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Terms in this set (50)
What is a market?
A group of customers with heterogeneous needs and wants
What are the 3 characteristics of markets
1. Common wants, needs and demands 2. Unique needs, wants and demands 3. Market contains subgroups who share common or similar needs.
What does target marketing suggest
That a different approach be taken for each type of characteristic in the market.
If all potential buyers are similar
An undifferentiated approach can be taken, mass marketing for production orientated organisations
If all the buyers have unique needs,
then the organisation will be more successful if it differentiates its products to match individual needs. Target marketing for market orientated organisations.
What is target marketing
An approach to marketing based on identifying understanding and developing an offering for those segments within the total market that the organisation can best serve.
What 3 premises is target marketing based upon?
Individual buyer or groups of buyer can be identified.
Sellers understand the needs of buyers.
Sellers will seek to shape their offer to meet the needs of target buyers.
What are the 3 marketing strategies?
Mass Marketing, One to One marketing and target marketing based on segments ( differentiated targeting strategy).
Buyers have common needs and wants. A single product will meet most people needs with an undifferentiated approach. Producing large volumes at a lower cost per unit makes it possible to sell at a low price and capture a large market hence ensuring high levels of profit.
One to One Marketing
Provide a unique and customised offering to meet individual customer needs. Often results in higher unit costs and a restricted market. Forms basis for a focused / niche strategy and is usually used by small business'
Differentiated Targeting Stratergy
Develops a different marketing mix for each target market segment. Entails higher costs and requires a higher RRP and higher market share with strong customer loyalty.
Marketing efforts are concentrated on offering a single product range to a number of market segments
Marketing efforts are focused on meeting a wide range of needs within a single market segment.
Marketing efforts are concentrated on offering a single product to a single market segment
What are the 5 conditions for specialisation approaches to work?
The market is characterised by a wide range of needs and product preferences
Clear market segments or product categories
The market is clearly divisible into segments so that each could be evaluated compared.
The individual market segments, or product categories are sufficiently large to represent profitable sales volume
The organization is able to reach individual market segments with particular marketing offer mix.
What are the 3 stages for target marketing process?
Segmentation, targeting and positioning
What are segmentation variables
Characteristics that buyers have in common and that might be closely related to their purchasing behaviour.
What are the 2 key factors for effective market segmentation?
1. Easy to measure and readily available
2. Linked closely to the purchase of the product in question. e.g. location maybe a variable for purchase of snow sports equipment.
What are the 5 variables for segmenting consumer markets?
Geographic, Demographic, Geo-demographic, psychographic and behavioural.
Market segmentation based on variables related to geography.
e.g. climate, region and terrain.
Quantifiable social characteristics of a population e.g. age, education and income.
Quantifiable social characteristics of a population
Market segmentation based on the psychographic variables of lifestyle, motives and personality attributes.
Not who you are but how you live your life.
Market segmentation based on actual purchase and/or consumption behaviours. e.g. price sensitivity, volume usage, brand loyalty and benefit expectations.
What is apart of an effective segmentation criteria?
Measurability, accessibility, practicability and sustainability.
What is a market segment profile?
A description of the typical potential customer in the market segment; a description of the common variables shared by members of market segments and how the variables differ between market segments
What is market targeting
The selection of target markets resulting from an evaluation of identified market segments.
What does the choice of an appropriate targeting strategy depend on?
Understanding the size and attractiveness of market segments and the organisations ability to compete for the chose market segments.
What does the evaluation of potential market segments involve?
A detailed and rigorous analysis of sales potential. The competitive situation and cost structures.
What is market potential:
The total sales of a product category that all organisations in an industry are expected to sell in a specified period of time, assuming a specific level of marketing activity.
What is sales revenue:
Total volume of sales multiplied by the average selling price.
What is market share:
The proportion of the total market held by the organisation.
The process for selecting target markets is:
Identify a range of potential target market segments, deciding which and how many segments to target and then estimating market potential in each target market segment.
What is competitive situation?
Sales potential must be conducted in the context of thorough assessment of the organisations to assess their competitive situation. Analyses the competitors in the market and sales estimates.
What is cost structure?
Involves costs involved in creating, communicating and delivering an offering to meet the needs of each potential market.
Cost directly affects:
Price, the competitiveness, profitability.
What is positioning:
The way in which target market perceive an organisation, its products and its brands in relation to competing offerings.
What 2 steps does positioning involve:
Determine the position of the company wishes to occupy in the mind of the buyers.
Develop a marketing mix to reflect the expectations of the target market segment.
Why do organisations pursue positioning:
to manage how it is perceived, how brands are seen ( distinguishing product attributes) and how the market distinguishes its offering from those of closely competitive brands.
Why is positioning developed?
For the long term and should not be change frequently unless absolutely necessary.
Common technique for determining positioning
Construction of a perceptual map - Usually based on two dimensions showing how each competing brand relates to the other
What encompasses the 2 step process:
Determine the current positioning of the brand; and identify the attributes consumers use to distinguish between competing products all brands ('salient' product attributes)
2. Devise some concept of the ideal position - Adjust on the grounds of practicality - Develop a plan to move to the desired position
What should the marketing mix for each segment include:
Be consistent with desired positioning, be internally consistent and be sustainable in the long term.
Define market segmentation
Subgroups within the total market that are relatively similar in regards to certain characteristics.
When choosing target markets an organisation
- It's own resources- does it have enough to cover the entire market
- Market demand - do all customers look for the same attributes and benefits in the product?
Competition- have competitors already segmented the market or are they selling to all buyers as a group?
Differentiated Target Strategy
A marketing approach that involves developing a different marketing mix for each market segment
In order to change from a mass marketing approach to a target marketing approach
7.Markets made up of buyers with diverse needs are said to be:
10.Which of the following concepts forms the basis of target marketing?
14.Product or market specialisation approaches will only be beneficial marketing strategies for an organisation to pursue if:
clear market segments or product categories exist or can potentially exist in the market.
the market is characterised by a wide range of needs and product preferences.
individual market segments or product categories are sufficiently large to represent an opportunity for the organisation to achieve profitable sales volume.
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