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Market Segmentation. Lesson Objectives Understand market segmentation Know benefits and disadvantages of market segmentation Have relevant examples for.

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Presentation on theme: "Market Segmentation. Lesson Objectives Understand market segmentation Know benefits and disadvantages of market segmentation Have relevant examples for."— Presentation transcript:

1 Market Segmentation

2 Lesson Objectives Understand market segmentation Know benefits and disadvantages of market segmentation Have relevant examples for each method Able to analyse a market using the most appropriate tools

3 Who are these products targeted at?

4 Market Segmentation

5 Definition Is the process of breaking down a market into sub groups Is the process of breaking down a market into sub groups Uses market research to find information on people who would fit into the product or services target market Uses market research to find information on people who would fit into the product or services target market E.g. Threshers used such information to make sure each store was stocked with goods suitable to the population of the area it serves

6 Benefits Should allow a business to sell more products and increase profits Should allow a business to sell more products and increase profits Understand customers better and vary products to suite their needs Understand customers better and vary products to suite their needs Helps target products at specific customer groups Helps target products at specific customer groups Prevent wrong product promotion, leading to a waste of resources Prevent wrong product promotion, leading to a waste of resources Allow marketing a wider range of differentiated products Allow marketing a wider range of differentiated products Develop business loyalty when needs are met Develop business loyalty when needs are met

7 Types of market segmentation There are four main types: 1. Geographical – where they live? 2. Demographic – by gender, class, age, ethnicity or religion 3. Psychographical – by lifestyle and personality 4. Behaviour – by how they act (repeat purchases) E.g. Tesco use storecard to gain customer information

8 Geographic segmentation Including where the consumers live and the nature of the region Type of house or area of the city they live in Global businesses will sell different products in various parts of the world (Nestle sells profiteroles in France) Goods can also be priced differently across the globe - car manufacturers (economy, production) However, consumers tastes are becoming more uniform across geographic boundaries (football club supporters)

9 Demographic Segmentation Age – music gets targeted at different categories of age Gender – targeting males and females because they have different spending patterns (Ford Ka targeted women) Social Class – Look at table 1 in text books, based on employment status and conditions (used by banks and insurance companies) Income – A self employed electrician and a middle manager could have the same income (watch companies in magazines) Religion – Food producers may specialise in Kosher food for Jewish people, also sky Christian channels Ethnic grouping – Radio stations gear towards certain groups, Radio 1 extra for black music

10 Market segmentation A Higher managerial, administrative or professional B Intermediate managerial, administrative and professional C1 Supervisory, clerical, junior administrative or professional C2 Skilled manual workers D Semi and unskilled manual workers E State pensioners, widows, lowest grade workers.

11 Psychographic Segmentation Groups customers according to attitudes, opinions and lifestyles Sports products aimed at different groups, football boots in a football magazine Attitudes used to segment the market Mobile phones offer internet access for business travellers Newspapers geared towards how people vote However, it can be difficult for businesses to collect this data and may require hiring in a specialist

12 Behavioural Segmentation Segments on how consumers relate to a product Usage rate – consumers are categorised according to quantity and frequency of purchase (BA has executive club) Loyalty – The Tesco Clubcard offers discounts for loyalty to store Time and date of consumption – Bars encourage different groups on certain nights of the week On its own may fail to capture the target market so needs to be used in accordance with other methods

13 TASK Choose one of the products listed below and state how it has been segmented for the market.

14 Market Segmentation and strategy

15 Recap on segmentation Recap on segmentation Understand different marketing strategies Understand different marketing strategies Know targeting and positioning strategies Know targeting and positioning strategies

16 Market Segmentation and strategy Think of different Ford Products Why do they have so many products? Who are their target market? How do they segment the market?

17 Segmentation, targeting and positioning Planning a marketing strategy Market segmentation Market targeting Market positioning Identify the market Developing customer profiles Evaluating market segments Selecting market segments to target Positioning for each market segment Developing a marketing mix for each target segment

18 Targeting Undifferentiated strategy : Try to promote the business to the whole market, Try to promote the business to the whole market, some newspapers for example Businesses producing commodities like oil do not need to produce products for specific market segments, PG Tips Businesses producing commodities like oil do not need to produce products for specific market segments, PG Tips A detergent manufacturer might sell cleaning products to consumers and cleaning companies, but it could use different packaging for both products A detergent manufacturer might sell cleaning products to consumers and cleaning companies, but it could use different packaging for both products Concentrated strategy : Targeting just one market segment, Gucci Targeting just one market segment, Gucci

19 Targeting Differentiated strategy : Different products are marketed to different groups of people, banks services for teenagers and retired people Different products are marketed to different groups of people, banks services for teenagers and retired people Some businesses are trying to move away from undifferentiated marketing strategies to better target consumer needs. Milk for example was marketed in this way, now it is differentiated by fat levels, skimmed etc. Consumer profiles – information that tells businesses about consumers of a particular product and their characteristics. Cinemas have 50% of customers between the age of

20 Positioning Takes into account the views and perceptions that consumers have about products Takes into account the views and perceptions that consumers have about products Consumers catagorise products according to quality, status or value for money Consumers catagorise products according to quality, status or value for money These catagories define the products position These catagories define the products position How to gain a strong position? Use a unique selling point to establish a position within the market, like Purdeys drinks with herbs and minerals Use a unique selling point to establish a position within the market, like Purdeys drinks with herbs and minerals Attributes like Flora pro-active having cholestrol reducing qualities Attributes like Flora pro-active having cholestrol reducing qualities Origins, Fosters emphasises it is an Australian beer Origins, Fosters emphasises it is an Australian beer Luxury, such as Thorntons chocolates Luxury, such as Thorntons chocolates

21 Positioning As markets and consumers tastes change a business may try to reposition its product. This can involve changing the image of the product, its features or its target market. E.g.. Lucozade was changed from a drink which people took when they were ill to one used for sport.

22 Questions 1. How can a market be segmented geographically? (3) 2. How might a business, plan concentrated marketing strategy? (6)

23 Marketing strategy Segmenting the market – Identify how to segment the market Develop customer profiles – Who are your customers? Done through market research and once identified draw up a consumer profile Evaluating market segments – Which segments are worth targeting? Selecting market segments – Which will be the target market? Position the product for the target segment – How to position the product within the market? Look at competition and how will it differentiate itself

24 Marketing strategy Developing a marketing mix for each target segment - Finally the business must develop a marketing mix. Take into account the 4 ps suited to the market segment. Always responding to market and customer needs. Problems Sometimes the buyer is not the main influence on the product, especially the increasing effect of pester power. Some researchers say this results in a purchase 2/3 of the time. Sometimes the buyer is not the main influence on the product, especially the increasing effect of pester power. Some researchers say this results in a purchase 2/3 of the time.

25 CASE STUDY The power of the Muslim pound The power of the Muslim pound Page 71 in text books Page 71 in text books Answer questions b,c and d. Answer questions b,c and d.

26 Plenary Everyone should understand : Market segmentation Market segmentation Market targeting Market targeting Market positioning Market positioning Marketing strategies Marketing strategies

27 Questions What is meant by a market segment? (3) How can market segmentation benefit a business? (3) List three ways, with examples, of how a business can differentiate the product. (3)


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