Marketing 2A

COMKA2

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 What will be covered
in today’s lesson?
Targeting

Week 5
Lesson 9 Segmentation: Consumer
markets

Segmentation: Business markets

Identifying target customers
Why can’t we target EVERYBODY in a marketing strategy?

awwaredigital. (n.d.). Target market: how to define it with examples. [online] Available at:
https://awware.co/blog/target-market/. [Accessed 6 March 2024]
What do you think are the prerequisites of
effective targeting?
To compete more effectively, many companies are now embracing target marketing.
Instead of scattering their marketing efforts, they’re focusing on those consumers they
have the greatest chance of satisfying.

Effective targeting requires that marketers:

• Identify distinct groups of buyers who differ in their needs and wants
(SEGMENTATION).
• Select one or more market segments to enter (TARGETING).
• For each target segment, establish, communicate and deliver the right benefit(s) for the
company’s market offering (developing a VALUE PROPOSITION AND POSITIONING).

(Kotler & Armstrong, 2022: 145)

Identifying target customers
Targeting Definition: Identifying customers for optimisation of offerings; Prioritising specific customer segments.
Purpose of Targeting: Guides the company in choosing its focus. Influences design, communication and delivery decisions.
Process Details: Involves choosing which customers to prioritise.
Determines which customers to ignore during various business phases.

awwaredigital. (n.d.). Target market: how to define it with examples. [online] Available at: https://awware.co/blog/target-
market/. [Accessed 6 March 2024]
Activity 1: Identifying target customers
What is the difference between:
• Mass marketing
• Targeted marketing
• One-to-one marketing
• Mass customisation
• Customised marketing services?

Discuss in your groups and give feedback in class.

Identifying target customers: answer
Mass Marketing: Targets entire market with a single offering. Ignores segment differences.
Henry Ford's Model-T in one color (black) exemplifies this approach. Argued benefits
include creating the largest potential market and lowering costs.
Others: Milk, toilet paper, chocolates

colebette (2017). ‘You can have any color you want, as long as it’s black.’—Henry Ford [2000x1473] [OC]. [online] Available at:
https://www.reddit.com/r/QuotesPorn/comments/6y9onm/you_can_have_any_color_you_want_as_long_as_its/ [Accessed 6 Mar. 2024].
Identifying target customers: answer
Targeted Marketing:
Defines multiple segments with different needs.
Sells different products to various market segments.
Estée Lauder offers brands catering to diverse consumer tastes.
Enables better design, pricing and marketing tailored to specific segments.
Another example: Castle

AB InBev-SAB a Step Closer as Deal Cleared by South

Africa. (2016). Bloomberg.com. [online] 30 Jun.
Available at:
https://www.bloomberg.com/news/articles/2016-06-
30/ab-inbev-sabmiller-deal-approved-in-south-africa-
with-conditions. [Accessed 6 March 2024]
Identifying target customers: answer
One-to-One Marketing:
Ultimate targeting approach.
Each market segment comprises a single customer.
Companies collect extensive customer information for individualized offerings.
Works best for firms with diverse products, high value and the ability to collect customer
data.
Identifying target customers: answer
Mass Customisation:
Uses mass production techniques for customised products.
Meets individual customer requirements on a mass scale.
Examples include MINI Cooper's online configurator and Coke's Freestyle vending machine.
Services like airlines and hotels also embrace customised experiences.

Smart Customizer. (n.d.). Mini

Cooper car customizer. [online]
Available at:
https://www.smartcustomizer.com/i
nspirations/mini-cooper-car-
customizer [Accessed 6 March 2024].
Identifying target customers: answer
Customised marketing in services:
Airlines, hotels and rental car agencies aim for individualised experiences.
Political candidates use Facebook's ad platform for personalised campaign messages.
Services and products can be tailored based on individual preferences and interests.
E.g. Spotify’s personalised playlists
Activity 2: Differentiate between single-segment
and multi-segment targeting
SCENARIO 1: SINGLE-SEGMENT TARGETING - LUXURY WATCHES
Imagine a company that specialises in crafting high-end luxury watches.
These watches are meticulously designed, using rare materials and catering to a niche market that values exclusivity and
craftsmanship.
The company has been successful in establishing itself as a prestigious brand and its watches are priced significantly higher than
mainstream alternatives.

