Chapter 5 Slides

PowerPoint
to accompany
Chapter 5
1. TARGET MARKETING STRATEGIES
2. CRM
Making and Delivering Value

(Figure 3.1) Making marketing value decisions Understanding consumers needs Creating the value proposition
This chapter
Communicating the value proposition

Delivering the value proposition
Copyright 2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781442525207/Solomon/Marketing/2nd edition
Objectives for Chapter 5

1 Understand the need for market segmentation in todays business environment
Explain the different dimensions (bases) marketers use to segment consumer and business-to-business markets
Explain how marketers evaluate and select potential market segments
Objectives for Chapter 5 contd

4 Explain how marketers develop a targeting strategy 5 Understand how a company develops and implements a positioning strategy 6 Explain how marketers practice CRM customer relationship management to increase long-term success and profits
The Need for Segmentation

Market fragmentation
Which creates the need for
The creation of many consumer groups due to a diversify of distinct needs and wants in modern society
Target marketing strategy
a) Dividing the total market into different segments on the basis of customer characteristics, b) selecting one or more segments, and c) then developing products to meet the needs of those specific segments
Segmenting the market

Give examples to show that the following businesses have segmented their markets: An airline A car manufacturer A shoe manufacturer
Steps in the Target Marketing Process

Figure 5.1
Step 1: Segmentation
Segmentation
The process of dividing a larger market into smaller pieces based on one or more meaningful, shared characteristics
Segmentation variables
Dimensions that divide the total market into fairly homogeneous groups, with each group having different needs and preferences
Ways to Segment Consumer Markets

Geographics
Demographics
Psychographics
Behaviour
Segmenting by: (a) Geographics

Suburb
Segmenting with geographic variables Climate Country Region
Geodemography
A segmentation technique that combines geography with demographics
Segmenting by: (b) Demographics

Age Gender Income
Family structure
Race and Ethnicity
Age Groups
Age
Generation Those born Y between 1977 and 1994 Generation Those born X between 1965 and 1976 Baby boomers Those born between 1946 and 1964 Difficult to reach through traditional marketing efforts I dont like to be told whats trendy. I can make up my own mind. A big market, approaching retirement, with money to spend
Sportsgirl targets the Tweens and Gen. Y
Segmenting by: (c) Psychographics

Psychographic data is useful for understanding consumer with different values and attitudes
Often by using
Activities
Interests
Opinions
Segmenting by: (d) Behaviour (toward the product)

Behavioural segmentation segments consumers on the basis of how they act toward, feel about, or use a product
Users Non-users
80/20 Rule Where 20% of purchasers account for 80% of sales
Light users Moderate users Heavy users
Usage situations
Specific occasions Eg, Easter, Christmas
Segmenting B2B Markets

The underlying logic is the same breaking the market into manageable pieces that share relevant characteristics 1. Organisational Demographics
Firm size
Number of facilities
2. User or non-user
Domestic or multinational
Type of business
3. Technology used
Class Activity Set out below is a list of geographic, demographic and psychographic segmentation variables and Australian newspaper or magazine titles. Match the letter to the right number.
A State of Western Australia 1 2 Male 3 C D E F Female 4 Country town 5 Lifestyle 6 Child The West Australian Newspaper Womans Day Magazine Geralton Gazette Newspaper Home and Garden Magazine The Phantom Comic Wheels Magazine
Step 2: Targeting
Target market: The market segment/s where a firm focuses its marketing plan and efforts Not selected Not selected
1. Evaluate the
attractiveness of each potential segment
2. Selected target market

Not selected
2a. Evaluating Market Segments

Are members of the Can marketers segment similar to each measure the segment? other, but different from (How many?) other segments? Can marketing Is the segment large communications reach enough to be the segment? profitable? (Type of media?) Can the marketer serve the segments needs? (Companys skills, resources?)
2b. Developing Segment Profiles

What is the description of the typical customer in the segment? Helps to understand the consumer Will influence future marketing decisions Benefits sought
Value for money?
Demographics
Age, income?
Viewers of TV, print media?
Media habits
Buying behaviour
Heavy users?
2c. Choosing a Targeting Strategy

