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The marketing concept suggest that to achieve organisational goals and be more profitable, an organisation should focuses its efforts on developing marketing mixes that best meet the needs of the consumer. However, since consumer needs within a market vary, one marketing mix could not adequately satisfy the needs of the entire market. Targeting marketing is one of the most important ideas in modern day marketing. Under the idea, the marketer divides the market into subgroups with similar needs and wants or preference, it will then be possible to tailor marketing mixes to specific segments, better meeting their needs.
As figure 1-1 shows, targeting marketing involve three major steps- market segmentation, market targeting and market positioning. Market segmentation is the first step that dividing a market into subgroups of consumers who are homogeneous in their response to a particular marketing mix. The second step is market targeting, in this step, the company select one or more target segments based on evaluating of each segment's attractiveness. The final step is market positioning, the company formulates marketing mix for each target segments and develops competitive positioning for its products.
Figure 1-1 Steps in market segmentation, targeting and positioning
Market segmentation can be defined as the " the process of dividing a potential market into distinct subsets of consumers with common needs characteristics and selecting one or more segments to target with a distinct marketing mix." Companies generally can not serve entire markets in a effective manner, so rather than trying to compete in an entire market, companies identify subsets of customers whose needs best match their offering.
The organisation can segment the market in many way, but a number of criteria should be met in order to developing effective segments for market strategy.
Measurablity: Measurablity refers to the degree to which the size and purchasing power of the segments can be measured. Before target groups can be selected, the descriptive characteristics, sales potential and potential profitability of each market segmetn muse be measurable.
Accessibility: The purpose of segmentation effort is to identify consumer groups with different needs and deliver customised marketing mixes to them. In order to do this, the segments should be accessible in terms of the use of media and distribution outlets. If members of a segment have distinctive shopping habits, tending to certain types of stores, they would be accessible through those outlets.
Substantiality: Segments should be of sufficient size to enable specific marketing action. Developing customised, separate marketing mixes rises cost. The company should choose the segments that are profitable enough to have distinct marketing mixes.
A variety of factors or bases can be used to segment a market, common segmentation bases for consumer markets are show in Table 1-1, including demographical, geographical, psychorgraphic and behavioural segmentation. Segments may be identified on the basis of one of these bases or a combination. In selecting a segmentation base, the marketer should realise that there is no one best segmentation base that will result in effective segmentation in all cases. Instead, the marketer must find a base that best fits the decision to be made.
Demographic factors are the most popular bases for segmenting customer groups. For example, Table 1-2 show the most established approached to segmentation are on demographic charactertics such as age, gender . Since, generally, demographic variables (age, gender, income, family size or occuption ) are the easiest to identify and consumer needs, wants and usage rates often vary closely with them.
Table 1-2 Typical demographic profile of the drinks market
Marketers can divide the market into many segments base on different geographic units such as nations, counties, regions and cities. Geographical segmentaion can be useful where there are regional difference in needs. For example, in the UK, Northerner consume 33% more potatoes and 43% more flour than their peers in the south east but consume 43% less fresh fruit. And they spend far more on alcoholic drink, most of it on beer. Londoners and Scots on other hand prefer wine.
Psychographic segmentation divides markets on difference in consumer life-styles, socioeconomic status or personality characteristics. Lifestyles are measured by asking consumers about their activities (work, hobbies, vacations), interest( family, job,communtiy) and opinions( about social issues, buniness)
Terminology mentioned in this term paper
Product Life Cycle,
Names referenced in this report
Levi Strauss, flovar, drik Cock-Cola, Colgate Fluorigard,
Locations talked about in this research material
UK, US, Carefree,
Companies mentioned in this essay
Target, Compaq, Johnson & Johnson, Toyota, Hyundai, Volvo, Holden, Mitsubishi,
Keywords talked about in this essay
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