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Target Marketing

Target Marketing. MARKET SEGMENTATION AND SELECTING TARGET MARKETS . At the end of this module the learning outcomes are. Why there is a need to segment markets? What are the various levels of market segmentation? What are bases for segmenting consumer markets? How the markets are targeted?.

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Target Marketing

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  1. Target Marketing TARGET MARKET

  2. MARKET SEGMENTATION AND SELECTING TARGET MARKETS At the end of this module the learning outcomes are. • Why there is a need to segment markets? • What are the various levels of market segmentation? • What are bases for segmenting consumer markets? • How the markets are targeted? TARGET MARKET

  3. MARKET SEGMENTATION AND SELECTING TARGET MARKETS SUGGESTED READINGS • Marketing Management by Philip Kotler, chapter 9 &10th edition. • Marketing Management by Ramaswami and Namkumari, Chapter 6. TARGET MARKET

  4. MARKET SEGMENTATION AND SELECTING TARGET MARKETS MARKET SEGMENTATION The need • Cannot serve all customers of this universe. • No company has that kind of resources. • Customers • Too numerous • Diverse in their buying requirement • Need to identify the market segments that it can serve more effectively TARGET MARKET

  5. MARKET SEGMENTATION AND SELECTING TARGET MARKETS MARKET SEGMENTATION. • The universe is heterogeneous. • Divide the universe into market segments, where buying or need requirements is same i.e. homogenous. • Attack one or few market segments. • This is target marketing. TARGET MARKET

  6. Target Marketing Steps in the Targeting Process: Market Segmentation Market Targeting Market Positioning TARGET MARKET

  7. Target Marketing • Target marketing requires marketers to take three major steps: • Identify and profile distinct groups of buyers who differ in their needs and preferences (market segmentation). • Select one or more market segments to enter (market targeting). • For each target segment, establish and communicate the key distinctive benefit(s) of the company’s market offering (market positioning). TARGET MARKET

  8. MARKET SEGMENTATION AND SELECTING TARGET MARKETS Mass Marketing • Seller engages in mass production. • Mass distribution. • Mass promotion of one product for all buyers. Example Coke in 60 & 70s, • Sold in India • One size 200 ml. TARGET MARKET

  9. MARKET SEGMENTATION AND SELECTING TARGET MARKETS Arguments for mass market. • Creates largest potential market • Leads to lower cost • Lead to lower prices. • Higher margins Why criticised • Market fragmentation • Splintering of the market • Mass media proliferation. • Distribution channel proliferation Difficult to practice “one size fits all’’ marketing. TARGET MARKET

  10. Using Market Segmentation Levels of Micromarketing Segment Marketing Niche Marketing Local Marketing Individual Marketing TARGET MARKET

  11. MARKET SEGMENTATION AND SELECTING TARGET MARKETS MARKET SEGMENTATION LEVELS 1. Segment Marketing • Consists of a large identifiable group within a market with similar wants, purchasing power, attitudes or buying habits • Each segment’s buyers are assumed to be quite similar in needs /wants • No two buyers all alike • Flexible market offerings TARGET MARKET

  12. MARKET SEGMENTATION AND SELECTING TARGET MARKETS Flexible market offering consists of two parts • Naked solution • Consists of products and service elements that all segment members value • Options • That some segment members value • Each option carries additional prices. TARGET MARKET

  13. MARKET SEGMENTATION AND SELECTING TARGET MARKETS Example – Segment Marketing Delta Airlines •     Economy Class passenger • Seat • Food • Soft Drink All of them – naked solution • Charges extra • Alcoholic beverages • Earphones TARGET MARKET

  14. MARKET SEGMENTATION AND SELECTING TARGET MARKETS Segment marketing – benefits • More fine tuned product • Price it appropriately for the target audience • Fewer competitors • Easier choice of • Distribution channels • Communication channels TARGET MARKET

  15. MARKET SEGMENTATION AND SELECTING TARGET MARKETS Niche marketing • Narrowly defined group • Needs are not well serviced • Seeking a distinctive mix of benefits • Fairly small market size • Normally attract one or two players • Customers willing to pay a premium price. TARGET MARKET

  16. MARKET SEGMENTATION AND SELECTING TARGET MARKETS • 1. High end designer wear like Gucci, Chanel, Tarun Tahiliani etc. • 2. Automobiles like Ferrari, Maserati, Lamborghini etc. • WHAT IS A NICHE TODAY MAY BECOME A SEGMENT TOMORROW AND VICE VERSA!! TARGET MARKET

  17. Ostrichesonline.com • Selling Ostrich derived products • On line • 2 million $ sales in 1998 • Visitors can buy • Ostrich meat • Feathers • Leather jackets • Videos • Eggshells • Skin care products derived from ostrich • Body oil TARGET MARKET

