Chapter 5 Slides

PowerPoint to accompany

Chapter 5

1. TARGET MARKETING STRATEGIES 2. CRM

Copyright 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781442525207/Solomon/Marketing/2nd edition

Making and Delivering Value (Figure 3.1)

Making marketing value decisions

Understanding consumers needs

Communicating the value proposition

Delivering the value proposition

Creating the value proposition

This chapter


Objectives for Chapter 5

Understand the need for market segmentation in todays business environment

1

2 Explain the different dimensions (bases) marketers use to segment consumer and business-to-business markets

3 Explain how marketers evaluate and select potential market segments


Objectives for Chapter 5 contd

Explain how marketers develop a targeting strategy

4

5 Understand how a company develops and implements a positioning strategy

6 Explain how marketers practice CRM - customer relationship management to increase long-term success and profits


The Need for Segmentation

Market

fragmentation

The creation of many consumer

groups due to a diversify of distinct

needs and wants in modern society

Target

marketing

strategy

a) Dividing the total market into

different segments on the basis of

customer characteristics,

b) selecting one or more segments,

and

c) then developing products to meet

the needs of those specific segments

Which creates

the need for


Segmenting the market

Give examples to show that the following

businesses have segmented their markets:

An airline A car manufacturer A shoe manufacturer


Steps in the Target Marketing Process Figure 5.1


Step 1: Segmentation

Segmentation

The process of

dividing a larger

market into smaller

pieces based on one

or more meaningful,

shared

characteristics

Segmentation

variables

Dimensions that

divide the total

market into fairly

homogeneous

groups, with each

group having

different needs and

preferences


Ways to Segment Consumer Markets

Geographics Demographics

Psychographics Behaviour


Segmenting by: (a) Geographics

Country Climate

Suburb Region

Segmenting with geographic variables

Geodemography A segmentation technique that

combines geography with

demographics


Segmenting by: (b) Demographics

Gender

Family structure

Age

Income

Race and Ethnicity


Age Groups

Age

Generation

Y

Those born

between 1977

and 1994

Difficult to reach

through traditional

marketing efforts

Generation

X

Those born

between 1965

and 1976

I dont like to be told whats trendy. I can make up my own

mind.

Baby

boomers

Those born

between 1946

and 1964

A big market,

approaching

retirement, with

money to spend

Sportsgirl targets the Tweens and Gen. Y


Segmenting by: (c) Psychographics

Activities Interests

Opinions

Psychographic data is useful for understanding consumer with different

values and attitudes

Often by using


Segmenting by: (d) Behaviour (toward the product)

Behavioural segmentation segments consumers on the basis of how they act

toward, feel about, or use a product

Users

Non-users

Light users

Moderate

users

Heavy users

Usage

situations

Specific

occasions

Eg, Easter,

Christmas 80/20 Rule

Where 20% of purchasers account for

80% of sales


Segmenting B2B Markets

The underlying logic is the same breaking the market into manageable pieces that share

relevant characteristics

1. Organisational

Demographics

Firm size

Number of facilities

Domestic or multinational

Type of business

2. User or non-user

3. Technology used

Class Activity

Set out below is a list of geographic, demographic

and psychographic segmentation variables and

Australian newspaper or magazine titles.

Match the letter to the right number.

1

Home and Garden Magazine

2

The Phantom Comic

3

Wheels Magazine

4

Geralton Gazette Newspaper

5

Womans Day Magazine

6

The West Australian Newspaper

A

State of Western Australia

B

Male

C

Female

D

Country town

E

Lifestyle

F

Child


Step 2: Targeting

1. Evaluate the attractiveness of each potential

segment

Not selected

Not selected

Target market: The market segment/s where a firm

focuses its marketing plan and efforts

2. Selected target market

Not selected


2a. Evaluating Market Segments

Are members of the

segment similar to each

other, but different from

other segments?

Can marketers

measure the segment?

(How many?)

Is the segment large

enough to be

profitable?

Can marketing

communications reach

the segment?

(Type of media?)

Can the marketer serve the segments needs?

(Companys skills, resources?)


2b. Developing Segment Profiles

What is the description of the typical customer in the segment?

Helps to understand the consumer

Will influence future marketing decisions

Demographics Age, income?

Benefits sought Value for money?

Media habits Viewers of TV, print media? Buying behaviour

Heavy users?


2c. Choosing a Targeting Strategy

4. Customised Marketing

1.Undifferentiated Marketing

3. Concentrated Marketing

2. Differentiated Marketing

Potential market segments

Differentiated marketing Using different approaches for targeted segments

Concentrated marketing Pursuing ONE segment only

Customised marketing

Tailoring offerings to individual consumers

Undifferentiated marketing

Pursue all segments at once with same offering/product


About each strategy

Undifferentiated Try to appeal to broad spectrum Benefit from economies of scale (size)

E.g. Woolworths

Differentiated Develops products for each segment where different needs exist

E.g. LOreal and Lancome

Concentrated Focus on a single segment Often useful for smaller companies

E.g. Surgical instruments.

Customised Meet the needs of individuals Common in B2B (made to order) and

service firms

E.g. Lawyers, hairdressers


Step 3: Positioning

Positioning means developing a marketing

strategy aimed at influencing how a particular market

segment perceives a product in comparison

to the competition

Or Repositioning: changing a products position in response to marketplace changes. Eg, Volvo, red

meat.


Three approaches used to create product positions are:

Position the product like the competition

(copy) (e.g. I Cant Believe Its Not Butter margarine).

Against the competition (compete)

(e.g. Avis We try harder).

Away from the competition (different)

(e.g. Nintendo Wii, VW Beetle,)


Developing a Positioning Strategy

Analyse the competitors positions

in the marketplace

(perceptual mapping)

Offer a product with a competitive

advantage

(Staff, service, superior image, unique features)

Finalise the marketing mix

Evaluate the target markets response so modifications can be

made, if needed


Perceptual Maps

Used to map a picture of how brands are

perceived and located in consumers minds

Uses key purchase characteristics

(attributes) as the basis of the maps

(Eg. price, level of service)

Typically uses information from

a consumer survey


Figure 5.4 Brand Positioning Map


Customer Relationship Management (CRM)

A philosophy that sees marketing as a process of building long-term relationships with customers to keep them satisfied and

to keep them coming back

Treats the customer as a partner (for life)


The Four Steps (of One-to-One Marketing)

1. Identify customers

2. Differentiate (best ones)

3. Interact with customers

4. Customise offering


Characteristics of CRM (What it does and what it hopes to achieve)

Share of Customer Seek to increase the % of

an individuals purchases of a particular brand

Lifetime Value of

Customer

Seek to maximise the

expected profit from a

particular customer

Customer Equity (asset) Seek to maximise the

financial value of a

customer relationship

Greater Focus on High-

Value Customers

Far more efforts targeted

at high-value customers

Chapter 5 Slides

Documents

chapter copyright

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demographics copyright

crm copyright

segmentation segmentation

profits copyright

preferences copyright

total market