The Essence Of The Marketing Concept

The Essence Of The Marketing ConceptMarket break complicate female genital organ be defined as the process of breaking down the entire market for a product or service into distinct sub-groups or divisions where for severally one part may conceivably represent a separate only whent market to be reached with a distinctive market mix. class and the subsequent strategies of branding and positioning start by recognizing that increasingly, within the total demand/market for a product, precise tastes, needs and demand may differ. It breaks down the total market for a product or service into somebody clusters of clients, or segments. Here, clients who sh atomic number 18 alike(p) demand preferences ar grouped together within each segment.Effective class is achieved when customers sharing similar patterns of demand be grouped together and where each group or segment differs in the pattern of demand from differentwise segments in the market. In most markets, be they consume r or industrial, some kind of partition can be accomplished on this background.2 Targeted selling effortsMost companies satisfyingise that they cannot effectively serve all the segments in a market, and must alternatively target their merchandising efforts. For example, in developing a new car, the manufacturing firm will have to assume a decision on many issues, much(prenominal) as should it be a two-, four-, or five-seater model, with a 1000, 2000 or 3000cc engine? Should it have leather, fabric or vinyl seats? The everywhere-riding factor when deciding these issues is customer demand. Some customers (segments) may want a five-seater 2000cc model with leather upholstery, while others may prefer a four-seater with a 1000cc engine and fabric seats. A result would be to compromise and produce a four-seater 1500cc model with leather seats and fabric trim. Clearly, such a model would go some guidance to clashing the requirements of both groups of procureers, but there is a d anger that because the needs of neither market segment are precisely met, most potential customers would purchase from other suppliers who could cater for their specific requirements. Ironically, one 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 following extensive marketing research, the results of which were aggregated, and the complete product was a car that satisfied the true needs of precise few buyers making it the most spectacular flop in modern motor history.Target marketing is thus defined as the identification of the market segments that are identified as being the most likely purchasers of a companys products.Specifically, the advant jump ons of target marketing areMarketing opportunities and unfilled gaps in a market may be more than accurately appraised and identified. Such gaps can be real (e.g. sweet, strong, harsh or mild) or they can be illusionary in hurt of the way people wan t to view the product (e.g. happy, aloof, silly or moody). In the case of the former, product attributes can fulfil these criteria whereas for the latter these attributes susceptibility sound have to be implanted in the oral sexs of customers through an appropriate denote mess bestride.Market and product appeals through manipulation of the marketing mix can be more delicately tuned to the needs of the potential customer.Marketing effort can be concentrated on the market segment(s) which offer the greatest potential for the company to achieve its goals be they goals to maximise profit potential or to promise the best long-term position for the product or any other appropriate goal.3 Effective partitioningTheoretically, the base(s) used for segmentation should lead to segments that areMeasurable/identifiable Here, the base(s) used should preferably lead to ease of identification in terms of who is in each segment. It should also be capable of meter in terms of the potential c ustomers in each segment.Accessible Here, the base(s) used should ideally lead to the company being able to reach haveed market targets with their psyche marketing efforts.Meaningful The base(s) used must lead to segments which have unalike preferences or needs and show clear variations in market behaviour and answer to individually designed marketing mixes.Substantial The base(s) used should lead to segments which are sufficiently large to be economically and practically worthwhile serving as discrete market targets with a distinctive marketing mix.The third criterion is finickyly important for effective segmentation, as it is an essential prerequisite when attempting to identify and select market targets.In segmentation, targeting and positioning, a company must identify distinct subsets of customers in the total market for a product where any subset might ultimately be selected as a market target, and for which a distinctive marketing mix will be developed. The following re presents the sequential steps in conducting a segmentation, targeting and positioning exercise for any given product market. claim 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 regions are then broken down into areas with individual regional manager controlling salespeople in distinct areas. In international marketing, different countries may be deemed to constitute different market segments.Demographic segmentation consists of a wide variety of bases for subdividing markets, and each of these is now discussedAge is a good segmentation variable for such items as clothes where the fashion-conscious young are more susceptible 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 again an obvious example is clothing. Here, fashion is a powerful element when acquire, 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 esotericly.Social class is possibly the single most used variable for research intentions. It is universally used. The National Readership Survey divides everybody into the following categories as shown in get a line 1A Upper middle class (higher managerial, administrative or professional) which comprises virtually 3 per cent of the raceB Middle class (intermediate managerial, administrative or professional) which comprises just about 10 per cent of the universeC1 Lower middle class (supervisory, clerical, junior administrative or professional) containing around 25 per cent of the populationC2 Skilled working clsass (skilled manual 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 grade earners) who form the remaining 5 per cent, or thereabouts, of the population.Figure 1 Social class and grade structureEducation is often related to social class, because, as a generalisation, the transgress educated tend to get the better jobs. It is principally acknowledged that a persons media habits are related to education. Accordingly, newspapers design to aim their news and newspaper content towards the upp er or lower ends of the social spectrum, and support advertisers to target their advertising appropriately, depending upon whether an advertisers product has an up-market or down-market appeal. In fact they realityise their readership profile of the percentage of ABC1, etc groups that truly read their newspapers or magazines and this information is ascertained through independent auditors. This is done principally to alert advertising agencies who will place their clients advertising according to the social classes towards at whom their products are targeted.Nationality or ethnic play down now constitutes a growing and distinctive segment for potential target marketing. Food products, clothing and hair care products are obvious examples of products that fit into this segmentation variable.Political is perhaps a less obvious segmentation base. An individuals political leanings might well influence the way he or she behaves in terms of purchases made. Such purchases are of course contriveed 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 