The division of a market into different homogeneous groups of consumers is known as market segmentation.
Rather than offer the same marketing mix to vastly different customers, market segmentation makes it possible for firms to tailor the marketing mix for specific target markets, thus better satisfying customer needs. Not all elements of the marketing mix are necessarily changed from one segment to the next. For example, in some cases only the promotional campaigns would differ.
A market segment should be:
* measurable
* accessible by communication and distribution channels
* different in its response to a marketing mix
* durable (not changing too quickly)
* substantial enough to be profitable
A market can be segmented by various bases, and industrial markets are segmented somewhat differently from consumer markets, as described below.
Consumer Market Segmentation:
A basis for segmentation is a factor that varies among groups within a market, but that is consistent within groups. One can identify four primary bases on which to segment a consumer market:
* Geographic segmentation is based on regional variables such as region,
climate, population density, and population growth rate.
* Demographic segmentation is based on variables such as age, gender,ethnicity,
education, occupation, income, and family status.
* Psychographic segmentation is based on variables such as values, attitudes,
and lifestyle.
* Behavioral segmentation is based on variables such as usage rate and
patterns, price sensitivity, brand loyalty, and benefits sought.
The optimal bases on which to segment the market depend on the particular situation and are determined by marketing research, market trends, and managerial judgment.
Business Market Segmentation :
While many of the consumer market segmentation bases can be applied to businesses and organizations, the different nature of business markets often leads to segmentation on the following bases:
* Geographic segmentation - based on regional variables such as customer
concentration, regional industrial growth rate, and international
macroeconomic factors.
* Customer type - based on factors such as the size of the organization, its
industry, position in the value chain, etc.
* Buyer behavior - based on factors such as loyalty to suppliers, usage
patterns, and order size.
Profiling the Segments :
The identified market segments are summarized by profiles, often given a descriptive name. From these profiles, the attractiveness of each segment can be evaluated and a target market segment selected.
Custom Search
Monday, September 20, 2010
Saturday, September 18, 2010
Marketing Research
Managers need information in order to introduce products and services that create value in the mind of the customer. But the perception of value is a subjective one, and what customers value this year may be quite different from what they value next year. As such, the attributes that create value cannot simply be deduced from common knowledge. Rather, data must be collected and analyzed. The goal of marketing research is to provide the facts and direction that managers need to make their more important marketing decisions.
To maximize the benefit of marketing research, those who use it need to understand the research process and its limitations.
Marketing Research vs Market Research
These terms often are used interchangeably, but technically there is a difference.
Market research deals specifically with the gathering of information about a market's size and trends. Marketing research covers a wider range of activities. While it may involve market research, marketing research is a more general systematic process that can be applied to a variety of marketing problems.
The Value of Information
Information can be useful, but what determines its real value to the organization? In general, the value of information is determined by:
* The ability and willingness to act on the information.
* The accuracy of the information.
* The level of indecisiveness that would exist without the information.
* The amount of variation in the possible results.
* The level of risk aversion.
* The reaction of competitors to any decision improved by the information.
* The cost of the information in terms of time and money.
The Marketing Research Process
Once the need for marketing research has been established, most marketing research projects involve these steps:
1. Define the problem
2. Determine research design
3. Identify data types and sources
4. Design data collection forms and questionnaires
5. Determine sample plan and size
Problem Definition
The decision problem faced by management must be translated into a market research problem in the form of questions that define the information that is required to make the decision and how this information can be obtained. Thus, the decision problem is translated into a research problem. For example, a decision problem may be whether to launch a new product. The corresponding research problem might be to assess whether the market would accept the new product.
The objective of the research should be defined clearly. To ensure that the true decision problem is addressed, it is useful for the researcher to outline possible scenarios of the research results and then for the decision maker to formulate plans of action under each scenario. The use of such scenarios can ensure that the purpose of the research is agreed upon before it commences.
Research Design
Marketing research can classified in one of three categories:
* Exploratory research
* Descriptive research
* Causal research
These classifications are made according to the objective of the research. In some cases the research will fall into one of these categories, but in other cases different phases of the same research project will fall into different categories.
