MGMA01H3 Lecture Notes - Target Market, Orange Juice, Product Differentiation
Chapter 8 – Customer driven marketing strategy: creating value to target customers
- Building the right relationship with the right customers.
- Selecting one or more of them to tailor each of their needs – segmentation. Firm focus on
buyers with great interest
- Market segmentation – the process of evaluating each market segment’s attractiveness and
selecting one or more segment to enter.
- Market targeting (Targeting) – the process of evaluating each market segment’s attractiveness
and selecting one or more segment to enter.
- Differentiation – actually differentiating the market offering to create superior customer value.
- Positioning – arranging for a market offering to occupy a clear, distinctive, and desirable place
relative to competing products in the minds of target consumers.
- Small segments that can be reach more efficiently and effectively with products and service that
match their unique needs.
- Geographic segmentation – dividing a market into different geographical units such as nations,
regions, provinces, counties, cities, or neighborhood.
- Companies are localizing their promotion & advertisement, product. Some are seeking to
cultivate untapped geographic territory.
- Most popular segmentation and usually the consumer needs, wants, and usage rate vary with
demographic variables. Easier to measure.
- Age and life cycle segmentation – dividing a market into different age and life cycle group.
- Marketers are now more careful to guard against stereotype when using age lifecycle
- Gender segmentation –dividing a market into different group based on gender.
- Advertise tailored to female image, clothes, etc.
- Income segmentation - dividing a market into different income groups.
- Which target low, middle, high class students with different income level.
- Psychological segmentation –dividing the market into different group based on social class,
lifestyle, or personality trait.
- Marketers also uses personality trait to convey their message, “Lust for life”, “High spirit”.
- Behavioural segmentation – dividing the market into group based on consumer knowledge,
attitudes, uses, or response to a product.
- Occasion – according to occasions when they get the idea to buy, actually make their purchase,
or use the purchase item. Occasion segmentation can help firms build up product usage.
- Occasion segmentation – dividing the market into groups according to occasions when buyer
get the idea to buy, actually make their purchase, or use the purchased item.
- Orange juice in the morning, candy & flowers on valentine day.
- Benefit segmentation – dividing the market into groups according to the different benefits that
consumer seek from consumer. (how it benefit consumer – athletes)
- User status – can be segment to ex/main/potential/first-time/users. Marketers want to
reinforce and retain regular, attract nonusers.
- Usage rate – segmented heavy/light/medium – heavy small percentage but large consumption.
- Loyal status – loyal to brands, store, companies, and their degree of loyalty. (MAC users)
Using multiple segmentation bases:
- Often use multiple segmentation bases in an effort to identify smaller, better-defined target
groups. Within groups can also find several other segments.
- PRZIM C2 helps identify segment people and locations into marketable group of like minded
consumer. Each segment has its own like, dislike and lifestyle.
- It can help companies identify and better understand key customer segments, target them more
efficiently, and tailor market offerings and messages to their specific needs.
Segment market business:
- Can be also segmented geographically, demographically, or by benefit sought, user status, usage
rate, and loyalty status. Can also add variable customer operating characteristics, purchasing
approaches, situational factors, and personal characteristic.
- On consumer segmentation many marketers believe that buying behaviours & benefit provide
the best basis for segmenting business markets.
Segmenting international markets:
- International firms need to group their world markets into segments with distinct buying needs
- Geographic location, nations have common traits & behavior.
- Also grouped by economic factor, population income levels, and overall economic development.
- Can also be segmented by political and legal factor such as type and stability of government,
foreign firms, monetary regulations, and amount of bureaucracy.
- Cultural factor can also be used, group on common language, religion, values and attitude,
customs, and behavioural pattern.
- Intermarket segmentation - forming segments of consumers who have similar needs and buying
behavior even though they are located in different countries.
Requirement for effective segmentation:
- Measurable – the size purchasing power, and profiles of the segments can be measured.
- Accessible – the market segments can be effectively reached and served.
- Substantial – the market segment are large or profitable enough to server.
- Differentiable – the segments are conceptually distinguishable and respond differently to
different marketing mix elements and program.
- Actionable – effective program can be design to attract and serving segments.
- Evaluating market segments:
- a firm must look at three factors: segment size & growth, segment structural attractiveness, and
company objective and resources. Must collect and analyze the segment sale, growth rates, and
- Must examine structural factors that affect LR attractiveness, if the segment has a lot of
aggressive competitors it may be less attractive.
- Substitute products may limit and profits and price.
- Power of buyers also affect attractiveness, bargaining power relative to seller will try to pull
- Powerful suppliers, who can control price or reduced quantity of ordered (less attractive).
- Company’s own objective and resources, does the company lack the skills and resources needed
for this segment, or mesh with company’s LR objective. Give economic standing etc.
Selecting target market segments:
- Target market – a set of buyers sharing common needs or characteristics that the company
decides to serve.
- Can be carried out undifferentiated (mass) marketing – a market coverage strategy in which a
firm decides to ignore market segment differences and go after the whole market with one
offer. Can have trouble with firms that do better job satisfying needs of specific segments.
- Differentiated marketing – market coverage strategy in which a firm decides to target several
market segments and design separate offers for each.
- Higher sale and stronger position within each market segment.
- But also increase the cost of doing business. (Forecast, promotion, analysis.
- Concentrated marketing (niche marketing) - market coverage strategy in which a firm goes
after a large share of one or a few segments or niches. Achieves a strong market position
because of its greater knowledge of consumer needs in the niches it serves and the special
reputation it acquires. Can market more effectively by fine-tuning its product, prices, and
programs to the need of carefully defined segments. More efficiently, target its product or
services, channels, and communication program toward consumers that can serve best and
- Some companies develop niches to create sale growth. Many also face greater risk, since
dependent on few segments.
- the practice of tailoring products and marketing program to the need and wants of specific
individual and local customers groups- including local marketing and individual marketing.
- Local marketing – tailoring brands and promotions to the need and wants of local customer
groups cities, neighborhoods, and even specific store. (wal-mart customize store)