Market Segmentation
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Market Segmentation

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Market Segmentation Market Segmentation Presentation Transcript

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