Exploratory research has the goal of formulating problems more precisely, clarifying concepts, gathering explanations, gaining insight, eliminating impractical ideas, and forming hypotheses. Exploratory research can be performed using a literature search, surveying certain people about their experiences, focus groups, and case studies. When surveying people, exploratory research studies would not try to acquire a representative sample, but rather, seek to interview those who are knowledgeable and who might be able to provide insight concerning the relationship among variables. Case studies can include contrasting situations or benchmarking against an organization known for its excellence. Exploratory research may develop hypotheses, but it does not seek to test them. Exploratory research is characterized by its flexibility.
Descriptive research is more rigid than exploratory research and seeks to describe users of a product, determine the proportion of the population that uses a product, or predict future demand for a product. As opposed to exploratory research, descriptive research should define questions, people surveyed, and the method of analysis prior to beginning data collection. In other words, the who, what, where, when, why, and how aspects of the research should be defined. Such preparation allows one the opportunity to make any required changes before the costly process of data collection has begun.
To maximize the benefit of marketing research, those who use it need to understand the research process and its limitations.
Marketing Research vs Market Research
These terms often are used interchangeably, but technically there is a difference.
Market research deals specifically with the gathering of information about a market's size and trends. Marketing research covers a wider range of activities. While it may involve market research, marketing research is a more general systematic process that can be applied to a variety of marketing problems.
The Value of Information
Information can be useful, but what determines its real value to the organization? In general, the value of information is determined by:
* The ability and willingness to act on the information.
* The accuracy of the information.
* The level of indecisiveness that would exist without the information.
* The amount of variation in the possible results.
* The level of risk aversion.
* The reaction of competitors to any decision improved by the information.
* The cost of the information in terms of time and money.
The Marketing Research Process
Once the need for marketing research has been established, most marketing research projects involve these steps:
1. Define the problem
2. Determine research design
3. Identify data types and sources
4. Design data collection forms and questionnaires
5. Determine sample plan and size
Problem Definition
The decision problem faced by management must be translated into a market research problem in the form of questions that define the information that is required to make the decision and how this information can be obtained. Thus, the decision problem is translated into a research problem. For example, a decision problem may be whether to launch a new product. The corresponding research problem might be to assess whether the market would accept the new product.
The objective of the research should be defined clearly. To ensure that the true decision problem is addressed, it is useful for the researcher to outline possible scenarios of the research results and then for the decision maker to formulate plans of action under each scenario. The use of such scenarios can ensure that the purpose of the research is agreed upon before it commences.
Research Design
Marketing research can classified in one of three categories:
* Exploratory research
* Descriptive research
* Causal research
These classifications are made according to the objective of the research. In some cases the research will fall into one of these categories, but in other cases different phases of the same research project will fall into different categories.
Exploratory research has the goal of formulating problems more precisely, clarifying concepts, gathering explanations, gaining insight, eliminating impractical ideas, and forming hypotheses. Exploratory research can be performed using a literature search, surveying certain people about their experiences, focus groups, and case studies. When surveying people, exploratory research studies would not try to acquire a representative sample, but rather, seek to interview those who are knowledgeable and who might be able to provide insight concerning the relationship among variables. Case studies can include contrasting situations or benchmarking against an organization known for its excellence. Exploratory research may develop hypotheses, but it does not seek to test them. Exploratory research is characterized by its flexibility.
Descriptive research is more rigid than exploratory research and seeks to describe users of a product, determine the proportion of the population that uses a product, or predict future demand for a product. As opposed to exploratory research, descriptive research should define questions, people surveyed, and the method of analysis prior to beginning data collection. In other words, the who, what, where, when, why, and how aspects of the research should be defined. Such preparation allows one the opportunity to make any required changes before the costly process of data collection has begun.
Tuesday, September 14, 2010
Successful Marketing With Promotional Products
Successful marketing with promotional products is fairly simple to do. It takes a little forethought and planning, and some advertising, to make promotions sparkle, but the results are well worth the extra effort and expense.
