1. No category

Market Segmentation,
Targeting and Positioning
Chapter 4
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
Market segmentation
 The process of dividing the total market for a
good or service into smaller groups, each of
which tends to be homogenous (or similar)
in all significant aspects.
 One or more of these segments is then
selected as the firm’s target market/s.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
4-1
Market segmentation
(cont.)
 A separate marketing mix is then developed
for each segment or group of segments.
This is referred to as ‘Market Segmentation’.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
4-2
Segmentation categories
 Geographic—the study of city size,
urban/suburban/rural population distribution
and climate.
 Demographic—the study of distribution of
population’s age, sex, income, stage in family
cycle and ethnic background.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
4-3
Segmentation categories
(cont.)
 Psychographic—personalties, lifestyles, social
class including Activities Interests and
Opinions (AIO).
 Behaviour towards products.
 Benefits desired or sought.
 Product usage rate.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
4-4
Benefits of segmentation
 Segmentation enables marketers to:
• Identify and satisfy specific benefits sought
by particular groups.
• Identify needs, satisfy needs.
• Divide the market into segments by
separating marketing programs.
• Select the target market.
• Action the market segmentation plan.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
4-5
Limitations of segmentation
 Segmentation can be expensive in terms of
production and marketing of products to only
those specific groups of the market.
 Mass production offers economies of scale.
 Standardisation of service offers increased
delivery speed and efficiency.
 Increase in promotion, administrative and
inventory costs.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
4-6
Market segmentation
process
 Identify the needs and wants of customers.
 Identify the different characteristics between
market segments.
 Estimate the market potential.
?
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
4-7
Identify the needs and
wants of customers
 Objective is to identify needs not currently
being satisfied.
• E.g. airlines might offer business travel
although research shows that preferred
departure and arrival times vary to those
being offered.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
4-8
Conditions for effective
segmentation
 The characteristics used to categorise
customers must be measurable and the
data obtainable.
 The segment itself must be accessible
through existing marketing institutions
with a minimum of cost and waste.
 A segment must be large enough to be
profitable.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
4-9
A useful segmentation process must
meet three conditions:
Market Coverage Strategies
Company
Marketing
Mix
Market
A. (Aggregation) Undifferentiated Marketing
Company Mix 1
Company Mix 2
Company Mix 3
Segment 1
Segment 2
Segment 3
B. (Single segment) Differentiated Marketing
Company
Marketing
Mix
Segment 1
Segment 2
Segment 3
C. (Multiple segments) Concentrated Marketing
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
4-10
Target market strategies
 The target market should be compatible with
organisations goals and images.
 The marketing opportunity presented by the
segment must match the company’s
resources.
 The business must generate a profit if it is to
continue its existence.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
4-11
Positioning
 The perception of a product or organisation
in the consumer’s mind relative to their
perception of other offerings in the same
category.
 The key words are perception in the mind of
a consumer which include attributes, benefits
and brand.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
4-12
Factors of consideration
Competition—look for a gap or niche.
Customers—seek product attributes.
The company—status of current image.
Repositioning—have the needs of target
market changed?
 The marketing mix—must support the
selected position.
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Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
4-13
Estimate the market
potential
 Marketers need to know if a market is viable
before segmentation occurs.
 Forecasting of market demand will
determine:
 Market potential.
 Sales potential.
 Market share.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
4-14
Forecasting market
demand
 Demand forecasting: estimating sales of a
product during a defined future period.
 Market factors: items or elements that exist
in a market, are measurable and are related
to the demand of a product.
 Market potential: the total sales volume
achievable in a given period.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
4-15
Forecasting market
demand (cont.)
 Sales potential: this is the portion of market
potential that a specific company could
expect to achieve under ideal conditions.
 Market share: this is the proportion of total
sales, by a single firm or brand, of a
product during a given period in a specific
market.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
4-16
Common methods of
forecasting
 Market factor analysis.
 Direct derivation.
 Correlation analysis (refer e.g.
p.85).
 Survey of buyer intentions.
 Test marketing.
 Trend analysis.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a Essential Marketing Skills by Rix
Slides prepared by Joe Rosagrata
4-17