The Essence Of The Marketing Concept

The Essence Of The Marketing ConceptMarket portionation scum bag be defined as the process of breaking smooth the gibe mart for a harvest-home or service into distinct sub-groups or ingredients where each component may conceivably in play a divide organize technicalize to be stumbleed with a characteristic tradeing mix. naval division and the subsequent st identifygies of calculateing and scene start by recognizing that increasingly, within the total take on/ foodstuff for a mathematical harvest-festival, specific tastes, ask and cl draw a bead on may differ. It breaks down the total market for a product or service into soul clusters of clients, or segments. Here, customers who shargon similar demand preferences atomic number 18 grouped unitedly within each segment.Effective class is achieved when customers sharing similar aims of demand be grouped together and where each group or segment differs in the pattern of demand from another(prenominal) segme nts in the market. In intimately markets, be they consumer or industrial, or so kind of segmentation can be accomplished on this basis.2 behinded market effortsMost companies realise that they cannot accomplishmentively serve all the segments in a market, and must instead target their merchandise efforts. For example, in larning a new car, the manu accompanimenturing firm get out mother to make a decision on many an(prenominal) issues, much(prenominal) as should it be a two-, iv-, or five-seater framework, with a 1000, 2000 or 3000cc locomotive engine? Should it ca-ca slash, theoretical account or vinyl seats? The over-riding factor when decision reservation these issues is customer demand. Some customers (segments) may leaseiness a five-seater 2000cc model with leather upholstery, while others may prefer a four-seater with a 1000cc engine and fabric seats. A solution would be to compromise and produce a four-seater 1500cc model with leather seats and fabric tr im. Clearly, much(prenominal) a model would go some demeanor to meeting the requirements of both groups of buyers, entirely there is a danger that beca practice session the needs of neither market segment be just met, most potency customers would leveraging from other suppliers who could cater for their specific requirements. Ironically, wholeness of the biggest post-war car failures was the much heralded and much hyped American Ford Edsel car. This is a car that was produced high societying extensive marketing research, the results of which were aggregated, and the end product was a car that satisfied the true needs of very(prenominal) few buyers qualification it the most spectacular flop in neo motoring history.Target marketing is thus defined as the identification of the market segments that be identified as being the most likely procurers of a companys products.Specifically, the advantages of target marketing beMarketing opportunities and unfilled gaps in a market may be much(prenominal) accurately appraised and identified. much(prenominal) gaps can be real (e.g. sweet, vigorous, harsh or mild) or they can be illusional in foothold of the way batch want to view the product (e.g. happy, aloof, silly or moody). In the case of the former, product attri al atomic number 53es can gather these criteria whereas for the latter these attributes superpower swell up read to be implanted in the minds of customers through an let ad message.Market and product appeals through exercise of the marketing mix can be to a greater extent delicately tuned to the needs of the potential customer.Marketing effort can be conpennyrated on the market segment(s) which finish uper the greatest potential for the company to achieve its goals be they goals to maximise profit potential or to secure the best long-term sight for the product or any other appropriate goal.3 Effective segmentationTheoretically, the base(s) use for segmentation should lead to segm ents that be mensural/identifiable Here, the base(s) employ should preferably lead to ease of identification in terms of who is in each segment. It should excessively be capable of amount in terms of the potential customers in each segment.Accessible Here, the base(s) employ should ideally lead to the company being able to reach divideed market targets with their individual marketing efforts.Meaningful The base(s) used must lead to segments which choose different preferences or needs and show clear variations in market behaviour and response to individually designed marketing mixes.Substantial The base(s) used should lead to segments which are satisfactoryly large to be economically and very much worthwhile serving as discrete market targets with a classifiable marketing mix.The third criterion is particularly of import for effective segmentation, as it is an essential prerequisite when attempting to scram upon and select market targets.In segmentation, targeting and pos itioning, a company must identify distinct subsets of customers in the total market for a product where any subset might eventually be selected as a market target, and for which a distinctive marketing mix depart be developed. The following represents