Marketing Strategy

The marketing director of one consumer durable company said:
“We have not broken the customers down, we have always held the opinion that the market is wide and the product has wide appeal, therefore why break the market down at all?”
Similarly, a sales director commented:
“We do not see the market as being made up of specific segments. Our market is made up of the whole industry.”

segmentation

Identifying Market Segments and Target Market Positioning

A market segment consists of a group of customers who share similar needs, preferences and buying habits. Market segmentation is a process of dividing the total market for a good or service into several smaller groups such that the members of each group are similar with respect to the factors that influence demand. A major element in a company’s success is the ability to segment its market effectively.
A target market consists of a group of customers (people or organization) whether large or small; for whom the seller designs a particular marketing mix.

Benefits of Segmentation

Market segmentation is customer-oriented and thus it is consistent with the marketing concept. In segmenting, we first identify the needs of customers within a sub-market and then decide if it is practical to develop a marketing mix to satisfy those needs. By tailoring marketing programs to individual market segments, the firm can do a better marketing job and make more efficient use of its marketing resources. A small firm with limited resources can effectively compete in one or two market segments whereas they will be overwhelmed by competition in larger segments. By developing strong positions in specialized market segments, even a medium size firm can grow rapidly. The major benefits of segmentation are as follows:
Application of the ‘divide and rule’ principle, or we can say ‘divide the markets and conquer them’.
Marketing effort becomes more effective and efficient.
Specific marketing mix can be effectively designed for specific market segments.
Focused attention can be given to complex but attractive segments.

Factors Affecting the Feasibility of Segmentation

For a market segment to justify attention, the following conditions typically need to be satisfied:
Measurable: although it may be a difficult process with industrial market measurement.
Accessible: the segment should be accessible through existing marketing system – middlemen, advertising media, company sales force – with a minimum cost and effort. There may exist sizable and potentially profitable segments which may be difficult to exploit because of lack of expertise and capabilities.
Substantial: the segments are large and profitable enough to serve. A segment should be the largest possible homogeneous group that is worth going after with a tailored marketing program.
Unique/Differentiable: the segment can be distinguished from other market segments in terms of its responding differently to the different marketing mix and programs.
Appropriate: to the organization’s objectives and resources.
Actionable: an effective program can be formulated for attracting and serving the segment.
Stable: its behavior in the future can be predicted with a sufficient degree of confidence.

Ultimate Consumers and Business Markets

The first step in segmentation is to divide the potential market into two broad categories: (1) Ultimate consumers and (2) Business users
The sole criteria for this first cut at the segmenting market are consumers’ reason for buying.
Ultimate consumers buy goods or services for their own personal or household uses that are satisfying strictly non-business ones. That constitutes what is called a consumer market.
Business users are business, industrial or institutional organizations that buy goods or services to use in their own organizations, to resell or to make other products. Business users constitute the business market.

OUR COURSES

Online Professional Certification