SCENARIO 2: MULTI-SEGMENT TARGETING - SMARTPHONES

Consider a company that manufactures smartphones with a variety of features and price points.
The company offers entry-level smartphones for budget-conscious consumers, mid-range options with additional features and high-
end flagship models with cutting-edge technology.
The goal is to capture a diverse market, accommodating different preferences, needs and budget ranges.

•For each scenario, reflect on whether a single-segment or multi-segment targeting strategy would be more effective.
•Consider factors such as product characteristics, market diversity, consumer needs and competition.
•Provide clear justifications for your choice in a short written response.

(Kotler & Armstrong, 2022: 153)

Activity 3: Single-segment and multi-segment
targeting (Answer)
Scenario 1: Single-Segment Targeting - Luxury Watches
The company producing high-end luxury watches should employ a single-segment
targeting strategy.
The exclusivity, craftsmanship and higher pricing align with a niche market that values
prestige.
A focused approach enhances the brand's image and maintains the allure of rarity.

Scenario 2: Multi-Segment Targeting - Smartphones

For the smartphone manufacturer offering various models with different features and price
points, a multi-segment targeting strategy is appropriate.
This allows the company to cater to diverse consumer preferences, needs and budget
ranges.
The goal is to capture a broader market by offering a range of products.
Activity 3: Defining the customer profile
By using demographic factors, geographic factors, behavioural factors and
psychographic factors, come up with the customer profile for Coca-Cola in
South Africa.

(Kotler & Armstrong, 2022: 160 )

Activity 3: Defining the customer profile - answer
DEMOGRAPHIC FACTORS:
Age: Primarily targets young adults and middle-aged consumers. While appealing to teenagers, there's a stronger emphasis
on the 18-35 age group.
Gender: Appeals to both males and females; no specific gender targeting.
Income: Targets consumers across different income levels, with a focus on middle to upper-middle-income groups.
Occupation: Broad appeal across various occupations due to the product's widespread popularity.

GEOGRAPHIC FACTORS:
Urban and Suburban Areas: Concentrates efforts in densely populated urban and suburban areas where accessibility and
visibility are high.
Nationwide Presence: Available throughout the country, from major cities to remote areas.

BEHAVIORAL FACTORS:
Usage Occasions: Targets consumers during various occasions, including social gatherings, meals, celebrations and leisure
activities.
Brand Loyalty: Fosters brand loyalty through consistent quality, marketing and promotional activities.
Buying Patterns: Frequent and impulsive purchases; also promotes bulk purchases during promotional periods.

PSYCHOGRAPHIC FACTORS:
Lifestyle: Appeals to a diverse range of lifestyles, from those leading active and busy lives to those seeking moments of
relaxation.
Values: Aligns with values such as happiness, joy and togetherness, positioning Coca-Cola as a drink that enhances
positive experiences.
Personality Traits: Targets consumers who appreciate a refreshing and uplifting beverage, associating the brand with
optimism and enjoyment.
Activity 3: Watch the video on creating customer personas
https://www.youtube.com/watch?v=v6EWN4EjHM0
How do we segment business markets?
Business markets can be segmented using variables similar to those in consumer markets, such as geography, benefits
sought and usage rate. However, business marketers also consider unique variables for segmentation:

Demographic Factors:
Industry: Which industries to serve?
Company size: What size companies to serve? (Kotler & Armstrong, 2022: 161 )
Location: What geographic areas to serve?

Operating Variables:
Technology: What customer technologies to focus on?
User or nonuser status: Should the focus be on heavy users, medium users, light users or nonusers?
Customer capabilities: Should the focus be on customers needing many or few services?