the sequential steps in conducting a segmentation, targeting and positioning exercise for any given product market. choose base(s) for segmentation and identify appropriate market segments.Evaluate and appraise the market segments resulting from the first step.Select an overall market targeting strategy.Select specific target segments.Develop a product positioning strategy for each target segment.6. Develop an appropriate marketing mix for each chosen target segment in order to support the product positioning strategy.4 Segmentation bases in consumer product marketsGeographic segmentation consists of dividing a country into regions that normally represent an individual sales persons territory. In bigger companies, these larger region s are past broken down into areas with individual regional manager controlling sales mass in distinct areas. In international marketing, different countries may be deemed to bring to pass different market segments.Demographic segmentation consists of a wide var. of bases for subdividing markets, and each of these is now discussedAge is a good segmentation variable star for such items as clothes where the fashion-conscious young are more capable to regular changes in style and older segments are perhaps more concerned with such factors as quality and comfort.Sex is a strong segment in terms of goods that are specifically targeted towards males or females and once again an limpid example is clothing. Here, fashion is a powerful element when buying, and a whole industry surrounds this criterion.Income as a segmentation base is more popular in certain countries like the USA than others who regard such matters very privately. favorable level is possibly the sensation most used v ariable for research purposes. It is universally used. The National Readership Survey divides everybody into the following categories as shown in view 1A Upper middle come apart (higher managerial, administrative or professional) which comprises about 3 per cent of the raceB Middle class ( middling managerial, administrative or professional) which comprises or so 10 per cent of the populationC1 set out middle class (supervisory, clerical, junior administrative or professional) containing around 25 per cent of the populationC2 Skilled working clsass ( practiced manual of arms workers) who comprise around 30 per cent of the population.D Working class (semi- and unskilled manual workers) or around 27 per cent of the populationE Lowest levels of subsistence (state pensioners with no other income, widows, casual and lowest manakin earners) who form the re master(prenominal)ing 5 per cent, or thereabouts, of the population.Figure 1 Social class and grade structureEducation is often related to brotherly class, because, as a generalisation, the fo to a lower place educated tend to get the advance jobs. It is largely acknowledged that a persons media habits are related to education. Accordingly, newspapers design to aim their news and newspaper content towards the upper or lower ends of the friendly spectrum, and encourage advertisers to target their advertising appropriately, depending upon whether an advertisers product has an up-market or down-market appeal. In fact they publicise their readership profile of the percentage of ABC1, etc groups that very read their newspapers or magazines and this tuition is ascertained through independent auditors. This is done principally to alert advertising agencies who will place their clients advertising match to the social classes towards at whom their products are targeted.Nationality or ethnic background now constitutes a growing and distinctive segment for potential target marketing. Food products, clothing and hair address products are obvious examples of products that fit into this segmentation variable.Political is perhaps a less(prenominal) obvious segmentation base. An individuals political leanings might well make the way he or she behaves in terms of purchases made. Such purchases are of course reflected in the types of newspaper and other media that is read, and this, in turn, contains advertising which is aimed at people who read such media, so political leanings might be more significant than it initially seems.Family size will have an effect on the amount or size of purchases, so this is certainly a meaningful segmentation variable.Family life cycle is a logical follow on to the above and this will tend to determine the purchase of many consumer durable products. This is ground on the notion that consumers pass through a series of quite distinct phases in their lives, each phase cock-a-hoop rise to different buy patterns and needs. For example, an unmarried person living a t home will probably have very different buy patterns from someone of the same age who has left home and is recently married. come up and Gubar have put forward what is now an internationally recognised sort formation in relation to life cycle and these stages are shown in Figure 2Bachelor stage young single people not living with parents (which gave rise to the category of YUPPIES or young, upwardly-mobile persons)Newly marrieds no children (sometimes referred to as