MKTG10001 Lecture Notes - Lecture 4: Walkman, Micromarketing, Psychographic
6 Jun 2018
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MKTG10001 - PRINCIPLES OF MARKETING
LECTURE 4 . 1 – MARKET SEGMENTATION & TARGETING
Customer Needs Analysis:
• Existing needs: satisfactory solutions already exist, opportunity for new products is limited.
• Latent needs: unmet needs, consumers can articulate needs via in-depth market research,
opportunity for innovation. Listen to customers then meet their needs
• Incipient needs: unmet needs, consumers can’t articulate the need or a solution, technological
breakthroughs can drive markets. E.g. microwaves, Walkman. Breakthrough innovations
Market Segmentation: divide large market into smaller target markets/customer groups with similar
needs & / or desires who will respond in a similar way to product offerings & marketing initiatives
• Benefits: optimise resource allocation, identify opportunities for repositioning, & new products
• Principles of effective segmentation: effective segments are:
• Homogeneous (within segments): very similar. Similar behaviours / needs
• Heterogeneous (between segments): groups are distinct
• Profitable: will pay for the product
• Operational:
• Measurable: average income, gender proportions, number, etc.
• Actionable: respond to marketing strategies
• Accessible: able to be approached / sell their product(s) to
• Criteria for segmentation: should be based on ability to identify segments for which different
strategies should be pursued. Start by looking at customer behaviour, then describing proxies
variables (e.g. demographics, socio-economic variables, psychographics, etc.)
• Benefits sought
• Price sensitivity
• Readiness to adopt
Targeting:
• Undifferentiated (mass): produce one product for all. Not tailored for specific needs
• Differentiated: goes for multiple segments (e.g. Toyota: family, luxury, sport, mini, etc.)
• Concentrated (niche): cover a large portion of 1 segment (eg beauty salon)
• Micromarketing (segment of ‘one’): personalised. (e.g. labelled coke)
• Strategic Considerations:
• Size & growth: segments will evolve throughout the product life cycle
• Segment interrelationships (compatibility): segments may provide
opportunities for economies of scope (able to move between markets with
the same product). Success in one segment provides a platform for entering another
• Competitive marketing strategies: consider comp’s segmentation & gaps in markets
• Degree of fit: assessment of the company’s understanding of the segment & its compatibility
with capabilities (is the company actually able to meet the needs of the segment)
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