MARKET IDENTIFICATION & SEGMENTATION
Ask an experienced marketer what will determine the success
or failure of a promotion and they’ll often quote an age old
industry rule: 70% audience, 20 % offer, 10% creativity. Or, to
express it another way, by correctly analysing, and segmenting
your customer database to ensure that the right offer reaches
the right people, you have a 90% chance of success before you
even start work on the creative.
It is bad tactics to try and appeal to everyone in a marketing campaign.
(Ford Edsell). Any decision maker worth his/her salt will focus on a
specific TM when trying to sell a product. This is one of the golden
rules of M’ing.
In defining TM’s there are four crucial steps to consider:
The fourth of these steps is market positioning, which looks at how our
product is seen by the TM, in relation to competing products. MP’ing is
considered when the MM is developed.
1. Market identification:
Who is your market? Who buys your product?
Q: Who buys f’ball boots?
A: footy players, soccer players, rugby players, touch rugby players (4
markets, M Segs [maybe]). But they all buy their product at the same
place, and for the same reason. It is only seen as 4 TM’s if we can find
ways in which they are different, apart from playing footy or RU or RL or
soccer.
Where do you buy beer (at a pub, bottle shop, liquor store)?
3 TM’s.
Who buys fitness club membership? (i) Fit people (ii) wannabe fit people
Many businesses set up shop and wait for the market to come to them.
Many of these businesses fail.
Some businesses are proactive in getting people to come to them. This is
why people promote their business, and to promote many businesses
advertise. But advertising is expensive. The more we can target our
promotions, the cheaper it should be (???) and the more effective our
promotions are.
But we cannot target our promotions unless we know who to target.
2. Market segmentation Dividing the market into groups of buyers,
where each group sees the product differently.
Q: who buys footy boots?
A: footy players, soccer players, rugby players, touch rugby
players (4 markets, 4 M Segs?? But they would all buy them at
pretty much the same place).
Who buys alcohol? (at a pub, bottle shop, liquor store)?
Why would they buy at these different places?
Because they are making the purchase for different reasons.
Think of this from the perspective of the person that buys most of
his/her alcohol from one (only) of these three places.
• Pub a social place, where alcohol is the social lubricant
• Bottle shop convenience
• Liquor store specialist place; wider range & lower prices
If they see the product in different ways, there is a solid reason for
segmenting the market.
In MS, we find ways of grouping buyers (segmenting), and developing
profiles of (describing) the relevant groups or segments. We do this
because each group of buyers sees the product differently.
E.g.#1 Mcdonalds: segmented on basis of (??) age, with the
three main grps being (??) kids, young singles, and young families.
Q: Who is the main TM for Unisports?
A: Ss
Q: How/why should Ss be segmented as a market for Unisport?
A: HMSS vs “the trackies”.
3. Market Targeting The process of selecting the market segment(s) that
we intend to focus a sales effort on, and tailoring the marketing mix for
those groups.
There is (nearly) always more than one M to aim at. If we only know of
one, we have not done our MSeg properly.
There will usually be some kind of logical association between TM’s.
E.g.#1 Mcdonalds: segmented on basis of age:
children/parents
e.g.#2: Gun shops usually sell fishing gear. Why is this logical?
It is two distinct but overlapping markets.
4. Market positioning Identifying the way in which the product is
defined by the customer on important attributes of utility & package. It is
the place the product occupies in the consumer’s mind, in relation to
competing products.
eg. Myers and Target
Owen Williams
Carlton (the Silvertails); Coll (working man’s club) (Paul Keating
and John Howard).
Market segmentation (revisited)
There is no single way to segment a market. Different segmentation
variables have to be tried, to find the variables that most accurately reflect
the market’s structure (who will/will not buy).
Demographic Segmentation age, sex, family size, marital
status, income, occupation, education, religion, race, nationality….
Geographic segmentation state or regional, population density
(rural-suburban-urban), community size (under 5k, 5-10k, 10-20k....per sq
km), climate, distance from a point.
A company may decide to operate in certain geographic areas, within
range of a set point (a sales outlet), or in given climates.
eg. Snowgum; would they operate in Qld?
Psychographic segmentation
Segmentation on the basis of the market’s knowledge of, attitude to, or
opinion of a product
e.g. #1 fitness ctrs target people that know of the benefits of good
health and fitness
Psychographic segmentation largely depends on a market’s Attitudes &
opinions
Transactional or database segmentation
Generally acknowledged to be a simple and reliable form of
segmentation.
Although TS/DS can be done on an large number of criteria, particularly
in Sport/health/fitness (membership package, length of membership, or
even demographics or psychographics), it is often desirable to segment on
the basis of FRM (FRA)
Frequency – Recency – Monetary value (or amount)
Whatever type of segmentation is used, for best effect we will usually
incorporate Multivarable segmentation.
Eg. MV survey
Functional Segmentation
Segmentation on the basis of why/how people use a product. It is usually
done by co’s that have a wide variety of products.
e.g. Niketown: Denver Colorado and Miami Florida.
