5 Definition 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 marketE.g. Threshers used such information to make sure each store was stocked with goods suitable to the population of the area it serves
6 BenefitsShould allow a business to sell more products and increase profitsUnderstand customers better and vary products to suite their needsHelps target products at specific customer groupsPrevent wrong product promotion, leading to a waste of resourcesAllow marketing a wider range of differentiated productsDevelop business loyalty when needs are met
7 Types of market segmentation There are four main types:Geographical – where they live?Demographic – by gender, class, age, ethnicity or religionPsychographical – by lifestyle and personalityBehaviour – 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 regionType of house or area of the city they live inGlobal 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 ageGender – 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 channelsEthnic grouping – Radio stations gear towards certain groups, Radio 1 extra for black music
10 Market segmentationA Higher managerial, administrative or professionalB Intermediate managerial, administrative and professionalC1 Supervisory, clerical, junior administrative or professionalC2 Skilled manual workersD Semi and unskilled manual workersE State pensioners, widows, lowest grade workers.
11 Psychographic Segmentation Groups customers according to attitudes, opinions and lifestylesSports products aimed at different groups, football boots in a football magazineAttitudes used to segment the marketMobile phones offer internet access for business travellersNewspapers geared towards how people voteHowever, 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 productUsage rate – consumers are categorised according to quantity and frequency of purchase (BA has executive club)Loyalty – The Tesco Clubcard offers discounts for loyalty to storeTime and date of consumption – Bars encourage different groups on certain nights of the weekOn its own may fail to capture the target market so needs to be used in accordance with other methods
13 TASKChoose one of the products listed below and state how it has been segmented for the market.
15 Market Segmentation and strategy Recap on segmentationUnderstand different marketing strategiesKnow targeting and positioning strategies
16 Market Segmentation and strategy How do they segment the market?Think of different Ford ProductsWho are their target market?Why do they have so many products?
17 Segmentation, targeting and positioning Planning a marketing strategyIdentify the marketMarket segmentationDeveloping customer profilesEvaluating market segmentsMarket targetingSelecting market segments to targetPositioning for each market segmentMarket positioningDeveloping a marketing mix for each target segment
18 Targeting Undifferentiated strategy : Try to promote the business to the whole market,some newspapers for exampleBusinesses producing commodities like oil do not need to produce products for specific market segments, PG TipsA detergent manufacturer might sell cleaning products to consumers and cleaning companies, but it could use different packaging for both productsConcentrated strategy :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 peopleSome 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 PositioningTakes into account the views and perceptions that consumers have about productsConsumers catagorise products according to quality, status or value for moneyThese catagories define the products’ positionHow to gain a strong position?Use a unique selling point to establish a position within the market, like Purdey’s drinks with herbs and mineralsAttributes like Flora pro-active having cholestrol reducing qualitiesOrigins, Fosters emphasises it is an Australian beerLuxury, such as Thorntons chocolates
21 PositioningAs 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 How can a market be segmented geographically? (3) How might a business, plan concentrated marketing strategy? (6)
23 Marketing strategySegmenting the market – Identify how to segment the marketDevelop customer profiles – Who are your customers? Done through market research and once identified draw up a consumer profileEvaluating 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 strategyDeveloping a marketing mix for each target segment - Finally the business must develop a marketing mix. Take into account the 4 p’s suited to the market segment. Always responding to market and customer needs.ProblemsSometimes 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 Page 71 in text books Answer questions b,c and d.