1. Unit 1: MARKETING
SEGMENTATION (2)
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2. SEGMENTING INDUSTRIAL MARKETS
Strategies used for industrial markets (as opposed to consumer markets):
By location
Customer size – the size of a company by turnover and/or staff numbers can give an idea on needs
Usage rates
Industry classification – the nature of the business
Product use
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3. Targeting and positioning
Segmentation: identifying which groups (segments) of consumers will respond to which types of marketing activity
Targeting: the organisation will use this information to select those segments best suited to what it offers
Positioning: research will discover why certain consumers buy certain products – this allows an organisation to develop those products and promote them to the optimum advantage
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4. Targeting strategies
Once various segments have been identified, a marketer will need to choose the organisational targeting strategy to ensure each segment is targeted with the product/service they are most likely to want/buy/need
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5. Niche/concentration strategy
Targeting one specific, well defined segment within the market
Advantage: can work well, especially with smaller firms who have smaller budgets and less resources
Disadvantage: all your eggs in one basket – what happens if people stop buying that product/ service?
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6. Mass/undifferentiated strategy
Targeting the whole market with a single product/service, based on the assumption that all customer needs are basically similar
Advantage: can produce product/service on a large scale, which means lower production costs and lower selling prices to customers
Disadvantage: do all customers want the same standard product or today, are more prepared to pay a premium for a specialist product for them specifically?
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7. Differentiated/selective strategy
Target each identified segment with a specifically chosen product/service and marketing mix, especially designed for that segment
Advantage: Tailoring the product/service and marketing mix to the specific needs to increase satisfaction and enhance customer loyalty = profit
Disadvantage: can become confusing for customers in an identified segment, if are targeted with several such products at any one time. Also more expensive to target several specific segments at any one time
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8. Further reading
P415- p451 Principles of Marketing; Kotler et el (2005)
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