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Marketing Management

INTERNATIONAL ISLAMIC UNIVERSITY
MALAYSIA
 Companies today recognize that
 they cannot appeal to all buyers in the marketplace,
or
 at least not to all buyers in the same way.
 Buyers are
 too numerous,
 too widely scattered and
 too varied in their needs and buying practices.
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 Moreover, the companies themselves vary widely in
their abilities to serve different segments of the
market.
 Rather than trying to compete in an entire market,
(sometimes against superior competitors,) each
company must identify the parts of the market that
it can serve best and most profitably.
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 Thus, most companies are becoming more choosy
about the customers with whom they wish to connect.
 Most have moved away from mass marketing and
toward market segmentation and targeting
 How? The steps are
 Identify market segments
 Select one or more of them
 Develop products and marketing programs tailored to each.
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 Instead of scattering their marketing efforts (the
shotgun approach), firms are focusing on the
buyers who have greatest interest in the values
they create best (the riffle approach).
 Figure 7-1 shows the three major steps in target
marketing (next slide) M
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Market segmentation
Identify bases for
segmenting the market
Develop segment
profiles
Market targeting
Develop measure of
segment attractiveness
Select target
segment
Market positioning
Develop positioning
for target segment
Develop a marketing
mix for each segment
Fig 7-1: Steps in market segmentation, targeting, and positioning
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 Market segmentation is dividing a market
into smaller groups of buyers with distinct
 needs,
 characteristics, or
 behaviors who might require separate products or
marketing mixes.
 The company identifies different ways to
segment the market and develops profiles of
the resulting market segments.
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 The marketing mix, as mentioned earlier, is
the combination of the marketing 'tactics':
product, price, place (distribution) and
promotion.

 Thus marketing mix is generally accepted as
the use and specification of 'the four Ps'
describing the strategic position of a product
in the market.
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 The second step is market targeting.
 This is the process of
 evaluating each market segment’s
attractiveness and
 selecting one or more segments to enter.
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 The third step is market positioning.
 This is the process of
 setting the competitive positioning for the
product and
 creating a detailed marketing mix.
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 Markets consist of buyers, and buyers differ
in one or more ways.
 They may differ in their
 wants
 resources
 locations
 buying attitudes, and
 buying practices.
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 Through market segmentation, companies divide
large, heterogeneous markets into smaller
segments that can be reached more efficiently and
effectively with products and services that match
their unique needs.
 There are five important segmentation topics. M
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 These topics are
 Levels of segmentation
 Segmenting consumer markets
 Segmenting business markets
 Segmenting international markets
 Requirements for effective segmentation.

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Mass
marketing
Segment
marketing
Niche
marketing
Micro-
marketing
No
segmentation
Complete
segmentation
Fig 7-2: Levels of marketing segmentation
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 Mass marketing
 Coca-cola at one time produced only one drink for
the whole market hoping it would appeal to
everyone.
 Thus major consumer products companies held
fast to mass marketing
▪ Mass producing
▪ Mass distributing and
▪ Mass promoting
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 Segment marketing
 A company that practices segment
marketing
 isolates broad segments that make up a market
and
 adapts its efforts to more closely match the
needs of one or more segments.

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 Niche marketing
 Market segments are normally large, identifiable
groups within a market.
 Examples:
▪ luxury car buyers,
▪ performance car buyers,
▪ utility car buyers and
▪ economy car buyers.
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 Micro-marketing
 Is the practice of tailoring products and
marketing programs to suit the tastes of specific
individuals and locations.
 Micro-marketing includes
▪ local marketing and
▪ individual marketing.
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 Local marketing
 Involves tailoring brands and promotions to the
needs and wants of local customer groups – cities,
neighborhoods, and even specific stores.
 Individual marketing
 Tailoring products and marketing programs to
the needs and preferences of individual customers.
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Geographic
World region or
country

Country region



City or metro size



Density

Climate
North America, Western Europe, Middle East, Pacific Rim, China,
India, Canada, Mexico

Pacific, Mountain, West North Central, West South Central, East
North Central, East South Central, South Atlantic, New England

Under 5,000, 5,000-20,000, 20,000-50,000, 50,000-100,000,
100,000-250,000, 250,000-500,000, 500,000-1,000,000, 1,000,000-
4,000,000, 4,000,000 or over

Urban, Suburban, Rural

Northern, Southern
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Gregarious – fond of company, living in flocks or herbs
Psychographic

Social class


Lifestyle


Personality

Lower lowers, upper lowers, working class, middle
class, upper middles, lower uppers, upper uppers.