Purchasing Approaches:
Purchasing-function organization: Highly centralized or decentralized purchasing organization?
Power structure: Should the focus be on engineering-dominated or financially dominated companies?
Purchasing criteria: Quality, service or price?
How do we segment business markets?
Situational Factors:
Urgency: Should the focus be on companies needing immediate delivery or service?
Specific application: Should the focus be on a certain application of the product?
Size of order: Should the focus be on large or small orders?

Personal Characteristics: (Kotler & Armstrong, 2022: 161 )

Buyer–seller similarity: Should the focus be on companies with similar values?
Attitude toward risk: Risk-taking or risk-avoiding customers?
Loyalty: Should the focus be on companies showing high loyalty to suppliers?
Activity 4: Defining the business market segment

Scenario :

A company specialising in advanced manufacturing technology wants to enter a new market.

Students are part of the marketing team tasked with developing a segmentation strategy.

Identify demographic, operating, purchasing, situational and personal characteristic variables

relevant to the scenario.
Activity 4: Defining the business market segment
– possible answer
Demographic Variables:
Industry Type: Identify industries that could benefit most from advanced manufacturing technology (e.g., automotive,
aerospace, healthcare).
Company Size: Consider whether the technology is more suitable for large corporations, mid-sized enterprises or
small businesses.
Geographic Location: Evaluate regions or countries where there is a high demand for advanced manufacturing
technology.

Operating Variables:
Technology Adoption: Assess the current level of technology adoption in the target market.
Customer Capabilities: Determine if potential customers require extensive support or if they can operate the
technology independently.
User Status: Consider whether the market consists of heavy users, medium users, light users or non-users of
advanced manufacturing technology.
Activity 4: Defining the business market segment
– possible answer
Purchasing Variables:
Purchasing Function Organization: Investigate whether companies in the market have centralized or decentralized
purchasing functions.
Power Structure: Understand the dominant power structure in companies—whether they are engineering-dominated,
financially dominated or have a balanced structure.
Purchasing Approaches: Analyze preferences for purchasing, such as preference for leasing, service contracts,
systems purchases or sealed bidding.

Situational Variables:
Urgency: Identify if there is an immediate need for advanced manufacturing technology in the market.
Specific Application: Assess whether the technology has specific applications within the market.
Order Size: Consider if the market tends to place large or small orders for such technology.

Personal Characteristic Variables:

Buyer–Seller Similarity: Investigate whether companies in the market share similar values or characteristics with the
advanced manufacturing technology company.
Attitude Toward Risk: Understand whether potential customers are risk-taking or risk-avoiding.

Loyalty: Assess the loyalty of companies in the market to their current suppliers.
What Happens Next?
•Please work through the content for Week 5, Lesson
10.
•Do the activities within Week 5, Lesson 10.
•Complete self-assessment quiz week 5, lesson 10.
•It is important to have a thorough understanding of the
following:
•Customer value proposition.
•Positioning
 References:
AB InBev-SAB a Step Closer as Deal Cleared by South Africa. (2016). Bloomberg.com. [online] 30 Jun. Available at:
https://www.bloomberg.com/news/articles/2016-06-30/ab-inbev-sabmiller-deal-approved-in-south-africa-with-
conditions.

awwaredigital. (n.d.). Target market: how to define it with examples. [online] Available at:
https://awware.co/blog/target-market/. [Accessed 6 March 2024]

colebette (2017). ‘You can have any color you want, as long as it’s black.’—Henry Ford [2000x1473] [OC]. [online]
Available at:
https://www.reddit.com/r/QuotesPorn/comments/6y9onm/you_can_have_any_color_you_want_as_long_as_its/
[Accessed 6 March 2024].

Kotler, P. and Armstrong, G. 2022. Principles of Marketing: Global and Southern African Perspectives. 2nd Edition.
Cape Town: Pearson Holdings

Smart Customizer. (n.d.). Mini Cooper car customizer. [online] Available at:
https://www.smartcustomizer.com/inspirations/mini-cooper-car-customizer [Accessed 6 March 2024].