i contain what is market ? n detail info about targeting product

1. BHO1171 -4- School of HTM - VU1
MARKET SEGMENTATION, TARGETING AND POSITIONING
LECTURE 4 : BHO1171 INTRODUCTION TO MARKETING
This lecture will explain:
• what constitutes a market
• market aggregation / mass market concepts using examples
• what market segmentation means and the reasons for segmenting markets
• What criteria (bases) can be used for segmenting markets (main focus of lecture)
• Bases for segmenting B2B markets
• What criteria can be used to determine if the segmentation is effective
• How to evaluate different segments – which segment to target?
• Once a target segment is chosen, marketing program can be developed
• Concept of positioning and why there is a need to position a product in the market
• Selecting the right competitive advantage – what criteria can be used to select the right differences to promote

2. BHO1171 -4- School of HTM - VU2
What are Markets?
• In Economics and Marketing - the term "market"
denotes an aggregate of people who, as individuals or
as organisations;
• have needs for products in a product class;
• have the ability, willingness and authority to
purchase such products;
• eg: Students are part of the market for textbooks,
calculators, paper, etc.

3. BHO1171 -4- School of HTM - VU3
TYPES OF MARKETS
• Markets can be divided into two categories:
• Consumer market - buy products for consumption - not for
making profit.
• Organisational or industrial market -
purchase a specific kind of product for resale
use in producing other products
use in general daily operations.
eg: producers, resellers, government and institutions

4. BHO1171 -4- School of HTM - VU4
REQUIREMENTS FOR A MARKET
For a group of people to be a market - it must meet the
following four requirements:
• must need or want a particular product
• have the ability to purchase the product.
• must be willing to use their buying power.
• must have the authority to buy the specific products.
eg: Under 18s not allowed to buy alcohol in most
States.

5. BHO1171 -4- School of HTM - VU5
Stages in Market Orientation
Mass
Marketing
Mass
Marketing
Product-Variety
Marketing
Product-Variety
Marketing
Target
Marketing
Target
Marketing

6. BHO1171 -4- School of HTM - VU6
HISTORICAL APPROACHES TO
MARKETS
• Mass Marketing: In mass marketing the seller mass produces,
mass distributes, and mass promotes one product to all buyers.
• Product-Variety Marketing: Here the seller produces two or
more products that have different features, styles, quality, sizes,
and so on.
• Target Marketing: Here the seller identifies market segments,
selects one or more of them, and develops products and
marketing mixes tailored to each.

7. BHO1171 -4- School of HTM - VU7
MASS MARKETING
• Also known as mass marketing or undifferentiated marketing
• A single marketing program is used to offer the same product to
all consumers.
• This approach will not satisfy the needs and wants of every
buyer completely.
• Used by marketers of standardised goods like sugar, salt, petrol,
paint
• This approach is used when consumers perceive little or no
difference between the products of different firms - when
competing products seem virtually the same.

8. BHO1171 -4- School of HTM - VU8
MARKET AGGREGATION: THE
STRATEGY FOR MASS MARKETING
• a large number of people must have the same basic
need or want.
• a single marketing mix must satisfy various potential
customers.
• Consumers are expected to compromise by accepting a
product that may not suit their needs perfectly.
• Market is vulnerable to competitors.
• Promotion and marketing activities create perception
of uniqueness and superiority - product differentiation.

9. BHO1171 -4- School of HTM - VU9
MARKET SEGMENTATION - STRATEGY
OF SUBDIVIDING THE MARKET
• Why segment markets? - because markets consist of
buyers and buyers differ in one or more respects.
• They differ in their: wants & resources
geographic locations
buying attitude & practices
Any of these may be used to segment a market.

10. BHO1171 -4- School of HTM - VU10
WHAT IS MARKET
SEGMENTATION?
• Divide a market into distinct groups of buyers (each
with relatively similar product needs).
• Segments are made up of groups of people with
different needs, characteristics or behaviour
• Each segment may require separate products or
marketing mixes

11. BHO1171 -4- School of HTM - VU11
EXAMPLE:
GMH
Sellers look for broad classes of buyers who differ in
their product needs or buying responses
• GMH has found that high and low-income groups
differ in their car-buying needs and wants
• Young consumers’ needs and wants differ from those
of older consumers
• Hence GMH has designed specific models for different
income and age groups

12. BHO1171 -4- School of HTM - VU12
SEGMENTATION BENEFITS
• Firms segment the market to better service
customers.
• Allows firms to compete more effectively.
• With a segmented market firm can tailor a
marketing mix to a well defined target market.
• What marketers look for are distinctive groups of
consumers within the total- segmentation allows them
to meet needs more efficiently.