2. Differentiated Marketing 1.Undifferentiated Marketing
3. Concentrated Marketing
4. Customised Marketing
Differentiated marketing Using

different approaches for targeted segments
Undifferentiated marketing Pursue all segments at once with same offering/product

Potential market segments
Concentrated marketing
Pursuing ONE segment only
Customised marketing
Tailoring offerings to individual consumers
About each strategy

Undifferentiated
Try to appeal to broad spectrum Benefit from economies of scale (size) E.g. Woolworths
Develops products for each segment where different needs exist E.g. LOreal and Lancome Focus on a single segment Often useful for smaller companies E.g. Surgical instruments. Meet the needs of individuals Common in B2B (made to order) and service firms E.g. Lawyers, hairdressers
Differentiated
Concentrated
Customised
Step 3: Positioning
Positioning means developing a marketing strategy aimed at influencing how a particular market segment perceives a product in comparison to the competition Or Repositioning: changing a products position in response to marketplace changes. Eg, Volvo, red meat.
Three approaches used to create product positions are:

Position the product like the competition (copy) (e.g. I Cant Believe Its Not Butter margarine). Against the competition (compete) (e.g. Avis We try harder). Away from the competition (different) (e.g. Nintendo Wii, VW Beetle,)
Developing a Positioning Strategy

Analyse the competitors positions in the marketplace
(perceptual mapping)
Offer a product with a competitive advantage

(Staff, service, superior image, unique features)
Evaluate the target markets response so modifications can be made, if needed
Finalise the marketing mix
Perceptual Maps
Used to map a picture of how brands are perceived and located in consumers minds
Uses key purchase characteristics (attributes) as the basis of the maps (Eg. price, level of service) Typically uses information from a consumer survey
Figure 5.4
Brand Positioning Map
Customer Relationship Management (CRM)

A philosophy that sees marketing as a process of building long-term relationships with customers to keep them satisfied and to keep them coming back
Treats the customer as a partner (for life)
The Four Steps (of One-to-One Marketing)

4. Customise offering 3. Interact with customers 2. Differentiate (best ones) 1. Identify customers
Characteristics of CRM
(What it does and what it hopes to achieve) Share of Customer Seek to increase the % of an individuals purchases of a particular brand Seek to maximise the expected profit from a particular customer
Lifetime Value of Customer
Customer Equity (asset)
Greater Focus on HighValue Customers
Seek to maximise the financial value of a customer relationship Far more efforts targeted at high-value customers

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Chapter 5 Slides

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PowerPoint

Making and Delivering Value

Communicating the value proposition

Objectives for Chapter 5

Explain how marketers evaluate and select potential market segments

Objectives for Chapter 5 contd

The Need for Segmentation

Target marketing strategy

Segmenting the market

Steps in the Target Marketing Process

Ways to Segment Consumer Markets

Segmenting by: (a) Geographics

A segmentation technique that combines geography with demographics

Segmenting by: (b) Demographics

Race and Ethnicity

Sportsgirl targets the Tweens and Gen. Y

Segmenting by: (c) Psychographics

Segmenting by: (d) Behaviour (toward the product)

Light users Moderate users Heavy users

Specific occasions Eg, Easter, Christmas

Segmenting B2B Markets

2. Selected target market

2a. Evaluating Market Segments

2b. Developing Segment Profiles

Viewers of TV, print media?

2c. Choosing a Targeting Strategy

Differentiated marketing Using

Undifferentiated marketing Pursue all segments at once with same offering/product

About each strategy

Three approaches used to create product positions are:

Developing a Positioning Strategy

Offer a product with a competitive advantage

Evaluate the target markets response so modifications can be made, if needed

Finalise the marketing mix

Brand Positioning Map

Customer Relationship Management (CRM)

Treats the customer as a partner (for life)

The Four Steps (of One-to-One Marketing)

Lifetime Value of Customer

Customer Equity (asset)

Greater Focus on HighValue Customers

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