DINKIES meaning double income no kids)Full cuddle I with the youngest child being under six social classs of age (sometimes referred to as ORCHIDS meaning one recent child, heavily in debt)Full inhabit II is where the youngest child is six or overFull nest III is an older married couple with dependent children living at homeEmpty nest I with no children living at home, but the family head is in work (sometimes referred to as WOOPIES meaning well off older persons)Empty nest II where the family head is ret ired lonesome survivor in workSolitary survivor retired (unkindly referred to as retreat meaning cheap old child-minder, operating on nothing)Figure 2 Family life cycle segmentation baseSAGACITY is a tincture of the family life cycle grouping dust. This is a system that believes that people have different behavioural patterns and aspirations as they proceed through life. Four main stages of life cycle are defined asDependent (mainly under 24 living at home)Pre-family (under 35s who have established their own household, but without children)Family (couples under 65 with one or more children in the household) later(a) (adults whose children have left home or who are over 35 and childless)Income groups are thusly defined as being in categories better off and worse off railway line groups are defined as white (collar) or the A, B and C1 social groups and blue (collar) or the C2, D and E social groupsThe system works as shown in Figure 3Life cycle Dependent Pre-family Family LateIn come Better off Worse off Better off Worse offOccupation vacuous Blue White Blue White Blue White Blue White Blue White BlueApprox % 7 7 5 5 11.5 10.5 2.5 7.5 10 7.5 9 18 adults UK (NB Because of rounding, total frame of reference does not add to 100%)Source Research Services expressageFigure 3 Sagacity Life Cycle GroupingsType of region and ingleside (ACORN) is a relatively new segmentation base. Its underlying school of thought the fact that the type of dwelling and area a person lives in is a good predictor of likely purchasing behaviour including the types of products and tags which might be purchased. This classification analyses homes, rather than individuals, as a basis for segmentation. It is termed the ACORN system (A potpourri of Residential Neighbourhoods). The source of this is the 10-yearly population nosecount that is undertaken during every year ending with one the next being due in 2001. The system was developed by Richard Webber for Consolidated Analysis Ce ntres Incorporated (CACI). It breaks down the census of population into various categories of homes as shown in Figure 4.Acorn Type of dwelling Approx % UK population GroupA Agricultural areas 3B advance(a) family housing, higher incomes 18C Older housing of intermediate view 17D Poor quality older terraced housing 4E Better-off council estates 13F Less well-off council estates 9G Poorest council estates 7H Multi-racial areas 4I High status non-family areas 4J Affluent suburban housing 16K Better-off retreat areas 4U Unclassified 1(Source CACI)Figure 4 ACORN Classification systemThese ACORN classifications are further sub-divided into yet little groupings. For instance, Group C which refers to Older housing of intermediate status, is broken down intoC8 Mixed owner-occupied and council estatesC9 Small town centres and flats above shopsC10 Villages with non-farm employmentC11 Older private shousing skilled workersMosaic system This system is an extension of the ACORN system except that this is based upon individual postal codes (or zip codes). Each postal code in the UK consists of up to seven letters and figures. An individual postal code represents approximately ten dwellings and each of these groups of dwellings is given an individual Mosaic categorisation, of which there are 58 categories. The idea of mosaic comes from the notion that if a different colourise was ascribed to each category and superimposed on a map of the UK the resulting pattern would resemble a mosaic. The full Mosaic listing is not reproduced here, but by way of illustration some of these are described underM1 High status retirement areas with many single pensioners 1.0% of populationM15 Lower income older terraced housing 1.5% M25 Smart inner city plats, company lets, very few children 1.5% M33 Council estates, often Scottish flats, with worst overcrowding 1.3% M46 Post 1981 housing in areas of highest income and status 0.2% M50 Newly built private estates, factory workers, young fa milies 3.3% M57 Hamlets and upset farms 0.7% Taken together, the demographic bases described constitute the most popular bases for segmentation in consumer product markets, since they are often associated with differences in consumer demand. As such, they are meaningful to advertisers. For instance, occupation and social class are linked because of the way that occupation is used to define social class. It is, therefore, relatively easy to reach the different social classes through their different media and shopping habits, although boundaries between the purchasing power of different classes become blurred when, for example, skilled manual workers are able to earn higher incomes than