CHAPT 3 MARKETING SEMENTATION AND STRATEGIC TARGET

What is mass marketing? offering the same product and marketing mix to all consumers; i.e. selling the same way to all consumers. A view that all consumers are alike. However, consumers have unique needs, wants and desires. So a seller might design a separate mktg program for each consumer group. A company that recognizes that consumers differ in their needs, and buying behaviors is practicing mkt segmentation. To avoid head-on competition, producers segment, target and position their products on the basis of price, styling, packaging, promotional appeal, method of distribution and level of service. Marketers found that differentiating products is more profitable than mass marketing. Ex. Magazines are segmented according to demography-Teen Magazine. CRITERIA FOR EFFECTIVE TARGETING To target effectively a segment, the market segment should be 1)identifiable 2) sizeable 3) stable or growing 4) accessible (reachable) and 5) congruent with the market ers objectives and resources. 1 Identifiable A marketer can identify common or shared needs or characteristics that are relevant to the product. Ex. Demographics like age, gender, ethnicity are easy to identify. 2 Sizeable In order to be viable mkt, a segment must consist of enough consumers to make it profitable. Ex. Tall people are identifiable but not sizeable. Size can be determined thru secondary data and consumer surveys. 3 Stable Stable in lifestyles and consumption patterns.Ex. adults with stable inome in govt sector. 4 Accessible Ability to be reached thru various promotional or media channels.

CONGRUENT WITH THE COMPANYS OBJECTIVE AND RESOURCES Companies may not be wanting or able to reach every segment. It is according to their objective and means. Air asia targets everybody. Bases for Segmentation Virtually all segmentation plans are in the forms of hybrid segmentation. Fig 3.3. Pg 76. The four groupings that divide the consumers characteristics along 2 criteria (1) facts which can be determined from direct questioning and categorized by a single objective measure versus cognitions-which are abstract that can only be determined thru complex questioning. (2) consumer rooted features stemming from the consumers physical, social and psychological characteristics versus consumption specific usage behaviors or attitudes and preferences.

Consumer-rooted Segmentation Bases 2 types of personal attributes facts and cognitions. Facts-age, gender, income are objective and empirical. Its easily determined. Social class look at income, education and occupation. Cognitions- lifestyles, opinions, interest, values, beliefs, personality traits like confidence. Demography Segmentation The core of almost all segmentations is demographics due to 1) easiest and most logical and can be measured 2) most cost effective way to locate and reach specific segments (secondary data)3) easy to identify shifts in population age, income and geographic location 40 many consumption behaviors, attitudes and media exposure patterns are directly related to demographics. Ex. Music preferences closely related to gender.. light n easy; above 50yrs old. Era-young adults. Leisure activities and interest are a function of a persons age, education and income. Age product needs often vary with consumers age. Many products and services use age as key factor in marketing. Ex. Younger investor- invest in aggressive stocks; older in bonds. A study discover that decision making is harder for older, less-educated female consumers. The study that research on attribute that depicts ones hardship in making buying decisions. Gender- like age, factual and many products and services designed for males or females. However, sex roles hv blurred. So it may not be clear on segmenting products like shampoo base on gender. Today, women are also doing DIY and therefore tools maybe targeted to women.

Marital status- Family has been the target of products and services. Studies been done as to persons involved in the actual selection of the product in order to devp appropriate mktg appeals. Family life cycle-at each phase of family life cycle, needs differs. Ex. Yung single people need basic furniture; parents refurnish homes. Its an impt target segments. Income, education and occupation these are indicators of ability to pay for a product. income is often combined with other demographic variables to define target mkts more accurately. Ex. Age with high income are affluent elderly. Yuppie; age with occupational status. Geodemographic Segmentation-where a person lives determines some aspects of consumption behaviour. A hybrid segmentation scheme based on the premise that people who live close to one another are likely to have similar financial means, tastes, preferences, lifestyles and consumption habits.(birds of a feather flock together).Ex. Damansara Heights residents. Personality Traits-people who hv personality trait of open mind is generally perceived less risk than others in trying new things. They are likely to try new product and are called consumer innovators. Therefore, marketer shld identify and target them. Innovators score high on exhibition(wants to be center of a group). Should encourage the innovators to initiate positive word of mouth abt the new product. Lifestyles- also known as psychographics consist of activities, interests, and opinions. These are cognitive constructs which can be measured thru surveys but are not evidence base. Psychographics explain buyers purchase decisions and the choices they make within the buying options available to them. Ex. a retiree decides to buy a condominium bcoz he wants safety. VALS (Values and Lifestyles) most popular segmentation system combining lifestyles and values. VALS explains consumer purchasing behaviour into 8 distinctive subgroups or segments based on consumer responses to both attitudinal and demographic questions. Fig 3-4 pg 85: 3 primary motivations: 1) the ideals are consumer segments guided by knowledge and principles 2) the achievement motivated are consumer segments looking for products and services that demonstrate success to their peers and 3) the self-expression motivated are consumer segments that desire social or physical activity, variety and risk. Each of the 3 major self-motivations rep distinct attitudes, lifestyles and decision making styles. Marketers must target because they early adopters.

