Market Segmentation

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Market Segmentation

  1. 1. TARGET MARKETS <ul><li>Marketing is costly so organisations need to be sure that they are communicating with the people most likely to buy their product. </li></ul><ul><li>Eg Expensive adverts shown at the wrong time on TV are a waste of money </li></ul>
  2. 2. UNDIFFERENTIATED MARKETING or MASS MARKETING <ul><li>Some products appeal to the majority of us – so all marketing is aimed at the general population. </li></ul><ul><li>Aimed at most or all of the market. This type of marketing is likely to be expensive. </li></ul><ul><li>This strategy is likely to be used where the product cannot be easily differentiated to suit the needs of particular groups of people </li></ul>
  3. 3. 2 <ul><li>this can involve marketing different products or services to different groups of people (segments) or promoting the same product in different ways. </li></ul><ul><li>Eg banks having different types of accounts for different groups of users. </li></ul><ul><li>Eg Ford produce different cars for different customers </li></ul><ul><li>Eg BT has different packages for different customers </li></ul>DIFFERENTIATED MARKETING
  4. 4. Question <ul><li>Distinguish between undifferentiated and differentiated marketing. (1) </li></ul>
  5. 5. MARKET SEGMENTATION <ul><li>Market research will show that a particular product appeals to a specific group of people. Producers need this information to identify groups with similar needs. </li></ul><ul><li>Breaking down a market into sub-groups is called market segmentation. </li></ul>
  6. 6. Market Segmentation <ul><li>Gender </li></ul><ul><li>Age </li></ul><ul><li>Income </li></ul><ul><li>Occupation </li></ul><ul><li>Lifestyle </li></ul><ul><li>Hobbies </li></ul><ul><li>Religion and Race </li></ul><ul><li>Geographic location </li></ul><ul><li>Level of Education </li></ul><ul><li>Social class </li></ul>
  7. 7. WHY USE MARKET SEGMENTATION? <ul><li>The main reason is that the information would allow more sales to be made </li></ul><ul><li>to gain greater knowledge about customers so that it can vary the product </li></ul><ul><li>prevent promoting products to the wrong people </li></ul><ul><li>to target particular groups </li></ul><ul><li>to market a wider range of differentiated products </li></ul>
  8. 8. Benefits of Segmentation <ul><li>Sales should increase </li></ul><ul><li>Satisfy customer needs more successfully </li></ul><ul><li>Customer feedback more easily obtained </li></ul><ul><li>Reduced costs as money is not wasted on ineffective advertising and promotion </li></ul>Add to notes
  9. 9. Questions <ul><li>Outline the benefits of market segmentation. (3) </li></ul><ul><li>For each of the products listed below suggest the most likely target market: </li></ul><ul><ul><li>Chanel No.5 </li></ul></ul><ul><ul><li>The Herald Newspaper </li></ul></ul><ul><ul><li>Glasgow university law degree </li></ul></ul><ul><ul><li>Fresh and Lo semi-skilled Milk </li></ul></ul><ul><ul><li>Ford Focus </li></ul></ul><ul><ul><li>BMW Mini </li></ul></ul>
  10. 10. NICHE MARKETING <ul><li>Companies identify a “gap” in the market. </li></ul><ul><li>This involves a business aiming a product at a particular, often tiny, </li></ul><ul><li>segment of the market. </li></ul><ul><li>WHY? </li></ul><ul><li>Small firms can sell in markets which have maybe been overlooked by or or ignored by other firms. </li></ul><ul><li>They can avoid competition in the early stages </li></ul><ul><li>Can focus on the needs of the consumers in these segments. </li></ul><ul><li>Many small firms have just one product </li></ul><ul><li>Examples of Niche Markets: </li></ul><ul><ul><li>The Whisky Shop </li></ul></ul><ul><ul><li>Tie Rack </li></ul></ul>
  11. 11. Niche Market <ul><li>PROBLEMS – </li></ul><ul><li>Does not spread risk </li></ul><ul><li>In time, market may attract large business which can benefit from economies of scale </li></ul><ul><li>can be more and frequent swings in consumer spending than in a large market. </li></ul>
  12. 12. Question <ul><li>Describe a niche market. (1) </li></ul><ul><li>Explain the advantages and disadvantages of operating in a niche market (4) </li></ul>
  13. 13. Solutions
  14. 14. MARKET SHARE <ul><li>This is the proportion of a particular market held by a product/business. </li></ul><ul><li>Indicates which business is the market leader. </li></ul><ul><li>It might influences the strategy or objectives of a business, eg to increase their share by 5%. </li></ul><ul><li>It may also be an indication of of the success or failure of a business or its strategy. </li></ul>
  15. 15. MARKET SHARE
  16. 16. PROBLEMS WITH MARKET SHARE <ul><li>Share may be measured in different ways. (Sales revenue, profit, sales volume), BTs share might be different if sales rev from calls was used. </li></ul><ul><li>type of product on which the market share </li></ul><ul><li>is based, </li></ul><ul><li>eg may have been different if </li></ul><ul><li>mobile phone companies had been included </li></ul>
  17. 17. Market Growth <ul><li>Market growth takes place when the total number of people buying a product or service increases in the whole market. </li></ul><ul><li>Eg: </li></ul><ul><li>2000 – there were 21,000,000 users of mobile phones in the UK </li></ul><ul><li>2007 – there were 37,000,000 users of mobile phones </li></ul><ul><li>Therefore the market has grown by 16,000,000 in 7 years </li></ul><ul><li>Just as products go through a lifecycle, so do entire markets. </li></ul>
  18. 18. Question <ul><li>Distinguish between market share and market growth. (1) </li></ul><ul><li>Solution: </li></ul>

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