their counterparts in lower or intermediate management.Direct or behavioural segmentation appeals to marketing people as it takes customer purchasing behaviour as the starting point for segmentation. Such bases includeUsage status when a distinction might be made between say light, medium and heavy us ers.Brand committedness status where customers can be divided into a number of groups according to their stanchty, or their propensity to repurchase the stake again. Status categories are heavy(p) core loyals who purchase the same brand every time balmy core loyals who have divided loyalties between two or more brands and purchase any of these on a random basis teddy loyals who are sometimes called brand switchers in that they buy one brand, and chip with it for a certain period, and then purchase another brand and expect with it for a certain period. They may then return to the original brandSwitchers who show no particular preference or loyalty to one particular brand, so their purchasing pattern cannot be clearly determined.Benefits sought-after(a)-after(a) is a segmentation base that determines the principal expectation(s) that a purchaser is want from the product. For instance, in the case of an automobile oil, purchasers might be looking for cheapness, a well known brand , its viscosity or its engine protection reputation. do for purchase likewise falls under this category. An example here relates to the purchase of holidays.Lifestyle or psychographic segmentation is based on the idea that individuals have characteristic patterns of living that may be reflected in the products and brands which they purchase. The advertising agency, new(a) Rubican, has come up with a classification system called Four Cs where C stands for consumers. These categories areMainstreamers or the largest group who do not want to stand out from the crowd. They are the biggest segment (over 40 per cent of the population) and tend to purchase branded products over supermarket brands.Reformers are people who tend to be creative and caring, many doing charitable work. They are largely responsible for the purchase of supermarket brands.Aspirers are usually younger people who are ambitious and astute to get on at all costs. Their purchases tend to reflect the a la mode(p) mode ls and designs.Succeeders are those who have made it and do not see the need for status symbols that aspirers seek. They like to be in control of what they are doing and this includes their purchases where they generally have very clear and firm ideas of what they see as a good product and what they see as being a less useful product.5 Segmentation bases in industrial product marketsSegmenting an industrial product market introduces a number of additional bases, uses similar bases and also precludes some of the ones more frequently used for consumer product markets. Such bases areType of application/end use e.g. adhesives for home, office and industrial useGeographical e.g. North, South, East and West regions or by countryBenefits sought Closely related to the above, but in terms of what the product truly does for the buying company e.g. detergents for general cleaning or detergents that are genuinely used in the production processType of customer e.g. banks or insurance companies or people who purchase for public authorities result/technology e.g. fibres for the carpet industry or the clothing industryclient size e.g. larger customers might receive different treatment to smaller customers and this is called key account selling whereby the sales manager deals directly with study accountsUsage rate e.g. light users or heavy users regular or sporadic usersLoyalty of customer e.g. regular purchasers of the companys products and sporadic purchasers. The treatment accorded to loyal customers might differ to that given to occasional customers buy procedures e.g. centralized versus change purchasing (which can affect the buyer/seller relationship) the extent to which purchasing is carried out by tightly defined, or more flexible, specifications which allows the seller more latitude in terms of making suggestions, the extent to which purchasing is by tender (i.e. by some kind of closed bidding system) or by open negotiationSituational factors considers the tactica l role of the purchasing circumstances. In some purchasing situations it requires a more detailed knowledge of the customer whereas in others the buyer/seller relationship is kept strictly to commercial mattersPersonal characteristics relate to the people who make purchasing decisionsAs with consumer markets, industrial market segmentation may be on an indirect (associative) or a direct (behavioural) basis. A variety of bases may be also be used in conjunction with each other in order to obtain successively smaller sub-segments of the market. The essential criteria given preferably for bases of consumer market segmentation being identifiable, accessible, substantial and, most important, meaningful are equally applicable to bases for industrial market segmentation. A nested get down has been suggested on the basis of a hierarchy from the broad to the specific (See Figure 5).DEMOGRAPHICS