MKTG1001 Lecture Notes - Brown Hair, Nissan Micra, Healthy Choice
Week 3 Module MKTG1001:
1. Define the main steps in designing a customer driven marketing strategy: market
segmentation, targeting and positioning (p174).
To appeal to particular buyers and audiences, companies must identify the parts of the
market that it can serve best and most profitably by designing customer-driven marketing
strategies that build the right relationships with the right customers. This is target
marketing- identifying market segments, selecting one or more of them, and developing
products and marketing programs tailored to each.
The first two steps involve the company selectin buyers it will serve, via marketing
segmentation and market targeting. Marketing segmentation involves dividing a market into
smaller segments of buyers with distinct needs, characteristics and behaviours and then
identify ways to segment the market and develop profiles to suit. Market targeting consists
of evaluating each market segment’s attractiveness and selecting one or more market
segments to enter. The final two steps includes the company deciding on a value
proposition- how it will create value for particular customers. Differentiation involves
actually differentiating the firm’s market offering to create superior customer value.
Positioning consists of arranging for a market offering to occupy a clear, distinctive and
desirable place relative to competing products in the mid of target consumers.
2. List and discuss the main bases for segmenting consumer markets (p175-184)
The main bases for segmenting consumer markets are geographical (region, city size, density
and climate), demographic (age, sex, family size, income, occupation, family life cycle,
education, religion, nationality), psychographic (socioeconomic status, values, personality
and lifestyle grouping) and behavioural 9(purchase occasion, benefits sought, user status
and rate, loyalty status, readiness stage, attitude towards product).
Geographic segmentation divides the market into different geographical units such as
nation, region, state, local area, cities or even neighbourhoods. They could choose to
operate in one area, or even all but pay attention to geographical differences in needs and
wants. Many companies today are localising their products, advertising, promotion and sales
efforts to fit needs of individual areas.
Demographic segmentation divides market into segments based on variables such as age,
gender, family size or life cycle, income, occupation, education, religion, race, generation
and nationality. These are easiest to measure.
Age and life-cycle: needs and wants change with age. Marketers must guard against
stereotypes when using age and life-cycle segmentation.
Gender: clothing, cosmetics, toiletries and magazine marketers.
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Income: automobiles, clothing etc. many marketers target affluent consumers with
luxury goods and convenience services
Psychographic segmentation divides buyers into segments based on social class, lifestyle or
personality. I.e. P & O cruises target families by offering family activities, whilst Kimberley
Cruises target thrill seekers.
Behavioural segmentation divides buyers based on their knowledge, attitudes, uses or
responses to a product.
Occasions: when they get the idea to buy and when they use it. For example,
consumers of a fruit juice drink it in the morning, but marketers such as Boost Juice
want juices to be seen as a full day healthy choice.
Benefits sought: finding the basic main benefits people look for in product class, the
kinds of people who look for this, and the main brands that deliver each benefit.
User Status: can be segmented into non-users, ex-users, potential users, first-time
users and regular users of a product. They want to reinforce and retain regular
users, attract targeted non-users and reinvigorate relationships with ex-users.
Usage rate: can be segmented into light, medium and heavy product users. Heavy
users are often a small percentage of the market but account for a high percentage
of total consumption.
Marketers rarely limit their segmentation analysis to one or only a few variables.
Segmenting Business Markets uses also a few more variables such as customer
operating characteristics, purchasing approaches, situational factors and personal
characteristics. As in consumer segmentation, many marketers believe that buying
behaviour and benefits provide the best basis for segmenting business markets.
Segmenting international markets includes other variables such as political and legal factors,
economic factors and geographic factors.
Segmentation is not always effective. For example, buyers of table salt could be divided
into blond and brunette customers- however we know this does not affect the purchase of
salt. To be useful, market segments must be:
Measurable: size, purchase power and profiles of the segments can be measured.
Accessible: Market segments can be effectively reached and served, it has to be
exposed to the groups it is aiming to reach.
Substantial: must be large or profitable enough to serve.
Differentiable: Segments are conceptually distinguishable and respond differently to
different marketing mix elements and programs.
Actionable: Effective programs can be designed for attracting and serving the
segments. For example, although a small airline identified seven market segments,
its staff was too small to develop separate marketing programs for each segment.
3. Identify how companies select a market targeting strategy (p184-189).
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Document Summary
Week 3 module mktg1001: define the main steps in designing a customer driven marketing strategy: market segmentation, targeting and positioning (p174). To appeal to particular buyers and audiences, companies must identify the parts of the market that it can serve best and most profitably by designing customer-driven marketing strategies that build the right relationships with the right customers. This is target marketing- identifying market segments, selecting one or more of them, and developing products and marketing programs tailored to each. The first two steps involve the company selectin buyers it will serve, via marketing segmentation and market targeting. Marketing segmentation involves dividing a market into smaller segments of buyers with distinct needs, characteristics and behaviours and then identify ways to segment the market and develop profiles to suit. Market targeting consists of evaluating each market segment"s attractiveness and selecting one or more market segments to enter.