Sociocultural Values and Beliefs Consumer mkts hv been successfully subdivided into segments on the basis of core cultural values, subcultural memberships and cross-cultural affiliation. Culture and subculture mkt segment base on culture heritage bcoz members of the same culture tend to share the same values, beliefs and customs Ex. Values on fitness and health. Also within a larger culture, distinct subculture are united by certain characteristics associated with specific values and beliefs. These groupings can be based on demography, ethnicity or others. There can be subculture. Ex. the American African or the elderly African Americans. Culturally distinct segments can be promoted for the same product but often targeted more efficiently with different promotional appeals. Ex. bicycle as efficient means of transport in China but health and fitness product in UK. CONSUMPTION-SPECIFIC SEGMENTATION BASES This group includes 2 types of consumption-specific bases for segmentation: 1)facts about actual consumption behaviour and 2) cognitions consumers hv abt products and services in the form of attitudes, preferences. Usage behaviors examined includes usage rate and usage situation It also includes benefit segmentation and brand loyalty and relationship. Usage Rate Segmentation segmenting among heavy, medium, light users and non-users of specific product, service or brand. Some products hv relatively small group but heavy users. Ex. 25% of beer drinkers account for 75% of total beer being consumed. Therefore, advertisers target adverts to these heavy users. However targeting them can be expensive as they are targeted by competitors too. Alternatively marketers are targeting to usage behavior i.e reasons for purchasing. Understanding nonusers is also essential. There are prospective adopters and persistent non adopters. Usage-Situation Segmentation- occasion or situation often determines what consumers will purchase or consume. Ex. Birthday card. Benefit segmentation- segment according to the sought benefit consumers seek. Benefit seeking is said to be core of all segmentation strategies. Ex. the chewing gum advert, stop smoking, whiten teeth Media benefits-marketers must study the benefits that consumers look in media. Consumers single out immediacy, accessibility and free cost as the most relevant features of digital newspapers. Another study found among car buyers, online info searchers were perceived as substitutes for reading print ads. Brand loyalty and relationships- marketers targets those are brand loyal with frequency award programs. Segmenting on brand loyalty looks at the 1)behaviour i.e. frequency and consistency of buying a given brand and 2)attitude of the consumers feeling of commitment to the brand. Marketers target brand loyal by awards, points. Switchers are also targets of marketers. They switch to obtain bargains. Consumer innovators are also a target because they tend not to be loyal.

Implementing Segmentation Strategies 1 Behavioral targeting and microtargeting strategy 2 Concentrated strategy 3 Counter segmentation 1 Behavioral Targeting and microtargeting Behavioral and microtargeting refers to aggregating individual consumers into relatively small groups and targeting them with tailor made messages. The individualised messages are transmitting via narrowcasting (via email; mobile devices). Ex. delivering personalised advertising messages to consumers. Ex. have name of the person in hotel room when enter the room. Behavioral targeting to describe segmentation base on usage behaviour. Ex. give coupons to those who use their products. Strategy to get them to act upon buying and to use the product. Concentrated strategy- choose to target one segment with unique marketing mix Ex. bank account for ladies; promotion and price unique for ladies. Differentiated marketing- target several segments using individual marketing mixes. Ex. gold accounts with different products to sell at different price. Counter segmentation when segments contract and no longer warrant individual design marketing programs. Two or more segments combined and redesign mktg mix. Ex. put together two courses (which has not enough students) to one course. Ex. Advertising and publicity courses merge to become promotion course. merge to