MARKET IDENTIFICATION & SEGMENTATION

Ask an experienced marketer what will determine the success or failure of a promotion and theyll often quote an age old industry rule: 70% audience, 20 % offer, 10% creativity. Or, to express it another way, by correctly analysing, and segmenting your customer database to ensure that the right offer reaches the right people, you have a 90% chance of success before you even start work on the creative.

It is bad tactics to try and appeal to everyone in a marketing campaign. (Ford Edsell). Any decision maker worth his/her salt will focus on a specific TM when trying to sell a product. This is one of the golden rules of Ming. In defining TMs there are four crucial steps to consider: The fourth of these steps is market positioning, which looks at how our product is seen by the TM, in relation to competing products. MPing is considered when the MM is developed. 1. Market identification: Who is your market? Who buys your product? Q: Who buys fball boots? A: footy players, soccer players, rugby players, touch rugby players (4 markets, M Segs [maybe]). But they all buy their product at the same place, and for the same reason. It is only seen as 4 TMs if we can find ways in which they are different, apart from playing footy or RU or RL or soccer. Where do you buy beer (at a pub, bottle shop, liquor store)? 3 TMs. Who buys fitness club membership? (i) Fit people (ii) wannabe fit people Many businesses set up shop and wait for the market to come to them. Many of these businesses fail.

Some businesses are proactive in getting people to come to them. This is why people promote their business, and to promote many businesses advertise. But advertising is expensive. The more we can target our promotions, the cheaper it should be (???) and the more effective our promotions are. But we cannot target our promotions unless we know who to target. 2. Market segmentation Dividing the market into groups of buyers, where each group sees the product differently. Q: who buys footy boots? A: footy players, soccer players, rugby players, touch rugby players (4 markets, 4 M Segs?? But they would all buy them at pretty much the same place). Who buys alcohol? (at a pub, bottle shop, liquor store)? Why would they buy at these different places? Because they are making the purchase for different reasons. Think of this from the perspective of the person that buys most of his/her alcohol from one (only) of these three places. Pub a social place, where alcohol is the social lubricant Bottle shop convenience Liquor store specialist place; wider range & lower prices If they see the product in different ways, there is a solid reason for segmenting the market. In MS, we find ways of grouping buyers (segmenting), and developing profiles of (describing) the relevant groups or segments. We do this because each group of buyers sees the product differently. E.g.#1 Mcdonalds: segmented on basis of (??) age, with the three main grps being (??) kids, young singles, and young families. Q: A: Q: A: Who is the main TM for Unisports? Ss How/why should Ss be segmented as a market for Unisport? HMSS vs the trackies.

3. Market Targeting The process of selecting the market segment(s) that we intend to focus a sales effort on, and tailoring the marketing mix for those groups.

There is (nearly) always more than one M to aim at. If we only know of one, we have not done our MSeg properly. There will usually be some kind of logical association between TMs. E.g.#1 Mcdonalds: segmented on basis of age: children/parents e.g.#2: Gun shops usually sell fishing gear. Why is this logical? It is two distinct but overlapping markets. 4. Market positioning Identifying the way in which the product is defined by the customer on important attributes of utility & package. It is the place the product occupies in the consumers mind, in relation to competing products. eg. Myers and Target Owen Williams Carlton (the Silvertails); Coll (working mans club) (Paul Keating and John Howard). Market segmentation (revisited) There is no single way to segment a market. Different segmentation variables have to be tried, to find the variables that most accurately reflect the markets structure (who will/will not buy). Demographic Segmentation age, sex, family size, marital status, income, occupation, education, religion, race, nationality. Geographic segmentation state or regional, population density (rural-suburban-urban), community size (under 5k, 5-10k, 10-20k....per sq km), climate, distance from a point. A company may decide to operate in certain geographic areas, within range of a set point (a sales outlet), or in given climates. eg. Snowgum; would they operate in Qld? Psychographic segmentation Segmentation on the basis of the markets knowledge of, attitude to, or opinion of a product

e.g. #1 fitness ctrs target people that know of the benefits of good health and fitness Psychographic segmentation largely depends on a markets Attitudes & opinions Transactional or database segmentation Generally acknowledged to be a simple and reliable form of segmentation. Although TS/DS can be done on an large number of criteria, particularly in Sport/health/fitness (membership package, length of membership, or even demographics or psychographics), it is often desirable to segment on the basis of FRM (FRA) Frequency Recency Monetary value (or amount) Whatever type of segmentation is used, for best effect we will usually incorporate Multivarable segmentation. Eg. MV survey Functional Segmentation Segmentation on the basis of why/how people use a product. It is usually done by cos that have a wide variety of products. e.g. Niketown: Denver Colorado and Miami Florida.