Most companies plan out their marketing budget in advance, and that is a wonderful strategy. It allows the company to plan events over the yearly calendar, and allocate enough of the budget per event. Planning ahead also prevents problems like having too many events and not enough advertising budget to properly work all the events. Once the plan for events is on paper, the marketing department can begin to work on themes and details of the event planning. Thinking ahead lets the planner strategize creatively. Events can be related to each other for maximum impact, and promotional products to be used at each event can also be planned out, and tied in with each other, to increase impact. By using a theme for events, and sequential promotional product give aways, the target audience can be increased. The accompanying advertising must feature the promotional product items, and using photos in addition to text is helpful.
All this work and pre-planning should result in increased traffic, which is the goal of any event. You want the most people to attend, and also to remember your company and the event you sponsored or supported. The imprinted promotional products will do this job for you. Imprinting is one of the greatest benefits found in promotional items. There are hundreds of thousands of products to choose from, and it is easy to select those that go together if you want to do sequential promotions.
Your product supplier is well able to advise you with product selection and imprint designs. Use company or product logos, text messages, images, or event information on the products. Use color, readable text fonts, and size to best advantage, without looking tacky. There is a complete range of prices, and with larger quantities, there are discounts. It never hurts to order some extras for around the office, for employees, suppliers, or to give to new clients. For special corporate gifts, consider some of the better gifts such as luggage, glassware, golf umbrellas, or laptop bags.
When selecting promotional items for use at large events, conventions, or meetings, look for usefulness and durability. Find items that are affordable, but popular, for best advertising reach and message longevity.
Most companies plan out their marketing budget in advance, and that is a wonderful strategy. It allows the company to plan events over the yearly calendar, and allocate enough of the budget per event. Planning ahead also prevents problems like having too many events and not enough advertising budget to properly work all the events. Once the plan for events is on paper, the marketing department can begin to work on themes and details of the event planning. Thinking ahead lets the planner strategize creatively. Events can be related to each other for maximum impact, and promotional products to be used at each event can also be planned out, and tied in with each other, to increase impact. By using a theme for events, and sequential promotional product give aways, the target audience can be increased. The accompanying advertising must feature the promotional product items, and using photos in addition to text is helpful.
All this work and pre-planning should result in increased traffic, which is the goal of any event. You want the most people to attend, and also to remember your company and the event you sponsored or supported. The imprinted promotional products will do this job for you. Imprinting is one of the greatest benefits found in promotional items. There are hundreds of thousands of products to choose from, and it is easy to select those that go together if you want to do sequential promotions.
Your product supplier is well able to advise you with product selection and imprint designs. Use company or product logos, text messages, images, or event information on the products. Use color, readable text fonts, and size to best advantage, without looking tacky. There is a complete range of prices, and with larger quantities, there are discounts. It never hurts to order some extras for around the office, for employees, suppliers, or to give to new clients. For special corporate gifts, consider some of the better gifts such as luggage, glassware, golf umbrellas, or laptop bags.
When selecting promotional items for use at large events, conventions, or meetings, look for usefulness and durability. Find items that are affordable, but popular, for best advertising reach and message longevity.
Monday, August 23, 2010
Marketing Environment
Introduction:
An organisation’s success is influenced by factors operating in it’s internal and external environment; an organisation can increase it’s success by adopting strategies which manipulate these factors to it’s advantage. A successful organisation will not only understand existing factors but also forecast change, so that it can take advantage of change within the environments in which it operates.
PEST & Micro environmental Factors:
The following type of forces influence an organisation’s operating environment:
• Pest Factors – These are external forces which the organisation does not have
direct control over these factors. PEST is an acronym and each letter represents a
type of factor (Political, Economical Social and Technological).
• Micro environmental factors – These are internal factors, which the organisation
can control.
PEST & PESTLE analysis:
A PEST analysis is used to identify the external forces affecting an organisation.This is a simple analysis of an organisation’s Political, Economical, Social and Technological environment. A PEST analysis incorporating legal and environmental factors is called a PESTLE analysis.
