List and describe the main benefits markets receive by segmenting markets. Give examples of how these benefits may be realize. The market develops from mass marketing and product-variety marketing to target marketing. In mass marketing, the seller mass produces, mass distributes and mass promotes one product to all buyers. At one time, Sony product only one type of television for the whole market, thus create hard selling. Product-variety marketing, the seller produces two or more products that have different features, styles, quality, sizes and so on.
Later, Sony produced several of television sets with different screen sizes and outside frame (casing) colors. However, customers have different needs that change over time. Customers seek variety and change. Target market, the seller identifies market segments, selects one or more of them, and develops products and marketing mixes tailored to each. For example, the Sony Company now produces television sets for the home entertainment segment, the fashion segment, the convenience segment, and the technology enthusiasts. Target marketing can help sellers to find their marketing opportunities more efficiently.
Sellers can develop the right product for each target market and adjust their prices, distribution channels and advertising to reach the target market efficiently. Instead of scattering their marketing efforts, they can focus on the buyers who have greater purchase interest. Segmenting the markets can help company make more profit as they know who they are target to, and what their needs and wants from them. Markets consist of buyers, and buyers differ in one or more ways. They may differ in their wants, resources, locations, buying attitudes and buying practices.
Because buyers have unique needs and wants, each buyer in potentially a separate market. Ideally, then, a seller might design a separate marketing program for each buyer. However, most sellers face larger numbers of smaller buyers and do not find complete segmentation worthwhile. Instead, they look for broad classes of buyers who differ in their product needs or buying responses. 1. The process of segmentation includes three phases each having two steps. Describe this process using examples of a common product or service throughout the process.
Marketing segmentation dividing a market into distinct groups of buyers with different needs, characteristics or behavior who might require separate products or marketing mixes. The company identifies different ways to segment the market and develops profiles of the resulting market segments. This process include identify bases for segmenting the market and develop profiles of resulting segments. It is the most basic process for company starts their marketing. There is no single way to segment a market. A marketer has to try different segmentation variables, alone and in combination, to find the best way to view the market structure.
Here are four major ways to segmenting the consumer markets, geographic, demographic, psychographic and behavioral variables. For examples, the Sony Company set up a research for the market to find out what their customer needs and wants from them. They conduct their research in different country for different groups of people (gender, age, family size and so on). The second step is market targeting- evaluating each market segment’s attractiveness and selecting one or more of the market segments to enter. The market targeting include develop measures of segment attractiveness and select the target segments.
In evaluating different market segments, a company must look at three factors: segment size and growth, segment structural attractiveness, and company objectives and resources. After that, company selecting market segment in various strategies such as undifferentiated marketing, differentiated marketing and concentrated marketing. After conduct the research, Sony can collect their result and find out which group is the most potential market, and then they can focus on this group to make more profit based on their satisfaction.
The third step is market positioning-setting the competitive positioning for the product and creating a detailed marketing mix. The market positioning consisted of develop positioning for each target segment and develop marketing mix for each target segment. Once a company has decided which segments of the market it will enter, it must decide with positions’ is wants to occupy in those segments. Product position is the way the product is defined by consumers on important attributes-the place the product occupies in consumers’ minds relative to competing product.
For examples, after Sony has been selecting their target market, they are concentrating on what this select market wants. If they are target to the young age, they may pay more attention to how to maximize their product function and catch up with fashion. If they are target to the female, they will focus on how to make they product more delicate and smaller. 2. You text book describes three major market coverage strategies. Compare and contrast these strategies giving examples throughout. A target market consists of a set of buyers sharing common needs or characteristics that the company decides to serve.
The company can adopt one of three market-coverage strategies: undifferentiated marketing differentiated marketing or concentrated marketing. The undifferentiated marketing strategy, a company might decide to ignore market segment difference and go after the whole market with one market offer. It focuses on what is common in the needs of consumers rather than on what is deferent. The company designs a product and a marketing program that appeals to the largest number of buyers. It relies on mass distribution and mass advertising, and aims to give the product a superior image in people’s minds.
Differentiated marketing strategy, a company decides to target several market segments, and designs separate offers for each. It focuses on what is the different need of different groups. Different people have different needs and wants. For example, Coles Myer uses different store formats and types to meet the needs of different customer segments. A third market-coverage strategy, concentrated marketing is especially appealing when company resources are limited. Instead of going after a small share of a large market, the company goes after a large of one or a few submarkets.
Differenced marketing typically creates more total sales than undifferentiated marketing. Lever & Kitchen gets a higher total market share with a multitude a laundry detergent brands than it could with only one. But it also increases the costs of doing business. Modifying a product to meet different market segment requirements usually involves some research and development, engineering or special tooling costs. A company usually finds it more expensive to produce, say, 10 units of 10 different products than 100 units of one product. Developing separate marketing plans for the egments requires extra marketing research, forecasting, sales analysis, and promotion planning and channel management, and trying to research different market segments with different advertising increases promotion costs. If this involves different brands, as with Unilever, the marketing costs are much higher. Thus, the company must weigh increased sales against increased costs when deciding on a differentiated marketing strategy. Through concentrated marketing, the company achieves a strong market position in the segments it serves because of its greater knowledge of the segments’ needs and the special reputation it acquires.
And it enjoys many operating economies because of specialization in production, distribution and promotion. If the segment is well chosen, the company can earn a high rate of return on its investment. At the same time, concentrated marketing involves higher than normal risks. If a company has “all its eggs in one basket” and the market takes a downturn, or a larger competitor takes an attacking position, the company may lose out. 4 . Positioning is describes as ““`the place the product of occupies in consumer’s minds relative to competing products”. kotler, et al. 7ed. page 364). Select two competing products and describe how positioning strategies might be used to gain a competitive advantage. Once a company has decided which segments of the market it will enter, it must decide which positions’ it wants to occupy in those segments. Consumers typically choose products and services that give them the greatest value. Thus, the key to winning and keeping customers is to understand their needs and buying processes better than competitors and to deliver more value.
If a company can position itself as providing superior value to selected markets-either by offering lower prices than competitors or by providing more benefits to justify higher prices-it gains competitive advantage. But solid positions cannot be built on empty promises. If a company positions its products offering the best quality and service, it must then deliver the promised quality and service. Thus, positioning begins with actually differentiating the company’s marketing offer so that it will give consumers more value than a competitor’s offer.
Not every company finds many opportunities for differentiating its offer and gaining competitive advantage. Some companies find many minor advantages that are easily copied by competitors. The solution for these companies is to keep competitors off balance. These companies do not expect to gain a single major permanent advantage, but rather many minor ones that can be introduced to win market share over a period of time. A company or market offer can be differentiated along lines of product, services, personnel or image.
