CHAPTER 4: IDENTIFYING CUSTOMERS

GROUP 2
4.1. Target marketing - Meaning, Basis and its Need
1.1/ What is Target Marketing?
 it refers to a concept in marketing which helps the marketers to divide the market
into small units comprising of like-minded people. Such segmentation helps the
marketers to design specific strategies and techniques to promote a product
amongst its target market.
1.2/ Basis of Target Marketing
 Age
 Gender
 Interests
 Geographic location
 Need
 Occupation

1.3/ Why target marketing? (Need of Target Marketing)

- Organizations can use similar kind of strategies to promote their products within a
target market.
- They can adopt a more focussed approach in case of target marketing. They know
their customers well and thus can reach out to their target audience in the most
effective way.
1.4/ How to create Target Market
The organization must first decide who all individuals would fit into a particular
segment. A male and a female can’t be kept in the same segment. The first and the
foremost step is to decide on the target market.
The next step is to identify need and preference of the target market. It is essential to
find out what the target market expects from the product.
Once the target market is decided, organizations can decide on the various
strategies helpful to promote their product.

4.2. SEGMENTATION 
There are two steps in the market segmentation phase: identifying variables that can be
used to define meaningful market segments; and profiling the market segments so they
can be assessed in the second stage of the target marketing process. 
Identify segmentation variables 
1. Segmenting consumer markets
 Geographic segmentation is market segmentation based on geographic
variables. Geographic variables are reliable predictors of customer needs and
purchasing behaviours for a wide range of products. Useful geographic
variables include: 
• climate
• local population 
• region
• topography 
• urban, suburban and rural location.
  Demographic segmentation is market segmentation based on
demographic variables, which are related to the quantifiable social
characteristics of populations
  Psychographic segmentation is based on differences in: 
 • psychological traits (personality attributes and motives) 
• key demographics 
• lifestyles (the expression of the two former categories).
 Behavioural segmentation is based on actual purchase and/or consumption
behaviours, typically towards particular products
    Behavioural variables include: 
• benefit expectations 
• brand loyalty 
• occasion 
• price sensitivity
• volume usage.     
2.  Segmenting business markets   
  Profile market segments
A multivariate market segment profile within the overall athletic shoe market could be
built as follows: 
• segment initially on demographic grounds (e.g. gender and people aged 7 to 12
years, 13 to 18 years, 19 to 30 years, 31 to 50 years, and over 50) 
• then segment on usage variables (e.g. casual walkers, joggers, cross-trainers,
serious amateur athletes, full-time elite athletes) 
• as well as benefits (e.g. active, comfortable, supportive, durable, fashionable,
performance enhancing)

4.3. Evaluation of potential market segments.

The evaluation of potential market segments involves detailed and rigorous analysis
of sales potential, the competitive situation and cost structures.
1. Sales potential
- Company sales potential is an estimate of the maximum sales revenue and
market share that an organisation can expect to achieve for a specific
product. Several factors influence the organisation’s ability to achieve its sales
potential in a given market segment:
 the market potential (i.e. the maximum possible sales in the total market for a
product category)
 the organisation’s ‘served market’ (i.e. those segments of the market for which
the organization chooses to compete)
 the level of industry marketing activity, which directly influences the market
potential
 the effectiveness of an organisation’s promotional spending, which depends
on the organisation’s ‘share of voice’ (i.e. the organisation’s promotional
spending relative to total industry promotional spending) and the use of
effective ‘tactical’ promotional spending designed to maximise impact.
2. Competitive situation
- Any estimate of sales potential must be conducted in the context of a
thorough assessment of the organisation’s competitive situation — the
activities of competitors already in the marketplace and their relative market
shares.
- It is important to evaluate the level of competitive activity and the strengths
and weaknesses of individual competitors before estimating the organisation’s
likely market share
3. Cost structure
- The organisation’s cost structure includes production costs, administrative
overheads and all associated promotion and distribution costs.
 - When considering an organisation’s cost structure, it is important to
distinguish between fixed and variable costs. Fixed costs are constant,
regardless of production and sales volumes. If they are high they serve as an
‘entry barrier’, and an organisation may choose not to enter a market even
though revenue and volume expectations may be attractive.

4.4. Explain the concept of market positioning.

Market positioning is important in describing how target markets perceive an
organization's offer relative to competitor's offers. Specifically, it is how potential
customers differentiate about the attributes and perceived the organization, its
products and brands compared to competitors when they are choosing and making
decisions among alternatives available. Positioning allows buyers to take shortcuts
and arrive at decisions without a complicated or confusing process. Organizations
may choose to implement a positioning to manage their overall company, brand, or
product differentiation from closely competed brands. The key questions for
positioning are whether the customer experience is in line with the promise and
whether the organization's performance corresponds to the organization's promises
and market positioning. A positioning strategy consists of 2 main steps: positioning
each segment through current position analysis, competitive positioning and
repositioning; and define the marketing mix for each segment. The marketing mix
developed for each target market segment must be consistent with the desired
location, internally consistent, and sustainable over the long term.