Political:
The first element of a PEST analysis is a study of political factors. Political factors influence organisations in many ways. Political factors can create advantages and opportunities for organisations. Conversely they can place obligations and duties on organisations. Political factors include the following types of instrument:
- Legislation such as the minimum wage or anti discrimination laws.
- Voluntary codes and practices
- Market regulations
- Trade agreements, tariffs or restrictions
- Tax levies and tax breaks
- Type of government regime eg communist, democratic, dictatorship
Non conformance with legislative obligations can lead to sanctions such as fines, adverse publicity and imprisonment. Ineffective voluntary codes and practices will often lead to governments introducing legislation to regulate the activities covered by the codes and practices.
Economical:
The second element of a PEST analysis involves a study of economic factors.
All businesses are affected by national and global economic factors. National and global interest rate and fiscal policy will be set around economic conditions. The climate of the economy dictates how consumers, suppliers and other organisational stakeholders such as suppliers and creditors behave within society.
An economy undergoing recession will have high unemployment, low spending power and low stakeholder confidence. Conversely a booming or growing economy will have low unemployment, high spending power and high stakeholder confidence.
A successful organisation will respond to economic conditions and stakeholder behaviour. Furthermore organisations will need to review the impact economic conditions are having on their competitors and respond accordingly.
In this global business world organisations are affected by economies throughout the world and not just the countries in which they are based or operate from. For example: a global credit crunch originating in the USA contributed towards the credit crunch in the UK in 2007/08.
Cheaper labour in developing countries affects the competitiveness of products from developed countries. An increase in interest rates in the USA will affect the share price of UK stocks or adverse weather conditions in India may affect the price of tea bought in an English café.
A truly global player has to be aware of economic conditions across all borders and needs to ensure that it employs strategies that protect and promote its business through economic conditions throughout the world.
Social:
The third aspect of PEST focuses its attention on forces within society such as family, friends, colleagues, neighbours and the media. Social forces affect our attitudes, interest s and opinions. These forces shape who we are as people, the way we behave and ultimately what we purchase. For example within the UK peoples attitudes are changing towards their diet and health. As a result the UK is seeing an increase in the number of people joining fitness clubs and a massive growth for the demand of organic food. Products such as Wii Fit attempt to deal with society’s concern, about children’s lack of exercise.
Population changes also have a direct impact on organisations. Changes in the structure of a population will affect the supply and demand of goods and services within an economy. Falling birth rates will result in decreased demand and greater competition as the number of consumers fall. Conversely an increase in the global population and world food shortage predictions are currently leading to calls for greater investment in food production. Due to food shortages African countries such as Uganda are now reconsidering their rejection of genetically modified foods.
In summary organisations must be able to offer products and services that aim to complement and benefit people’s lifestyle and behaviour. If organisations do not respond to changes in society they will lose market share and demand for their product or service.
Technological:
Unsurprisingly the fourth element of PEST is technology, as you are probably aware technological advances have greatly changed the manner in which businesses operate.
Organisations use technology in many ways, they have
1. Technology infrastructure such as the internet and other information exchange
systems including telephone
2. Technology systems incorporating a multitude of software which help them manage
their business.
3. Technology hardware such as mobile phones, Blackberrys, laptops, desktops,
Bluetooth devices, photocopiers and fax machines which transmit and record
information.
Technology has created a society which expects instant results. This technological revolution has increased the rate at which information is exchanged between stakeholders. A faster exchange of information can benefit businesses as they are able to react quickly to changes within their operating environment.
However an ability to react quickly also creates extra pressure as businesses are expected to deliver on their promises within ever decreasing timescales..
For example the Internet is having a profound impact on the marketing mix strategy of organisations. Consumers can now shop 24 hours a day from their homes, work, Internet café’s and via 3G phones and 3G cards. Some employees have instant access to e-mails through Blackberrys but this can be a double edged sword, as studies have shown that this access can cause work to encroach on their personal time outside work.