13. BHO1171 -4- School of HTM - VU13
EFFECTIVE USE OF MARKET
SEGMENTATION
• can the market be identified and
measured?
• is the segment large enough to be
profitable?
• is the market reachable?
• is the segment responsive?
• the segment must be stable

14. BHO1171 -4- School of HTM - VU14
Bases for Segmenting Consumer Markets
C
H
A
R
A
C
T
E
R
I
S
T
I
C
S
1. Demographic
2. Geographic
3. Behavioural
4. Psychographic

15. BHO1171 -4- School of HTM - VU15
Segmenting Bases
• Refer Table 7.1 pp219
• Geographic
– region, city size, urban,rural,climate
• Demographic
– income,age, gender, family life cycle,
– social class, education, occupation, ethnicity
• Psychographic
– personality, lifestyle, values
• Behavioural
– benefits desired, usage rate

16. BHO1171 -4- School of HTM - VU16
EXAMPLE:
GEOGRAPHIC SEGMENTATION
• Dividing the market into different zones -
• Regions, States, Cities
• ICI’s fertiliser arm segments by geography -
emphasising the right product in the right areas
• Can localise products, advertising, promotion and sales
efforts to fit needs of individual areas
• People in different areas have different need and wants

17. BHO1171 -4- School of HTM - VU17
Segmenting by Demographics
Examples:
• Cars designed to appeal to women – Holden Barina, Suzuki
Jimmy(what about the ute!) – gender segments
• CBA Visa card has ads in Cosmopolitan & Cleo
Pepsi targets different demographic segments in different ways:
(age-life cycle stage)
• Ads to teens (dance-beat music, adventure, rapid scene
movements)
• Ads to seniors (softer and more sentimental – closing the
generation gap by sharing a common soft drink - Pepsi

18. BHO1171 -4- School of HTM - VU18
Segmenting by Psychographics
• Socioeconomic status has strong effect on
preferences for cars, clothing,home furnishings,
leisure, store choice
• Lifestyle: frozen dinners, low fat yoghurts,
Solo soft drink
• Personality – creating products that correspond
to consumer personalities – cosmetics,
insurance, liquor, online share trades

19. BHO1171 -4- School of HTM - VU19
Segmenting by Behaviour
• Occasions: Valentine’s Day, Mother’s Day, marketing
of greeting cards, Kodak single use cameras
• Benefit sought: eg tooth decay prevention,
whiteness,tartar control, fluorigard

20. BHO1171 -4- School of HTM - VU20
BASES FOR SEGMENTATION
BUSINESS MARKETS
• Demographics
• Operating Variables
• Purchasing Approaches
• Situational Factors
• Personal Factors

21. BHO1171 -4- School of HTM - VU21
MARKET TARGETING
• Market targeting is the process of evaluating
each market segment’s attractiveness and
selecting one or more segments to enter.

22. BHO1171 -4- School of HTM - VU22
Market Targeting: Evaluating Market
Segments
Size and
Growth
Size and
Growth
Structural
Attractiveness
Structural
Attractiveness
Company
Objectives and
Resources
Company
Objectives and
Resources

23. BHO1171 -4- School of HTM - VU23
Requirements for Effective Segmentation
Requirements
for
Effective
Segmentation
Measurable
Substantial
Actionable Accessible

24. BHO1171 -4- School of HTM - VU24
Choosing a Market-Coverage Strategy
Factors
Affecting
Strategy
Decisions
Factors
Affecting
Strategy
Decisions
Company
Resources
Competitors’
Strategies
Market
Variability
Product
Variability
Stage in
Life Cycle

25. BHO1171 -4- School of HTM - VU25
Market Coverage Strategy
Remember that a market may consist of a number of
segments: Do we need to cover all segments?
The market coverage strategy that works best will depend
on:
• the company’s resources
• how different the product is
• the competitors’ marketing strategies
• the nature of the market

26. BHO1171 -4- School of HTM - VU26
STRATEGIC POSITIONING
EXAMPLE: Shampoo Market
• Shampoo market is highly fragmented - overflowing with
brands that promise: - body and control
- renewed life for dull hair
- elimination of split ends
- avoidance of dandruff.
• Effective marketers understand the value of establishing a solid
position in the minds of consumers.

