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Marketing Management
INTERNATIONAL ISLAMIC UNIVERSITY
MALAYSIA
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Companies today recognize that
they cannot appeal to all buyersin the marketplace,
or
at least not to all buyers in the same way.
Buyers are
too numerous,
too widely scattered and
too varied in their needs and buying practices.
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Moreover, the companies themselves vary widely in
their abilities to serve different segments of the
market.
Rather than trying to compete in an entire market,
(sometimes against superior competitors,) each
company must identify the parts of the market that
it can serve best and most profitably.
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Thus, most companies are becoming more choosy
about the customers with whom they wish to connect.
Most have moved away from mass marketing and
toward market segmentation and targeting
How? The steps are Identify market segments
Select one or more of them
Develop products and marketing programs tailored to each.
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Instead of scattering their marketing efforts (the
shotgun approach), firms are focusing on the
buyers who have greatest interest in the values
they create best (the riffle approach). Figure 7-1 shows the three major steps in target
marketing (next slide)MME4272
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Market segmentation
Identify bases for
segmenting the marketDevelop segment
profiles
Market targeting
Develop measure of
segment attractivenessSelect target
segment
Market positioning
Develop positioning
for target segmentDevelop a marketing
mixfor each segment
Fig 7-1: Steps in market segmentation, targeting, and positioning
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Market segmentation is dividing a marketinto smaller groups of buyers with distinct needs,
characteristics, or
behaviors who might require separate products ormarketing mixes.
The company identifies different ways to
segment the market and develops profiles ofthe resulting market segments.
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The marketing mix, as mentioned earlier, is
the combination of the marketing 'tactics':
product, price, place (distribution) andpromotion.
Thus marketing mix is generally accepted as
the use and specification of 'the four Ps'
describing the strategic position of a product
in the market.
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The second step is market targeting.
This is the process of
evaluating each market segments
attractiveness and
selecting one or more segments to enter.MME4272Week9
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The third step is market positioning.
This is the process of
setting the competitive positioning for the
product and
creating a detailed marketing mix.MME4272Week9
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Markets consist of buyers, and buyers differin one or more ways.
They may differ in their
wants resources
locations
buying attitudes, and buying practices.
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Through market segmentation, companies divide
large, heterogeneous markets into smaller
segments that can be reached more efficiently and
effectively with products and services that matchtheir unique needs.
There are five important segmentation topics.MME4272Week9
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These topics are
Levels of segmentation
Segmenting consumer markets
Segmenting business markets
Segmenting international markets
Requirements for effective segmentation.
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Segment marketing
A company that practices segment
marketing isolates broad segments that make up a market
and
adapts its efforts to more closely match the
needs of one or more segments.
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Niche marketing
Market segments are normally large, identifiable
groups within a market.
Examples:
luxury car buyers,
performance car buyers,
utility car buyers and economy car buyers.
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Micro-marketing
Is the practice of tailoring products and
marketing programs to suit the tastes of specific
individuals and locations.
Micro-marketing includes
local marketing and
individual marketing.
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Local marketing Involves tailoring brands and promotions to the
needs and wants of local customer groupscities,
neighborhoods, and even specific stores. Individual marketing
Tailoring products and marketing programs tothe needs and preferences of individual customers.
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Geographic
World region or
country
Country region
City or metro size
Density
Climate
North America, Western Europe, Middle East, Pacific Rim, China,
India, Canada, Mexico
Pacific, Mountain, West North Central, West South Central, East
North Central, East South Central, South Atlantic, New England
Under 5,000, 5,000-20,000, 20,000-50,000, 50,000-100,000,
100,000-250,000, 250,000-500,000, 500,000-1,000,000, 1,000,000-
4,000,000, 4,000,000 or over
Urban, Suburban, Rural
Northern, Southern
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Gregariousfond of company, living in flocks or herbs
Psychographic
Social class
Lifestyle
Personality
Lower lowers, upper lowers, working class, middleclass, upper middles, lower uppers, upper uppers.
Achievers, strivers, strugglers
Compulsive, gregarious, authoritarian, ambitious
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BehavioralOccasions
Benefits
User status
User rates
Loyalty status
Readiness stage
Attitude towardproduct
Regular occassion, special occasion
Quality, service, economy, convenience, speed
Nonuser, ex-user, potential user, first-time user, regular user.
Light user, medium user, heavy user
None, medium, strong, absolute
Unaware, aware, informed, interested, desirous, Intending tobuy
Enthusiastic, positive, indifferent, negative, hostile
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Each product has a life cycle, though its exact
shape and length are not known in advance.
Figure (next slide) shows a typical PLC, thecourse that a products sales and profits take
over its lifetime.
The PLC has five distinct stages: product
development, introduction, growth, maturity
and decline.
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Product development:
begins when the company finds and develops a new
product idea.
It passes through major stages such as Idea generation
Idea screening
Concept development and testing
Marketing strategy development
Business analysis
Create product
Test marketing
Commercialization
During this phase sales are zero and companys costs mount.
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Introduction:
a period of sales growth as the product is
introduced in the market. Profits are nonexistent because of the heavy
expenses of product introduction.MME4272Week9
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Growth: a period of rapid market acceptance
and increasing profits.
Maturity: Period of slowing down in sales growth as the
product has achieved acceptance by most potential
buyers.
Profits level off or decline because of increasedmarketing outlays (expenditure) to defend the
product against competition.
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Decline:period when sales fail off and profits
drop.
Note: Not all products follow this PLC.
Some products are introduced and die quickly;
others stay in mature stage for a long, long time.
Some enter the decline stage and are then cycled
back into the growth stage through strong
promotion and positioning.
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Introduction Growth Maturity Decline
Characteristics
Sales Low sales Rapidly rising
sales
Peak sales Declining sales
Costs High cost percustomer Average costper customer Low cost percustomer Low cost percustomer
Profits Negative Rising profits High profits Declining
profits
Customers Innovators Early adopters Middle
majority
Laggards
Competitors Few Growing
number
Stable number
beginning to
decline
Declining
number
Table: Summary of PLC Characteristics, Objectives
and Strategies
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Introduction Growth Maturity DeclineMarketing
ObjectivesCreate product
and trial
Maximize
market share
Maximize
profit while
defending
market share
Reduce
expenditure
and milk the
brand
Table: Summary of PLC Characteristics, Objectives
and Strategies
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Introduction Growth Maturity Decline
Strategies
Product Offer a basic product Offer product
extensions, service,
warranty
Diversify brand and
models
Phase out weak
items
Price Use cost-plus formula Price to penetratemarket
Price to match orbest competitors
Cut price
Distribution Build selective
distribution
Build intensive
distribution
Build more
intensive
distribution
Go selective: phase
out unprofitable
outlets
Advertising Build product
awareness among earlyadopters and dealers
Build awareness
and interest in themass market
Stress brand
differences andbenefits
Reduce to level
needed to retainhard-core loyals
Sales
promotion
Use heavy sales
promotion to entice
trial
Reduce to take
advantage of heavy
consumer demand
Increase to
encourage brand
switching
Reduce to minimal
level
Table: Summary of PLC Characteristics, Objectives
and Strategies
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THANK YOU
