Segmentation and Targeting

1. Segmentation and Targeting ATM Semester 2 Lecture 1 By Sanemkhan Nurillaeva

2. Agenda • Segmentation • PITA Model • Target market strategies • Customer Profiles

3. Target Marketing Process Target marketing strategy consists of 3 separate steps • Dividing the market into meaningful segments • Selecting segments • Design a unique marketing mix for each segment (Solomon, et.al, 2013)

4. 1. Segmentation

5. Segmentation: Definition Market Segmentation Dividing a market into distinct groups of buyers with different needs, characteristics or behavior, who might require separate products or marketing mixes. (P. Kotler) The process of dividing a larger market into smaller pieces based on one or more meaningful , shared characteristics (Solomon, et.al, 2013)

6. Demographic • Age • Gender • Race • Ethnicity • Marital status • Family size • Family life cycle • Income Behavioural • End use • Benefits sought • Usage rate • Loyalty • Attitude • Readiness to purchase • Psychographic /Lifestyle • Social Class • Activities • Interests • Opinions Geographic • Region • County size • City size • Density • Climate Segmenting consumer markets

7. Social Class Office of National Statistics (2011)

8. Population Density in Uzbekistan UN Office for the Coordination of Humanitarian Affairs (2009)

9. Population in Uzbekistan

10. Population in Uzbekistan Age structure: 0-14 years: 24.9% (male 3,693,838/female 3,514,734) 15-24 years: 20.5% (male 3,008,779/female 2,934,534) 25-54 years: 43% (male 6,178,921/female 6,255,715) 55-64 years: 6.8% (male 926,129/female 1,036,576) 65 years and over: 4.8% (male 588,881/female 791,609) (2014 est.)

11. 2. PITA model

12. PITA Model • Companies are most fascinated by increasing sales to present customers and finding attractive customer segments. • Sales volume is a simple mathematical formula. Understanding the formula should help unlock some possibilities on how to generate new sales volume. • PITA=Population*Incidence*Times*Amount

13. PITA Model PITA = Population*Incidence*Times*Amount P – Population, a number of targeted people I – Incidence is the proportion of the target population that has (or would) purchased what you are selling T – Times, frequency of purchase A – Amount of moneyconsumers (or merchants) are willing to pay.

14. PITA Model Example Trombopol –medicine used in order to prevent heart attacks Target: Uzbek Male 55-64 years (≈927,000) PITA= 927,000*5%*12times a year* 6000 sums= 3.3372 bln UZS

15. 3. Targeting

16. Targeting: Definition Targeting –Evaluating attractiveness of each potential segment and decide which of these groups marketers will invest resources in to try to turn them into customers (Solomon, et.al, 2013) Target market – The customer group or groups selected by the firm (Solomon, et.al, 2013)

17. Targeting Strategies There are 4 main Targeting Strategies (Solomon, et.al, 2013)

18. 1. Undifferentiated Marketing Company concentrates on common needs which must be greater than the needs that separate them Whole Market Company Marketing mix

19. Undifferentiated Marketing Example Organization Marketing mix Target market Everybody • Product • Price • Promotion • Place Post Office

20. 2. Differentiated Marketing Company develops a separate marketing mix to meet the needs of each segment Marketing mix 1 Segment 1 Company Marketing mix 2 Segment 2 Marketing mix 3 Segment 3

21. Differentiated Marketing Example UMS tariffs in Uzbekistan

22. Differentiated Marketing Example Marketing mix 1 Businessmen Marketing mix 2 Students Marketing mix 3 Young Entrepreneurs

23. 3. Concentrated Marketing Company focuses its efforts on offering one or more products and to a single segment using certain marketing mix Segment 1 Company Marketing mix Segment 2 Segment 3

24. Concentrated Marketing Example Industrial Cars Marketing mix Luxury Sport Cars Family Cars

25. 4. Customized Marketing Company often works in B2B sector with one or few large clients and develops a product and services that only these clients will use. Marketing mix 1 Customer 1 Company Marketing mix 2 Customer 2 Marketing mix 3 Customer 3

26. Customized Marketing Example Marketing mix 1 Supermarket Construction Group Marketing mix 2 Marketing mix 3 Factory

27. 4. Customer Profiles

28. Customer Profile: Definition Customer/Segment –Description of the “typical” customer in that segment. Once a marketer has identified a set of usable segments, it is helpful to generate a profile of each to really understand segment members’ needs and to look for business opportunities (Solomon, et.al, 2013)

29. Customer Profile Example Jasur: Male 20-25, Student from Tashkent, Uzbek Websites TV Channels Entertainment Games Places to eat Shopping Hobby

30. Customer Profile Example Jasur: Male 20-25, Uzbek • Channels to watch: • ТНТ • Yoshlar • MY5 • МУЗ ТВ • Places to Shop: • Korzinka.uz • MAKRO • Poytaht • Web Sites: • Facebook • OK.ru • YouTube • Gazeta.UZ • Afisha.Uz • Games: • PES 2016 • Dota • Candy Crash Saga • War Craft • Entertainment: • Bowler • Premier Hall • Hobby: • Playing Football • Places to Eat: • Bibigon • BBQ Burger • PlovSamsa.uz • Caramel coffee and pastry

31. Customer Profile Determining Customer Profile shows customer destinations, shopping and eating habits, interests, activities and media preferences. This information helps to find ways of “catching” target customers through marketing communications of the company.

33. Reading Brassington F. and Pettit S. (2003) Principles of Marketing, Pitman Publishing. Chapter 5 Jobber, D.(2001) Principles and Practice of Marketing, McGraw Hill. Chapter 7 P.Kotler, Principles of Marketing,3rd European edition,2002, Prentice Hall. Chapter 9 and 10 Solmon, M. et al (2013) Marketing: Real People, Real Decisions, 2nd European ed. Pearson Education Chapter 6