animateness cycle is a logical follow on to the above and this will tend to determine the purchase of many consumer immutable products. This is based on the imprint that consumers pass through a series of quite distinct phases in their lives, each phase giving rise to different purchasing patterns and needs. For example, an unmarried person living at home will probably have very different purchasing patterns from someone of the same age who has left home and is recently married. Wells and Gubar have put forward what is now an internationally recognised classification musical arrangement 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 draw near I with the youngest child being under six years of age (sometimes referred to as ORCHIDS meaning one recent child, heavily in debt)Full nest 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 retiredSolitary survivor in workSolitary survivor retired (unkindly referred to as COCOON meaning cheap old child-minder, operating on nothing)Figure 2 Family life cycle segmentation baseSAGACITY is a refinement of the family life cycle grouping system. This is a system that be lieves that people have different behavioural patterns and aspirations as they glide by through life. Four main stages of life cycle are defined asDependent (mainly under 24 living at home)Pre-family (under 35s who have open their own household, but without children)Family (couples under 65 with one or more children in the household)Late (adults whose children have left home or who are over 35 and childless)Income groups are then defined as being in categories better off and worse offOccupation 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 3 life sentence cycle Dependent Pre-family Family LateIncome Better off Worse off Better off Worse offOccupation White no-account 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 figure does not add to 100%)Source Research Services LimitedFigu re 3 Sagacity Life Cycle GroupingsType of neighbourhood and dwelling (ACORN) is a relatively new segmentation base. Its underlying philosophy 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 brands which might be purchased. This classification analyses homes, rather than individuals, as a basis for segmentation. It is termed the ACORN system (A Classification of Residential Neighbourhoods). The source of this is the 10-yearly population census 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 Centres 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 Modern family housing, higher incomes 18C Older housing of intermediate status 17D Poor quality ol der 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 retirement areas 4U Unclassified 1(Source CACI)Figure 4 ACORN Classification systemThese ACORN classifications are further sub-divided into yet smaller 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 overlook 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 whic h there are 58 categories. The idea of mosaic comes from the notion that if a different colour 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 describe belowM1 High status retirement areas with many single pensioners 1.0% of populationM15 Lower income older terraced housing 1.5% M25 promising 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 families 3.3% M57 Hamlets and scattered 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 flaccid to reach the different social classes through their different media and shopping habits, although boundaries amongst 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 users.Brand loyalty status where customers can be divided into a number of groups according to their loyalty, or their propensity to salvation the brand again. Status categories areHard core loyals who purchase the same brand every timeSoft core loyals who have divided loyalties between two or more brands and purchase any of these on a random basisShifting loyals who are sometimes called brand switchers in that they buy one brand, and stay with it for a certain period, and then purchase another brand and stay with it for a certain period. They may then return to the accepted brandSwitchers who show no particular preference or loyalty to one particular brand, so their purchasing pattern cannot be clearly determined.Benefits desire is a segmentation base that determines the principal expectation(s) that a purchaser is seeking 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.Occasions for purchase also 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 b rands which they purchase. The advertising agency, Young 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 keen to get on at all costs. Their purchases tend to reflect the latest models 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 servic eable 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 double-u regions or by countryBenefits sought Closely related to the above, but in terms of what the product actually does for the buying company e.g. detergents for general alter or detergents that are actually used in the production processType of customer e.g. banks or insurance companies or people who purchase for public authoritiesProduct/technology e.g. fibres for the carpet industry or the clothing industry usanceer size e.g. larger customers might receive different sermon to smaller customers and this is called key account selling whereby the sales manager deals directly with major 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 customersPurchasing procedures e.g. centralized versus decentralized purchasing (which can affect the buyer/seller kindred) 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 tactical 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 earlier 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 approach has been suggested on the basis of a hierarchy from the broad to the specific (See Figure 5).DEMOGRAPHICSOPERATING VARIABLES acquire APPROACHSITUATIONALPERSONALCHARAC-TERISTICSFigure 5 A nested approach 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 purch asing practices (e.g. who actually makes buying decisions, or the decision making unit). Operating variables allow a more exact pinpointing of potential and existing customers within the final category that is demographic variables, or the broad description of the segments related to customer needs and patterns of usage.6 Effective segmentationOnce market segments have been identified, the marketers task is to assess these various market segments. This appraisal 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 overall size, projected rate of growth, actual and potential competition, nature of competitive strategies and customer needs. Companies that decide 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 ma rkets must be based on some of the factors outlined earlier, including resources, competition, segment potential and company quarrys.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 as well 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 especially 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 supposi tions.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 think 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 along 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 appoint 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 f inal 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 desired 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.Differentiated marketing where there are many marketing 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 appreciate how marketing begins to work. Having def ined 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 contribute 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. place relates to how the product is perceived in the minds of consumers and a suitable marketing mix should then be designed.