SECTION 5

MARKET SEGMENTATION AND TARGET

www.regenesys.co.za INTRODUCTION

• Section 5 looks at four key decision areas of marketing – segmentation; targeting; differentiation and; .

• Central focus of marketing: to create and to build profitable customer relationships.

• Starting point: a focus on the (individual) consumer; their needs and wants.

www.regenesys.co.za STEPS IN DESIGNING A CUSTOMER –DRIVEN • Marketers cannot be “all things to all people”...

• Fig. 11 poses two profound questions:

1. “Which will we serve?” 2. “How will we serve them best?”

• The pivotal goal here: to “create more value for our customers than competitors can” (Kotler and Armstrong, 2014: 215)

www.regenesys.co.za STEP 1: MARKET SEGMENTATION

• It involves “dividing a large, heterogeneous market into smaller segments of buyers with distinct needs, characteristics, or behaviours that might require separate marketing strategies or mixes” • It is the dividing of a large market into smaller manageable and profitable segments.

www.regenesys.co.za STEP 2: TARGETING

• It consist of “evaluating each market segment’s attractiveness and selecting one or more market segments to enter” (Kotler and Armstrong, 2014:215) • It is a process of approaching selected attractive market segments with relevant .

www.regenesys.co.za MARKET TARGETING CONT….

The two main questions to ask are: • Which consumers will we serve? This question is answered in two parts namely: 1. How many segments and which segments to serve? 2. How marketers evaluate and select target segments.

www.regenesys.co.za EVALUATING MARKET SEGMENTS

Three main factors that are focused on: 1. Size and growth characteristics. However the bigger the market does not mean the more profitable the market. Smaller companies may target smaller markets which are unattractive but which maybe profitable to them. 2. Segment’s long-term attractiveness. Segment is less attractive if it has powerful suppliers, actual or potential substitute products, relative power of buyers. www.regenesys.co.za EVALUATING MARKET SEGMENTS CONT..

3. Own objective and resources • The segment should align with the company’s objectives and resources.

www.regenesys.co.za TARGETING STRATEGIES

Levels of Market Targeting

www.regenesys.co.za STEP 3: DIFFERENTIATION

• It involves “differentiating the firm’s market offerings to create superior customer value” (ibid)

www.regenesys.co.za BASES FOR MARKET SEGMENTATION

Segmentation base Examples Geographic Nations, regions, states or provinces, cities, Demographic Age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, generation. Psychographic Social class, lifestyle, personality Behavioural Occasions, benefits sought, user status, usage rate, loyalty status.

www.regenesys.co.za REQUIREMENTS FOR EFFECTIVE SEGMENTATION Segments must be: Measurable Accessible Substantial Differentiable Actionable

www.regenesys.co.za STEPS IN MARKET SEGMENTATION

Choose Select Select List needs segmentation category descriptors bases

Profile Identify Select target segment dimensions market

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