING STRATEGIES STRATEGY # 1 DIFFERENTIATED MARKETING Differentiated marketing targets several different market segments and designs separate offers for each Goal is to achieve higher sales and stronger position More expensive than undifferentiated marketing
65 DIFFERENTIATION STRATEGY Multi segment approach Separate mix for each segment Expensive In terms of product & marketing cost Only possible for large firms
66 STRATEGY # 2 CONCENTRATED MARKETING Concentrated marketing targets a small share of a large market Limited company resources Knowledge of the market More effective and efficient
67 CONCENTRATED MARKETING Marketing effort directed at a single highly defined segment Niche marketing Rolex watches Used when one group is especially attractive for the organization to target A useful strategy for smaller firms avoids a head on collision with major players Provides scope for competitive advantage in a small niche in the market
68 STRATEGY # 3 MICRO-MARKETING Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations Local marketing Individual marketing
69 STRATEGY # 4 LOCAL MARKETING Local marketing involves tailoring brands and promotion to the needs and wants of local customer groups CITIES NEIGHBORHOODS STORES
70 STRATEGY # 5 INDIVIDUAL MARKETING Individual marketing involves tailoring products and marketing programs to the needs and preferences of individual customers Also known as: One-to-one marketing Mass customization Markets-of-one marketing
71 CHOOSING A POSITIONING STRATEGY Identifying possible competitive advantages Choosing the right competitive advantage Choosing a positioning strategy Differentiation can be based on Products Services Channels People Image
72 MARKET SEGMENTATION Identifying possible competitive advantages Choosing the right competitive advantage Choosing a positioning strategy How many differences to promote? Unique selling proposition Several benefits Which differences to promote? Criteria include: Important Distinctive Superior Communicable Preemptive Affordable Profitable
73 MARKET SEGMENTATION Identifying possible competitive advantages Value propositions represent the full positioning of the brand Possible value propositions: Choosing the right competitive advantage Choosing a positioning strategy More for More More for the Same More for Less The Same for Less Less for Much Less
74 PORSHE VERSUS LEXUS Porsche is positioned on the basis of performance and freedom. 7-74
75 CONTINUUM OF TARGETING STRATEGIES Customized Different mix for each customer Niche Targets a single small segment Concentrated Targets single large segment Differentiated Different mix for each segment Undifferentiated Single marketing mix for all customers
76 MARKET TARGETING Choosing a Targeting Strategy depends on Company resources Product variability Product life-cycle stage Market variability Competitor s marketing strategies
77 MARKET TARGETING Socially Responsible Target Marketing Benefits customers with specific need Concern for vulnerable segments Children Alcohol Cigarettes Internet abuses
78 MARKET SEGMENTATION Levels Of Marketing Segmentation Mass Marketing Segment marketing Niche Marketing Micro-marketing No Segmentation Complete segmentation 78
79 FIVE PATTERNS OF TARGET MARKET SELECTION P1 Single-segment concentration M1 M2 M3 P1 Selective specialization M1 M2 M3 P1 Product specialization M1 M2 M3 P2 P2 P2 P3 P3 P3 Market specialization M1 M2 M3 Full market coverage M1 M2 M3 P = Product M = Market P1 P2 P1 P2 P3 P3
80 Product Varieties SEGMENT-BY-SEGMENT INVASION PLAN Airlines CUSTOMER GROUPS Railroads Truckers Large computers Mid-size computers Personal computers Company A Company B Company C
81 POSITIONING Position in the market The location of a product or service alongside key competitors in the mind of consumers Refers to the place the product occupies in the consumer s perceptual map of the market
82 POSITION AND POSITIONING A product s position ultimately depends on the attitudes of people in the target market Firms will seek to position their products to increase sales Either marketers accept the customer attitudes as they & tailor the product to fit those attitudes or seek to change those attitudes Positioning indicates how a company wishes to compete in the market place
83 POSITIONING Positioning Arranging for a brand or product to occupy a clear and distinctive place in the minds of the target customers relative to competing products and brands
84 THE ROLE OF POSITIONING The role of positioning To strengthen the power of messages directed at consumers To target a particular segment To ensure that the product is differentiated in the minds of the consumer To decide on the ground on which to compete To analyze re-positioning possibilities
85 The role of positioning THE ROLE OF POSITIONING To strengthen the power of messages directed at consumers To target a particular segment To ensure that the product is differentiated in the minds of the consumer To decide on the ground on which to compete To analyze re-positioning possibilities
86 PORTER S GENERIC STRATEGIES Porter s generic strategies Cost leader: Compete by being the lowest cost producer Differentiation: Compete by offering something different & superior Focus: Become a niche player concentrating on small part of the market
87 WHAT TYPE OF PRODUCT AM I?
88 DIFFERENTIATION The basic principle is that you must either: - Differentiate your product - Be a provider of generic products to be sold at the lowest prices
89 DIFFERENTIATION AND POSITIONING Product position is the way the product is defined by consumers on important attributes the place the product occupies in consumers minds relative to competing products Perceptions Impressions Feelings
90 DIFFERENTIATION AND POSITIONING Identifying Possible Value Differences and Competitive Advantages Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices
91 DIFFERENTIATION AND POSITIONING Choosing a Differentiation and Positioning Strategy Identifying a set of possible competitive advantages to build a position by providing superior value from: Product differentiation Service differentiation Channel differentiation People differentiation Image differentiation
92 DIFFERENTIATION AND POSITIONING Choosing the Right Competitive Advantage Difference to promote should be: Important Distinctive Superior Communicable Preemptive Affordable Profitable
93 DIFFERENTIATION AND POSITIONING Selecting an Overall Positioning Strategy Value proposition is the full mix of benefits upon which a brand is positioned
94 PERCEPTUAL MAP The visual representation of a brand within a specific market place showing its position relative to competitors Shows which and how products compete in consumers mind and suggests how an product can be positioned to maximize sales
95 A PERCEPTUAL MAP FOR SUPERMARKETS Full range Low price High price Limited range
96 96 FORMULATING THE CORRECT POSITIONING
97 DIFFERENTIATION AND POSITIONING Positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions
98 WHAT TYPE OF PRODUCT AM I?
99 WHAT TYPE OF PRODUCT AM I? very expensive and of high value based on knowledge, skills and experience Price Product humanaterian, skilled professional, degree in tourism Self Motivated Passionate Place Promotion Family circle corporate network volunteer organisation Customer service Trained Tour Guide Professionalism
100 COMMUNICATION AND DELIVERING THE CHOSEN POSITION Choosing the positioning is often easier than implementing the position.
101 MARKETING 1101 PRODUCT TEAMS DIGICEL VERSUS GT&T BLACKBERRY VERSUS SAMSUNG COKE VERSUS PEPSI BANKS VERSUS CARIB MONACO VERSUS MOJO PRINCESS VERSUS PEGASUS REPUBLIC VERSUS BANK OF NOVA SCOTIA COURTS VERSUS SINGERS NIGELS VERSUS BOUNTY