SESSION 3 & 4

UNDERSTANDING THE CUSTOMER AND THE CONSUMER

SESSION OUTLINE:

Although many products and services are said to be “mass-market”, but in

actuality, no company markets its products and services to the whole general
public. Therefore the target market, (the people who are most likely to be
interested in your products) must be identified. Through research and then by
using the process of segmentation, the company will select its target market. This
chapter will discuss the research process and the means of segmentation which
will then lead to targeting and positioning

OBJECTIVES:

 To define target market

 To define target audience
 To define segmentation
 To understand the process of segmentation
 To understand the use of research in identifying target market
 To understand the role of positioning and branding

Establishing the market-place

As it is virtually impossible to get everyone to buy your products or services.
Therefore the company must identify the sector of the market that is most likely
to buy or use their offerings. The steps are:

1. Establish a sector where there is a demand for which customers are

prepared to pay
2. Develop the product/service
3. Cost effective production
4. Distribution to wholesakers and retailers
5. Use promotion tehniques such as advertisng the inform the market place
about the product/service

The target market

The marketing department does extensive market research to discover how the
Market place is segmented. It can then study the segments to find the needs and
wants of the individuals within specific segments. The members of the selected
segment is then determined as the target market. In other words the target
market are the people who are most potential to buy/consume the company’s
product/ services.
The target audience

The target audience are members of the target market to whom promotion and
advertising messages will be addressed. Target audience can be broken down
into smaller more manageable markets that have different wants and lifestyles.
One of the biggest and most important target audiences are housewives,
because of the major decisions that they make on household purchases, but
even this segment can be broken down into smaller categories such as urban
housewives, working housewives and housewives with children.

Further research will enable the marketing department to find what publications
the members of the target audience read, the radio stations they listen to and the
television programs they watch, as well as the social media they attend to.
Similar research is often done by the advertising agency as it is vital to develop a
message that appeals to the target audience and to ensure that the commercials
and advertisements are seen and heard by the right audience.

Segmentation

A segment must have the following qualities:

1. It must have specific characteristics that can be defined and measured

2. It should be accessible for distribution chain and for advertising and
promotion messages
3. It must sufficient in size or volume for the company to gain profit

Once isolated, the segment can be further studied, to establish

1. Its precice needs, wants, demands and aspirations

2. The income s and types of job of the people within the segment
3. Its location
4. Its potential in terms of sales and profits
5. Effective means of communicating so that the right media and messges
can be used
6. Efficient budget for promotion and advertising

The benefits of segmentation to the compay

1. Cost are kept low as they targeted to profitable marketing

2. Production are more efficient since as can concentrate on specific items
 3. Minimized wasted stocks
4. More profits

Means of segmentation

Demographics

Classifying target market/target audience on measurable factors:

 sex
 age
 social class
 family life cycle
 education
 employment
 occupation
 marital status
Etc.

Geo-demographics
Geo-demographic is classifying the target market/audience into location of
residences such as, urban, suburbs, rural, etc.

Social grades

This classification is based on social class which may use annual income or
monthly expenditure as means of classification.

Family life cycle

The family life cycle is used to segment the market based on life stages:

 single
 newly married
 full nest ( have children)
 empty nest ( no more dependents)

Etc.
Lifestyle

Lifestyle or the way people live as affected by numbers of factors such as

 daily activities ( hobbies, work activities, social and family activities )

 interests (fashion, music, etc)
 opinions ( attitudes to political, social, economic, cultural issues, etc)

Behavioral types

Behavioral types are further variation of lifestyle. It is based on social

expectation, goals and beliefs.

Market Research

To determine the different segments and target group, process called market
research is conducted.
Market research will identify:

 market size
 market potentials
 market location
 target market attitudes concerning a particular product

Marketing Research

Marketing research is conducted to provide information that will assist the

process of marketing, for example in identifying which media is effective in
reaching the target audience, which advertising message is credible, etc.

