1Marketing Management

MKTG1203

Dr. Wade Jarvis

Markets: Segmentation, Targeting and

Positioning.

Learning objectives for this topic

Learning Objectives:

explain the broad concept of a market

understand the target marketing concept

identify market segmentation variables for consumer and

business markets, and develop market segment profiles

select specific target markets based on evaluation of potential

market segments

understand how to effectively position an offering to a target

market in relation to competitors, and develop an appropriate

marketing mix.

2The market

Market

A group of buyers who have the opportunity,

willingness and ability to purchase a product or

products.

There are many different kinds of markets,

including consumer markets and business markets.

Reseller markers, producer markets, government

markets and institutional markets are examples of

business markets.

Markets are dynamic and difficult to define!

Target marketing

Markets can have a variety of characteristics:

1. Buyers have common wants, needs and

demands.

2. Buyers have unique wants, needs and demands.

3. The market contains subgroups.

Market segments

Subgroups within the total market that are

relatively similar in regards to certain

characteristics.

3Target marketing

Target marketing

An approach to marketing based on identifying,

understanding and developing an offering for

those segments of the total market that the

organisation can best serve.

Target marketing

4Target marketing

Mass marketing

Buyers have common wants, needs and

demands. A single product will meet the needs of

most people in the market, with an

undifferentiated approach.

Producing large volumes at a low cost per unit (due

to economies of scale) makes it possible to sell at

a low price and capture very large markets,

ensuring high levels of profitability.

Target marketing

One-to-one marketing

Providing a unique, customised offering to meet individual

customer needs.

A one-to-one approach often results in higher unit costs and a

more restricted market.

One-to-one conditions typically form the basis for a focus or

niche strategy. Many small services businesses take a one-

to-one marketing approach, for example, hairdressers.

5Target marketing

Differentiated targeting strategy

A marketing approach that involves developing a

different marketing mix for each target market

segment.

Market segmentation forms the basis of target marketing.

A differentiation strategy entails high costs. To achieve

high profits requires higher retail prices, high market

share and strong customer loyalty.

Positioning based more on differentiation by highlighting

a specific feature, a user group or occasion!

Target marketing

Product specialisation: Marketing

efforts are concentrated on offering a

single product range to a number of

market segments.

Market specialisation: Marketing

efforts are focused on meeting a wide

range of needs within a particular

market segment.

Productmarket specialisation:

Marketing efforts are concentrated on

offering a single product to a single

market segment.

6Target marketing

Market segmentation

Segmentation variables: Characteristics that buyers have in

common and that might be closely related to their purchasing

behaviour.

7Market segmentation

Segmenting consumer markets

The variables for segmenting consumer markets

fall into four broad categories: demographic,

geographic, psychographic and behavioural

variables.

Effective segmentation involves choosing

segmentation variables that are easy to measure

and readily available, and linked closely to the

purchase of the product in question .

Market segmentation

Geographic segmentation

Market segmentation based on variables related to geography.

Useful geographic variables include: climate, local population, market density, region, topography and urban, suburban, rural footprint.

Geo-demographic segmentation

Combines demographic variables and geographic variables to profile very small areas, such as suburbs.

8Market segmentation

Demographic segmentation

Market segmentation based on demographic

variables, which are the vital and social

characteristics of populations, such as age,

education and income.

Demographic variables are the most commonly

used variables for market segmentation.

Market segmentation

Psychographic segmentation

Market segmentation based on the psychographic

variables of lifestyle, motives and personality

attributes.

Psychographic segmentation is based on the need

to understand not who you are, but how you live

your life. This is reflected in activities such as

hobbies or choice of entertainment.

9Market segmentation

Behavioural segmentation

Market segmentation based on actual

purchase and/or consumption behaviours.

Behavioural variables include: benefit

expectations, brand loyalty, occasion, price

sensitivity and volume usage.

Market segmentation

Effective segmentation involves ensuring:

measurability abstract variables can be

difficult to measure

accessibility through distribution and

communication channels

substantiality the segment must be of

sufficient size to allow profitability

practicability segments are only of use if

they can be identified and serviced.

10

Market segmentation

Market segment profile

A description of the typical potential customer in the market segment (i.e.. the common variables shared by members of market segments and how the variables differ between segments).

Market segments must be sufficiently different from each other for a distinctive offer to be created for each segment, without risk of overlapping segments or sending confusing images and messages.

Market targeting

Market targeting: The selection of target markets resulting from an

evaluation of identified market segments.

11

Market positioning

Perceptual map of the

Australian surfwear industry

12

Positioning Strategies

Against aCompetitor

UsageOccasions

Away fromCompetitors

ProductAttributes

ProductClass

BenefitsBenefitsOffered

Users

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