The pace of technological change is so fast that the average life of a computer chip is approximately 6 months. Technology is utilised by all age groups, children are exposed to technology from birth and a new generation of technology savvy pensioners known as “silver surfers” have emerged. Technology will continue to evolve and impact on consumer habits and expectations, organisations that ignore this fact face extinction.
PESTLE:
A PEST analysis is sometimes expanded to incorporate legal and environmental factors; this is known as a pestle analysis. There are many statutes books containing company law as almost every aspect of an organisation’s operation is controlled through legislation from treatment of employees through to health and safety. Legal factors are important as organisations have to work within legislative frameworks. Legislation can hinder business by placing onerous obligations on organisations. On the other hand legislation can create market conditions that benefit business.
An organisation’s success is influenced by factors operating in it’s internal and external environment; an organisation can increase it’s success by adopting strategies which manipulate these factors to it’s advantage. A successful organisation will not only understand existing factors but also forecast change, so that it can take advantage of change within the environments in which it operates.
PEST & Micro environmental Factors:
The following type of forces influence an organisation’s operating environment:
• Pest Factors – These are external forces which the organisation does not have
direct control over these factors. PEST is an acronym and each letter represents a
type of factor (Political, Economical Social and Technological).
• Micro environmental factors – These are internal factors, which the organisation
can control.
PEST & PESTLE analysis:
A PEST analysis is used to identify the external forces affecting an organisation.This is a simple analysis of an organisation’s Political, Economical, Social and Technological environment. A PEST analysis incorporating legal and environmental factors is called a PESTLE analysis.
Political:
The first element of a PEST analysis is a study of political factors. Political factors influence organisations in many ways. Political factors can create advantages and opportunities for organisations. Conversely they can place obligations and duties on organisations. Political factors include the following types of instrument:
- Legislation such as the minimum wage or anti discrimination laws.
- Voluntary codes and practices
- Market regulations
- Trade agreements, tariffs or restrictions
- Tax levies and tax breaks
- Type of government regime eg communist, democratic, dictatorship
Non conformance with legislative obligations can lead to sanctions such as fines, adverse publicity and imprisonment. Ineffective voluntary codes and practices will often lead to governments introducing legislation to regulate the activities covered by the codes and practices.
Economical:
The second element of a PEST analysis involves a study of economic factors.
All businesses are affected by national and global economic factors. National and global interest rate and fiscal policy will be set around economic conditions. The climate of the economy dictates how consumers, suppliers and other organisational stakeholders such as suppliers and creditors behave within society.
An economy undergoing recession will have high unemployment, low spending power and low stakeholder confidence. Conversely a booming or growing economy will have low unemployment, high spending power and high stakeholder confidence.
A successful organisation will respond to economic conditions and stakeholder behaviour. Furthermore organisations will need to review the impact economic conditions are having on their competitors and respond accordingly.
In this global business world organisations are affected by economies throughout the world and not just the countries in which they are based or operate from. For example: a global credit crunch originating in the USA contributed towards the credit crunch in the UK in 2007/08.
Cheaper labour in developing countries affects the competitiveness of products from developed countries. An increase in interest rates in the USA will affect the share price of UK stocks or adverse weather conditions in India may affect the price of tea bought in an English café.
A truly global player has to be aware of economic conditions across all borders and needs to ensure that it employs strategies that protect and promote its business through economic conditions throughout the world.
Social:
The third aspect of PEST focuses its attention on forces within society such as family, friends, colleagues, neighbours and the media. Social forces affect our attitudes, interest s and opinions. These forces shape who we are as people, the way we behave and ultimately what we purchase. For example within the UK peoples attitudes are changing towards their diet and health. As a result the UK is seeing an increase in the number of people joining fitness clubs and a massive growth for the demand of organic food. Products such as Wii Fit attempt to deal with society’s concern, about children’s lack of exercise.
Population changes also have a direct impact on organisations. Changes in the structure of a population will affect the supply and demand of goods and services within an economy. Falling birth rates will result in decreased demand and greater competition as the number of consumers fall. Conversely an increase in the global population and world food shortage predictions are currently leading to calls for greater investment in food production. Due to food shortages African countries such as Uganda are now reconsidering their rejection of genetically modified foods.