operate VARIABLESPURCHASING APPROACHSITUATIONALPERSONALCHARAC-TERISTICSFigure 5 A nested over ture to segmentation in industrial marketsAt the centre we have people who actually make buying decisions and their personalities must be considered. Then come situational factors that look at the tactical role of the purchasing situation. This demands customer knowledge. Purchasing approaches examines customer purchasing practices (e.g. who actually makes buying decisions, or the decision making unit). Operating variables allow a more exact pinpointing of potential and alive customers within the final category that is demographic variables, or the broad interpretation of the segments related to customer needs and patterns of usage.6 Effective segmentation once market segments have been identified, the marketers task is to assess these various market segments. This assessment should be in relation to sales and profit potential, or in the case of a non-profit organization, their ability to add to organisational aims. This means that each segment should be viewed in terms of its ov erall size, projected rate of growth, actual and potential competition, nature of competitive strategies and customer needs. Companies that square up to follow a concentrated or a differentiated targeting strategy must decide which of the segments in the market they wish to serve. Such a decision to select specific target markets must be based on some of the factors outlined earlier, including resources, competition, segment potential and company physical objects.There are four characteristics that make a market segment particularly attractiveIt has sufficient current profit and sales potential to meet the organisations aims and objectivesCompetition in the segment is not too intenseThere is good potential for future growthThe segment has some previously unidentified requirements that the company has recognised and is now in a position to serve oddly well7 Product positioningA company has to develop a positioning strategy for each segment it chooses to serve. This relates to the task of ensuring that a particular companys products occupy a planned for place in chosen target markets, pertinent to opposing competition in the marketplace. The notion of product/brand positioning is applicable to both industrial and consumer markets, and the key aspects of this approach are based upon the following suppositions.All products and brands have both objective attributes (e.g. sweet/sour dark/light fast/slow) and subjective attributes (e.g. modern/unfashionable happy/sad youthful/elderly).Potential purchasers might call about one or more of these attributes when deliberating which product and/or brand to purchase.That potential customers have their own thoughts about how the various competing products or brands rate for each of these particular attributes. In other words, the positioning of the brand on the parameters of these attributes (eg entertaining on the one hand to mundane at the other extreme) takes place in the mind of the customer.Once this is done, it is possible to establish important attributes in choosing between different brands or products, together with the customers perception of the position of competitors products in relation to these characteristics, and then establish the most advantageous position for the company within this particular segment of the market.The final step in the appraisal of segmentation, targeting and positioning is developing appropriate marketing mixes. This involves the design of marketing programmes that will support the chosen positional strategy in the selected target markets. The company must therefore determine the 4 Ps of its marketing mix, i.e. what price, product, distribution (place) and promotional strategies will be necessary to achieve the want position in the market.There are four acknowledged strategic options for target marketingUndifferentiated marketing where there is one single marketing mix for every potential customer in the market. differentiate marketing where there are many m arketing mixes for different segments of the market. concentrated marketing which has a single marketing mix for a segment of the total market.Custom marketing which attempts to satisfy each individual customers requirements with a separate marketing mix.8 SummaryWe can now revalue how marketing begins to work. Having defined the purpose of segmentation we have looked at the obvious and the less obvious bases for segmentation in both consumer and industrial markets. We have also ascertained that used well, the techniques and concepts described in this chapter can sacrifice significantly to overall company marketing success. Market segmentation, targeting and positioning decisions are thus more strategic than they are tactical.Segmentation variables should be examined in detail, especially new segments. These should then be authenticated in terms of viability and potential profit.Targeting investigates specific segments in terms of how they should be approached.Positioning relates to how the product is perceived in the minds of consumers and a suitable marketing mix should then be designed.