Research Terminologies

Qualitative Research

Based on the work “quality”, this type of research is looking for qualitative
information in the market place. The qualitative information could refer to
consumer needs and wants, their behavior in using a certain products. These
information are helpful to advertisers and advertising agencies in establishing
marketing communication strategies to influence the target audience to use the
products. Another name for this research is attitudinal research, as it considers
the attitudes of potential customers and consumers, such as beliefs and values,
as these will influence behavior in the market place.
Attitudes, values and beliefs play an important part in people’s motives, therefore
it is vital that they are examined and tested. The motives that can be investigated
include not only physical needs (such as food, drink, shelter and warmth) but
also psychological wants (e.g. .security, status and esteem). As Maslow’s
Hierarchy of Needs (Figure 3.1) suggests, customers move upwards from
satisfying their physical needs until they reach their full potential.

Quantitative Research

Quantitative research look for answers in terms of quantity or how many, for
instance how many people believe in family planning. The method involves
interviewers finding respondents and asking them appropriate questions.
Questions are designed to get a “yes” or “no” answer, which are called closed
question. Quantitative research is often used to find the number of people who
share attitudes based on age, income bracket, sex or any other demographic
factor recorded in the interview. These information are very useful in determining
the target market and target audience.

Secondary Data

The word secondary suggests that the data is collected after the primary data
has been obtained. However that is not the case. Secondary data which is
collected from published materials such as books and websites is usually
collected first and then followed by collection of primary data.

Desk Research

Desk research referred to acquiring information behind a desk, such as from

books in a library or by using a computer to search for websites. Secondary data
is obtained in this way

Field Research

Field research is carried out face-to-face by speaking to customers or other

respondents either in their offices or homes or on the street, and it is the favored
way of obtaining primary data.
Primary Data

The objective of obtaining primary data is to find information specifically related

to certain issues important to the advertiser or advertising agencies, such
information regarding motivation and attitudes in consuming certain products.
Primary data are obtained through interviews, questionnaires or discussion with a
sample group.

Sampling

Sampling involves questioning a pre-determined number of individuals who are a

‘sample’ of the overall market sector that is under investigation.

Random Sampling

Random sampling means that anyone has an equal chance to being asked
questions, or participate in the survey. Once the research has
Been completed, the data can then be analyzed to establish opinions and
Attitudes related to various classifications (by age, sex or other demographics).
Data gained from random sampling might subsequently be used to identify a
group (or segment) that shows a demand for a certain type of product or service

Quota Sampling

Quota sampling is used when the researchers are seeking to explore a particular
group of people. They will want to establish the size, breakdown, attitudes and
opinions of that particular group, for example students, 18-21 years old, female.

The quota sample represents a segment which have potentials to be exploited,

providing certain characteristics such as needs and motivation are discovered in
the research.

Using the results of research

After analyzing the data, the result of the survey is used to determine:

 market trends
 market size and potentials
 Target market characteristics such as buying habits.

Positioning

Brand positioning means placing the brand in the consumers mind so that it is
perceived differently and more superior to competing brands. Successful brand
positioning often relies in how the brand is viewed as meeting the needs and
wants of its target audience and in how actually the brand fulfills its promise to
the consumers.

The brand may have many benefits, but in establishing positioning, the marketer
or the advertising agency should focus on one benefit of the brand that is related
to the product, the competitors (what they say about their brands), and the
characteristic of the consumers. If too many benefits are conveyed, then the
message is not “single minded” or focus. For example Volvo has always stay with
the same positioning: the safety aspect of the brand.

Branding

Branding in marketing terms today means creating an image for a product. It is a

combination of character, identity and the reputation that is developed by the
product and its associations (egg the product might be coffee but it is identified
and branded as a particular make, such as Nescafe-Classic).
a major task of advertising is creating and maintaining brand image as means of
establishing competitive edge in the market place

Brand image

Brand image is about perception. Perception is not reality but what is believed.
Brand image is the consumer’s total perception of the brand, what he believes
the brand is about. Therefore, brand image indicates how the advertising
message is understood and interpreted by the consumer.
Points to remember

Dear students,
Write the most important points you want to remember about this session.