  18. MARKET SEGMENTATION AND SELECTING TARGET MARKETS 3. Local marketing • Needs of local customer groups Example Kraft Cheese • Helps supermarket chains • Identify cheese assortment and shelf layout • Optimise cheese sales in • Low • Middle • High income stores • Different ethnic groups TARGET MARKET

  19. MARKET SEGMENTATION AND SELECTING TARGET MARKETS 4. Individual marketing • Ultimate level of segmentation • Segment of one. • One-to-one marketing. • Customised to individuals • Tailor made • Cobbler designed shoes. • Customised industrial products Use of new technologies • Computers. • Databases Customised offering. TARGET MARKET

  20. MARKET SEGMENTATION AND SELECTING TARGET MARKETS Example 1.     Dilip Chhabria -Designer cars • Customised cars • Small market • About 500 a year • Each car is unique, high prices TARGET MARKET

  21. MARKET SEGMENTATION AND SELECTING TARGET MARKETS Turning to Mass customisation It is the ability to prepare on a mass basis individually designed products and communication to meet each customer’s requirements. Example. Levi’s Jeans • Customer measurements. • Jeans ready in 8 hrs. Mattel Barbie com Design your own Barbie doll. TARGET MARKET

  22. MARKET SEGMENTATION AND SELECTING TARGET MARKETS • Choose Doll’s • Skin tone • Eye colour • Haircolor. • Clothes • Accessories • Her likes and dislikes. • When Barbie delivered. • Doll’s name on the package • Computer generated paragraph about her personality TARGET MARKET

  23. Using Market Segmentation Basic Market-Preference Patterns TARGET MARKET

  24. Needs-based segmentation Segment identification Segment attractiveness Segment profitability Segment positioning Using Market Segmentation Needs-based Segmentation Process • Marketing-mix strategy TARGET MARKET

  25. Segmentation Characteristics of Effective Segments Measurable Actionable Substantial Accessible Differentiable TARGET MARKET

  26. Bases for Segmentation Geographic Demographic Psychographic Behavioral Nation or country State or region City or metro size Density Climate Segmenting Consumer Markets TARGET MARKET

  27. MARKET SEGMENTATION AND SELECTING TARGET MARKETS Example Geographic Ford Ikon in India • World car • Changes for India • Higher suspension • Larger size air conditioner, higher ambient temperature • Lower average speeds • Handle adulterated fuel • Petrol / diesel adulterated with kerosene TARGET MARKET

  28. Bases for Segmentation Geographic Demographic Psychographic Behavioral Age, race, gender Income, education Family size Family life cycle Occupation Religion, nationality Generation Social class Segmenting Consumer Markets TARGET MARKET

  29. Bases for Segmentation Geographic Demographic Psychographic Behavioral Lifestyle Activities Interests Opinions Personality Core values Segmenting Consumer Markets TARGET MARKET

  30. MARKET SEGMENTATION AND SELECTING TARGET MARKETS • Lifestyle Nestle Classic • Pleasure of making coffee • Adding milk, sugar, coffee in hot milk Nestle “3 in 1 • Office goers • Paucity of time • Espresso feeling • Milk sugar coffee premixed TARGET MARKET

  31. b. Personality • Targeting consumer personality • Customer of Ford • Independent • Impulsive • Masculine • Alert to change • Self confident • Customers of Chevrolet • Conservative. • Thrifty • Prestige. • Conscious. • Avoid extremes TARGET MARKET

  32. MARKET SEGMENTATION AND SELECTING TARGET MARKETS C. VALUES Tourists to Disneyland • Fun seekers • Families visit Tourists to Udayan child welfare unit at Kolkatta • Stay and meet poor children • Share thoughts • Donate TARGET MARKET

  33. Bases for Segmentation Geographic Demographic Psychographic Behavioral Occasions Benefits User status Usage rate Loyalty status Buyer-readiness Attitude Segmenting Consumer Markets TARGET MARKET

  34. Segmenting Consumer Markets • Multi-attribute segmentation via geoclustering combines multiple variables to identify smaller, better-defined target groups TARGET MARKET

  35. Market Targeting Strategies • Evaluating and selecting market segments requires assessing the segment’s overall attractiveness in light of company’s objectives and resources. • Five patterns of target market selection can then be considered. TARGET MARKET

  36. Market Targeting Strategies Five Patterns of Target Market Selection TARGET MARKET

  37. Market Targeting Strategies • Targeting multiple segments may result in cost economies • Higher costs using differentiated marketing include: • Product modification cost • Manufacturing cost • Administrative cost • Inventory cost • Promotion cost TARGET MARKET

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