MARK1012 Lecture Notes - Swot Analysis, Target Market, Monopolistic Competition
THE SEGMENTATION, TARGETING AND POSITIONING
PROCESS
STEP 1: ESTABLISH OVERALL STRATEGY OR OBJECTIVES
o Articulate the vision or objective of the company’s marketing
strategy clearly
o Must be consistent and derived from the firm’s mission and
objectives
o SWOT Analysis
STEP 2: SEGMENTATION METHODS
o Develops descriptions of the different segments
o Better understand customer profiles
o Use geographic, demographic, psychographic, benefits and
behavioural segmentation
o GEOGRAPHIC organises customers into groups on the
basis of where they live
o E.g. country, region (east, west) or areas within a
region (state, city, suburbs, postcodes)
o Most useful segmentation
o DEMOGRAPHIC groups consumers according to easily
measured, objective characteristics (e.g. age, gender,
income and education)
o Most common means to define segments
o Easy to identify and because demographically
segmented markets are easy to reach
o Rethinking stereotypical ideas about who is buying
what to broaden appeal
o PSYCHOGRAPHIC how consumers actual describe
themselves
o Underlying psychological reasons determine choices
o More expensive means of identification
o Not all people are alike
o VALS is often used in surveys or focus groups
o Must understand three components:
▪ SELF-VALUES are goals for life. Overriding
desires that drive how a person lives his or
her life
• E.g. self-respect, self-fulfilment or
sense of belonging
• This motivations causes people to
develop self-images
• Marketing: self-values help determine
the benefits the target market may be
looking for from a product
• Fundamental need to seek out certain
brands stems from his/her desire to
fulfil a self-value
• Provide an end goal
▪ SELF-CONCEPT is the image people ideally
have of themselves
• e.g. someone who wants to belong →
wants to see himself as a fun-loving,
gregarious type
• self-concept is the way one sees
oneself in the context of that goal
• Marketing: make use through
communication that demonstrates a
connection between the product and
the self-concept
▪ LIFESTYLES the way we live
• How we live our lives to achieve goals
• VALUE AND LIFESTYLE SURVEY
(VALS)
o Consumers classified into 8
different segments based on
their answers to the
questionnaire
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(www.strategicbusinessinsight
s.com/vals/presurvey.shtml)
o Vertical indicates level of
resources (income, education,
health, energy level and
degree of innovativeness)
▪ Upper segments have
more resources and
are more innovative
than those below
o Horizontal: segments’ primary
psychological motivation for
buying
o Also enables firms to identify
target segments and their
underlying motivations
o Shows a correlation between
psychology and lifestyle
choices
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o BENEFIT SEGMENTATION groups on basis of the benefit
they derive from goods or services
o Hollywood uses benefit segmentation
o BEHAVIOURAL SEGMENTATION divides customers into
groups on the basis of how they use the product
o OCCASION based on when a product is purchased
or consumed
o LOYALTY investing in retention and loyalty initiatives
to retain their most profitable customers
▪ E.g. Airlines: Gold members
o Online shopping uses this segmentation method
▪ E.g. advertisements and recommended posts
on Facebook
o Multiple segmentation methods
o Demographics + geography is easy but their
characteristics don’t help marketers determine their
needs
o Benefits important for designing overall marketing
strategy → but can’t identify specifically which
customers are seeking these benefits
o GEODREMOGRAPHIC SEGMENTATION:
geographic, demographic and lifestyle characteristics
▪ Using MOSAIC and geoSmart
• geoSmart uses 54 segments and 12
groups organised on the two
dimensions
▪ Particularly good for retailers because
customers typically patronise stores close to
their suburb
STEP 3: EVALUATING SEGMENT ATTRACTIVENESS
Segment has to be:
o IDENTIFIABLE
o Firms must be able to identify who is within their
market
o Ensure segments are distinct from one another
o SUBSTANTIAL
o After identifying potential target markets, must
measure size
o Too small/insignificant buying power → profits will
not be sufficiently generated
o REACHABLE
o Consumer must know product exists, understand
what it can do for him/her and recognise how to buy
it
o RESPONSIVE
o Customers must react similarly and positively to
firm’s offering
▪ E.g. Ford and Holden do not target luxury car
segment, rather targets middle-priced family
oriented car/ute/van segment
o PROFITABLE
o Focus on profitability of each segment current and
future
o Factors: market growth, market competitiveness,
market access
o Segment profitability = (Segment size x Segment
adoption percentage x Purchase behaviour x Profit
margin percentage) – Fixed costs
▪ Where,
Segment size + number of people in segment
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Step 1: establish overall strategy or objectives: articulate the vision or objective of the company"s marketing strategy clearly, must be consistent and derived from the firm"s mission and objectives, swot analysis. Segment has to be: groups on the basis of how they use the product. Segment size + number of people in segment. Segment adoption percentage = percentage of customers in segment whoa er likely to adopt the product/service. Purchase behavious = purchase price x number of times customer would buy the product/service in a year. Profit margin percentage= (selling price- variable costs) | selling price. Fixed costs = advertising expenditure, rent, utilities, insurance and administrative salaries for managers. Step 4: select target maret: firm assesses both attractiveness of the target market (o & T from swot analysis and profitability of segment) and its own competencies (swot analysis- s & t: undifferentiated targeting strategy or.
