The increased fragmentation of markets has led to:
Micro-marketing, where companies modify their marketing programs to suit the needs and wants of specifically defined geographic; demographic; psychographic; or behavioural segments (the focus is now on an even more narrowly defined target ).
The ultimate form of target marketing is one-to-one, or mass-customised, marketing where a company adapts its product and its marketing program to the needs of a specific consumer or buying organisation.
Dividing a market into distinct groups of buyers with each group having different needs; characteristics; or behaviour, which might require the development of separate products or marketing mixes for each group.
Evaluating each market segment’s attractiveness, and selecting one or more of the market segments to enter.
Setting the competitive positioning for the product, and creating a detailed marketing mix to achieve the position.
Markets consist of buyers, and buyers differ in one or more ways such as:
In their wants; resources; location; buying attitudes; and buying practices, and in their preferences for particular buying channels such as ordering by mail; by phone; via the Internet; or at a physical location.
Because buyers have unique needs and wants, each buyer is potentially a separate market .
A seller could develop a separate marketing program
for each buyer, - this is not usually a practical option.
Substantiality - the extent to which the segments are large or profitable enough. A segment should be the largest possible homogeneous group worth targeting with a specifically developed marketing program
Actionability - the extent to which a firm can develop effective programs to attract and serve the selected segments .
Collect and analyse data on current dollar sales; projected sales growth rates; and expected profit margins for the various segments. Select segments that have the right size and growth characteristics.
Size/ growth is relative - select what is best for the firm .
Segment structural attractiveness
A segment might have desirable size and growth, and still not be attractive from a profitability point of view. Need to examine the major structural factors that affect long-term segment attractiveness, such as :
strength of competitors; influence of suppliers; threat from substitute products .
Even if a segment has positive size and growth, and is structurally attractive, the company must consider its own objectives and resources in relation to that segment. Some seemingly attractive segments could be quickly rejected because they do not fit with the company’s long-term objectives
Does firm have the necessary resources and skills; can it deliver value, and gain competitive advantage?
a company decides to ignore differences between segments and go after the whole market with a single market offering . It will focus on what is common in the needs of consumers, rather than worrying about what is different.
Differentiated marketing = (multi-segment)
a company decides to target several market segments and designs separate offerings (mix) for each. By providing product and marketing variations , it hopes for higher total sales and a stronger position within each market segment.
Many factors must be considered. Which strategy is best depends on the marketing organisation’s resources ; product variability ; stage in the life cycle ; market variability ; and competitors’ marketing strategies .
Permission marketing has come to the fore - the process of converting strangers into friends, and friends into customers.
Once a firm has decided on which segments of the market to enter, it must select a value proposition that differentiates it from competitors & appeals to buyers.
Product position is the way the product is perceived by consumers on important attributes - the place the product occupies in consumers’ minds, relative to competing products .
Marketers may follow several positioning strategies. They can position on specific product attributes; benefits; usage occasions; against a competitor; away from competitors; and by product classes.
Choosing and Implementing a Positioning Strategy
Identifying a positional direction consists of 4 steps:
Identifying a set of possible competitive advantages on which to build a position
Selecting the right competitive advantages
Selecting an overall positioning strategy
Developing a positioning statement
Identifying possible value differences
Perceptual mapping: Analysis to identify the ‘position’ of the brand in the mind of the consumers. This involves consumers, or prospective consumers, rating brands against each other in terms or similarity or dissimilarity
Brand Position of Particular Department Stores
Consumers typically choose products and services that give them the greatest value.
The key to winning and keeping customers is to understand their needs and buying processes better than competitors and then deliver more value.
if a firm can position itself as delivering superior value to selected target markets either by offering a lower price, or by providing more benefits to justify a higher price, the firm will be able to gain competitive advantage