In summary organisations must be able to offer products and services that aim to complement and benefit people’s lifestyle and behaviour. If organisations do not respond to changes in society they will lose market share and demand for their product or service.
Technological:
Unsurprisingly the fourth element of PEST is technology, as you are probably aware technological advances have greatly changed the manner in which businesses operate.
Organisations use technology in many ways, they have
1. Technology infrastructure such as the internet and other information exchange
systems including telephone
2. Technology systems incorporating a multitude of software which help them manage
their business.
3. Technology hardware such as mobile phones, Blackberrys, laptops, desktops,
Bluetooth devices, photocopiers and fax machines which transmit and record
information.
Technology has created a society which expects instant results. This technological revolution has increased the rate at which information is exchanged between stakeholders. A faster exchange of information can benefit businesses as they are able to react quickly to changes within their operating environment.
However an ability to react quickly also creates extra pressure as businesses are expected to deliver on their promises within ever decreasing timescales..
For example the Internet is having a profound impact on the marketing mix strategy of organisations. Consumers can now shop 24 hours a day from their homes, work, Internet café’s and via 3G phones and 3G cards. Some employees have instant access to e-mails through Blackberrys but this can be a double edged sword, as studies have shown that this access can cause work to encroach on their personal time outside work.
The pace of technological change is so fast that the average life of a computer chip is approximately 6 months. Technology is utilised by all age groups, children are exposed to technology from birth and a new generation of technology savvy pensioners known as “silver surfers” have emerged. Technology will continue to evolve and impact on consumer habits and expectations, organisations that ignore this fact face extinction.
PESTLE:
A PEST analysis is sometimes expanded to incorporate legal and environmental factors; this is known as a pestle analysis. There are many statutes books containing company law as almost every aspect of an organisation’s operation is controlled through legislation from treatment of employees through to health and safety. Legal factors are important as organisations have to work within legislative frameworks. Legislation can hinder business by placing onerous obligations on organisations. On the other hand legislation can create market conditions that benefit business.
What is Marketing
The term marketing has changed and evolved over a period of time, today marketing is based around providing continual benefits to the customer, these benefits will be provided and a transactional exchange will take place.
The Chartered Institute of Marketing define marketing as 'The management process responsible for identifying , anticipating and satisfying customer requirements profitably'
If we look at this definition in more detail Marketing is a management responsibility and should not be solely left to junior members of staff. Marketing requires co-ordination, planning, implementation of campaigns and a competent manager with the appropriate skills to ensure success.
Marketing objectives, goals and targets have to be monitored and met, competitor strategies analysed, anticipated and exceeded. Through effective use of market and marketing research an organisation should be able to identify the needs and wants of the customer and try to delivers benefits that will enhance or add to the customers lifestyle, while at the same time ensuring that the satisfaction of these needs results in a healthy turnover for the organisation.
Philip Kotler defines marketing as 'satisfying needs and wants through an exchange process'
Within this exchange transaction customers will only exchange what they value (money) if they feel that their needs are being fully satisfied, clearly the greater the benefit provided the higher transactional value an organisation can charge.
The Chartered Institute of Marketing define marketing as 'The management process responsible for identifying , anticipating and satisfying customer requirements profitably'
If we look at this definition in more detail Marketing is a management responsibility and should not be solely left to junior members of staff. Marketing requires co-ordination, planning, implementation of campaigns and a competent manager with the appropriate skills to ensure success.
Marketing objectives, goals and targets have to be monitored and met, competitor strategies analysed, anticipated and exceeded. Through effective use of market and marketing research an organisation should be able to identify the needs and wants of the customer and try to delivers benefits that will enhance or add to the customers lifestyle, while at the same time ensuring that the satisfaction of these needs results in a healthy turnover for the organisation.
Philip Kotler defines marketing as 'satisfying needs and wants through an exchange process'
Within this exchange transaction customers will only exchange what they value (money) if they feel that their needs are being fully satisfied, clearly the greater the benefit provided the higher transactional value an organisation can charge.
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