27. BHO1171 -4- School of HTM - VU27
Product Positioning Strategies
Against a
Competitor
Against a
Competitor
Usage
Occasions
Usage
Occasions
Away from
Competitors
Away from
Competitors
Product
Attributes
Product
Attributes
Product
Class
Product
Class
Benefits
Offered
Benefits
Offered
UsersUsers
B
B
A
A
E
E
D
D
C
CH
H
G
G
F
F

28. BHO1171 -4- School of HTM - VU28
PROCEDURE FOR IDENTIFYING AN
APPROPRIATE POSITION
• (1) Determine the relevant product / market
• (2) Identify competitors.
• (3) Determine how consumers evaluate options
• (4) Learn how competitors are perceived
• (5) Identify gaps in positions held
• (6) Plan and carry out the positioning strategy
• (7) Monitor the position

29. BHO1171 -4- School of HTM - VU29
DEFINING A POSITIONING
STRATEGY
• Identifying a Positional Direction
• Identifying Possible Competitive Advantage
• Selecting the Right Competitive Advantage
• Differences to Promote
• Communicating the Chosen Position

30. BHO1171 -4- School of HTM - VU30
IDENTIFYING A POSITIONAL
DIRECTION
• See Pages 234-235 Kotler
• Brand position of department stores
• Brand repositioning strategies

31. BHO1171 -4- School of HTM - VU31
SOURCES OF COMPETITIVE
ADVANTAGES
• Product Differentiation can be based upon features or
performance.
• Services Differentiation may come from delivery, installation,
repair, or training advantages.
• Personnel Differentiation is derived from a superior work
force.
• Image Differentiation can be generated from effective use of
symbols in association with product consumption.

32. BHO1171 -4- School of HTM - VU32
Promoting Differences
Criteria
for
Determining
Which
Differences
to
Promote
AffordableAffordable SuperiorSuperior
ProfitableProfitable
PreemptivePreemptive
DistinctiveDistinctive
ImportantImportant
Commun-
icable
Commun-
icable

33. BHO1171 -4- School of HTM - VU33
EXAMPLE:
FORD MOTOR COMPANY
• A company that has evolved from a mass-marketer to a
market-targeter.
• Ford originally made one car for the entire — didn’t
even have a choice of colours.
• “You can have any colour car you want so long as it’s
black” Henry Ford
• Over time, Ford added other cars to its line (product-
variety marketing), and eventually developed cars for
nearly every market segment (target marketing).

34. BHO1171 -4- School of HTM - VU34
EXAMPLE:
PROCTER & GAMBLE
• Most companies that have been around for a long time have
shown a similar evolution.
• Procter & Gamble, had been in existence more than 80 years
when it introduced Ivory Flakes to supplement Ivory Soap
(product variety)
• Was almost 90 years old when it first developed a product
(Camay) to compete with an existing P&G product (Ivory)
(“150 Years of P&G”, Advertising Age, August 20, 1987, p. 10).
• Today, P&G is one of the pre-eminent market targeting
companies in the world.

35. BHO1171 -4- School of HTM - VU35
EXAMPLE:
SEGMENTS IN THE BEER MARKET
• The beer market is segmented in many ways:
• region (through regional brewers and brands),
• income and social class (premium beers and imports versus
budget beers),
• life style (“The original party animal”),
• purchase occasion (“Here’s to good friends”), and
• usage rate (“The one beer to have when you’re having more
than one”).

36. BHO1171 -4- School of HTM - VU36
EXAMPLE:
BENEFIT SEGMENTATION IN INDUSTRIAL
MARKETS
• Service, selection, and reliability can all be used in benefit
segmentation of industrial markets.
• Suppliers who want to emphasise these characteristics must
identify firms that need these benefits.
• By better satisfying these firms’ needs, the supplier is able to
charge higher prices than competitors who offer fewer services
or less selection.
• Other suppliers can find market segments that do not need
these benefits, and sacrifice service, selection, and reliability to
reduce costs and be able to sell at a lower price.

37. BHO1171 -4- School of HTM - VU37
Steps in Segmentation, Targeting, and
Positioning (fig 7.1)

38. BHO1171 -4- School of HTM - VU38
Segmenting Business Markets
Bases
for Segmenting
Business
Markets
Bases
for Segmenting
Business
Markets
DemographicsPersonal
Characteristics
Situational
Factors
Operating
Variables
Purchasing
Approaches

39. BHO1171 -4- School of HTM - VU39

40. BHO1171 -4- School of HTM - VU40
Selecting Market Segments
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
Company
Marketing
Mix
Company
Marketing
Mix
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
Company
Marketing
Mix
Company
Marketing
Mix
Company Mix 1Company Mix 1
Company Mix 2Company Mix 2
Company Mix 3Company Mix 3
MarketMarket
A. Undifferentiated Marketing
B. Differentiated Marketing
C. Concentrated Marketing

41. BHO1171 -4- School of HTM - VU41
Identifying a Positional Direction
(fig 7.4)

42. BHO1171 -4- School of HTM - VU42
Identifying a Re-Positioning Direction
(fig 7.5)

43. BHO1171 -4- School of HTM - VU43
Identifying Possible Competitive
Advantage
ProductProduct ServiceService
PersonnelPersonnel ImageImage
Areas for Competitive
Differentiation
Areas for Competitive
Differentiation