Achievers, strivers, strugglers


Compulsive, gregarious, authoritarian, ambitious
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Behavioral
Occasions

Benefits

User status


User rates

Loyalty status

Readiness stage

Attitude toward
product
Regular occassion, special occasion

Quality, service, economy, convenience, speed

Nonuser, ex-user, potential user, first-time user, regular user.

Light user, medium user, heavy user

None, medium, strong, absolute

Unaware, aware, informed, interested, desirous, Intending to
buy

Enthusiastic, positive, indifferent, negative, hostile
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 After launching a new product management
wants the product to enjoy a long and happy
life.
 Although it does not expect the product to sell
forever, the company wants to earn a decent
profit to cover all the effort and risk that went
into launching it.
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 Each product has a life cycle, though its exact
shape and length are not known in advance.
 Figure (next slide) shows a typical PLC, the
course that a product’s sales and profits take
over its lifetime.
 The PLC has five distinct stages: product
development, introduction, growth, maturity
and decline.
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 Product development:
 begins when the company finds and develops a new
product idea.
 It passes through major stages such as
▪ Idea generation
▪ Idea screening
▪ Concept development and testing
▪ Marketing strategy development
▪ Business analysis
▪ Create product
▪ Test marketing
▪ Commercialization
 During this phase sales are zero and company’s costs mount.

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 Introduction:
 a period of sales growth as the product is
introduced in the market.
 Profits are nonexistent because of the heavy
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 Growth: a period of rapid market acceptance
and increasing profits.
 Maturity:
 Period of slowing down in sales growth as the
product has achieved acceptance by most potential
buyers.
 Profits level off or decline because of increased
marketing outlays (expenditure) to defend the
product against competition.
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 Decline: period when sales fail off and profits
drop.
 Note:
 Not all products follow this PLC.
 Some products are introduced and die quickly;
others stay in mature stage for a long, long time.
 Some enter the decline stage and are then cycled
back into the growth stage through strong
promotion and positioning.
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Introduction Growth Maturity Decline
Characteristics
Sales Low sales Rapidly rising
sales
Peak sales Declining sales
Costs High cost per
customer
Average cost
per customer
Low cost per
customer
Low cost per
customer
Profits Negative Rising profits High profits Declining
profits
Customers Innovators Early adopters Middle
majority
Laggards
Competitors Few Growing
number
Stable number
beginning to
decline
Declining
number
Table: Summary of PLC Characteristics, Objectives
and Strategies
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Introduction Growth Maturity Decline
Marketing
Objectives
Create product
and trial
Maximize
market share
Maximize
profit while
defending
market share
Reduce
expenditure
and milk the
brand
Table: Summary of PLC Characteristics, Objectives
and Strategies
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Introduction Growth Maturity Decline
Strategies
Product Offer a basic product Offer product
extensions, service,
warranty
Diversify brand and
models
Phase out weak
items
Price Use cost-plus formula Price to penetrate
market
Price to match or
best competitors
Cut price
Distribution Build selective
distribution
Build intensive
distribution
Build more
intensive
distribution
Go selective: phase
out unprofitable
outlets
Advertising Build product
awareness among early
adopters and dealers
Build awareness
and interest in the
mass market
Stress brand
differences and
benefits
Reduce to level
needed to retain
hard-core loyals
Sales
promotion
Use heavy sales
promotion to entice
trial
Reduce to take
advantage of heavy
consumer demand
Increase to
encourage brand
switching
Reduce to minimal
level
Table: Summary of PLC Characteristics, Objectives
and Strategies
SemII, 1013-2014
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