3.3.3 Segmentation, targeting and positioning

• Market segmentation involves dividing a market unto parts that reflect different customer needs and wants
• In what ways to markets differ?

  Customer needs and wants

  How customers buy

  Location of customers

  Knowledge and experience of customers
• What are the main segments?

  Demographic

  Income

  Behavioural

  Geographical
• Demographics as a segment is dividing a market into segments based in demographic variables such as age, gender, family, lifestyle, religion, nationality or ethnicity
• Income as a segment is dividing markets into different income segments often on the basis of socio-economic grouping
• Behavioural segmentation is dividing a market based on the different ways customers use or respond to a product and the benefits they seek
• Geographical segmentation is dividing a market into different geographical units, such as nations, regions, cities, neighbourhoods or other territories
• What are the benefits of market segmentation?

  Can tailor products to the segment

  Can change the product to suit needs

  Can fit a certain need - gap in the market
• What are the drawbacks of segmentation?

  Requires lots of research and can be expensive

  Does not guarantee success

  You can have too many segments and can fit your product to them all
• Niche marketing is where a business targets a smaller segment of a larger market, where customers have specific needs and wants
• Mass marketing is where a business sells into the largest part of the market where there are many similar products offered by competitors
• What are the advantages with a niche audience?

  Can tailor the marketing to very specific people

  Can charge a higher price

  Can control market more easily
• What are the disadvantages of niche marketing?

  Small market, not many customers

  Not everyone wants it

  Vulnerable to market change

  Lack of economies of scale
• What is a target market?

  The set of customers sharing common needs and wants that a business decides to target
• Mass marketing as a global brand?

  Businesses target the whole market ignoring segments products focus on what customers needs and wants are that are common
• Segmented marketing?

  Businesses target several market segments within the same market

  Products are designed and targeted at each segment requires separate marketing plans and often different business units and production portfolios
• Niche marketing?

  Businesses focuses narrowly on smaller segments or niches

  Aim is to achieve a strong market position (share) within those niches
• What is market positioning?

  Market positioning refers to the process of creating an image or identity for a product or brand in the minds of target consumers, distinguishing it from competitors
• • Having chosen which segments to target businesses need to decide how to complete in those segments
  • Marketing people call this the value proposition
  • Market position is defined by customers the place a products occupies in customer minds relative to completing products
• A market (positioning) map illustrates the range if positions that a product can take in a market based in two dimensions that are important to customers
• Customers choose products based on the value proposition

  Providing superior value than the competition is a source of competitive advantaged if it can be sustained

  There are various possible differences which can deliver competitive advantage
• What links data to marketing?

  Budgeting

  Sales trending

  Market conditions
• What is extrapolation?

  A moving average takes a data series and smooths the fluctuations in data to show an average

  The aim is to take put the extremes of data from period to period
• Extrapolation uses trends established from historical data to forecast the future
• What are the advantages of extrapolation?

  Quick and easy

  Not much data required

  Cheap
• What are the disadvantages of extrapolation?

  Cannot be 100% correct

  External factors can drastically change results

  Ignores qualitative factors

  Assumes past trends will continue
• Correlation looks at the strength of a relationship between 2 variables
• The independent variable ( x axis) is the factor that causes the dependant variable to change
• The dependant variable (y axis) is the variable that is influenced by the independent variable
• The line of best fit indicates the strength of the correlation

  Strong correlation means that there is little room between the data points and the line

  Weak correlation means that the data points are spread quite wide and far away from the line of best fit