MKT 501 TUTORIAL 6 ANSWERS
1. The four major steps in designing a customer-driven marketing strategy are Market
Segmentation, Market Targeting, Differentiation and Positioning. Market
Segmentation Market segmentation is the process of dividing up the total market (all
the people the organization can sell its products or services to) into identifiable,
measurable and discrete groups who share some common characteristics or needs and
whose attitudes or reactions towards communications messages about products or
services might be similar. Market Targeting Once an organization has identified a
range of possible segments within the market, it begins the targeting process. This
consists of developing measures of the attractiveness of the segments and selection of
the segments to target. This process is a re-evaluation of the segments and the profiles
matched against the core competencies and resources (what the organization actually
offers from the service or the experience) to identify which are the most attractive
segments to target. Differentiation Regards to differentiation, there are a few strategy
example product differentiation, Service differentiation, channel differentiation,
people differentiation and Image differentiation. The deference to promote can be
Important, distinctive, Superior, communicable, pre-emotive, affordable and
profitable. Positioning The product positioning process consist of making any fine
adjustments to the service offering in the light of research conducted in the marketing
planning process ND then the creation of an “image” of the service which meets the
target market values.
2. Demographic Segmentation: Demographic segmentation divides the markets into
groups based on variables such as age, gender, family size, income, occupation,
education, religion, race and nationality. Demographic factors are the most popular
bases for segmenting the consumer group. One reason is that consumer needs, wants,
and usage rates often vary closely with the demographic variables. Moreover,
demographic factors are easier to measure than most other type of variables.
Geographic Segmentation: Geographic segmentation refers to dividing a market
into different geographical units such as nations, states, regions, cities, or
neighborhoods. For example, national newspapers are published and distributed to
different cities in different languages to cater to the needs of the consumers.
Psychographic Segmentation: Psychographic segmentation pertains to lifestyle and
personality traits. In the case of certain products, buying behavior predominantly
depends on lifestyle and personality characteristics. Behavioral Segmentation: In
behavioral segmentation, buyers are divided into groups on the basis of their
knowledge of, attitude towards, use of, or response to a product. Behavioral
segmentation includes segmentation on the basis of occasions, user status, usage rate
loyalty status, buyer-readiness stage and attitude. Gloria jeans can use demographic
segmentation.
3. When choosing a market targeting strategy, the company should consider: The
Company’s resources. If resources are limited, a concentrated market targeting
strategy might make more sense. The degree of product variability. The product life
cycle. Market variability. Competitors' marketing strategies.
4. Micromarketing is a marketing strategy in which marketing and/or advertising
efforts are focused on a small group of tightly targeted consumers. For example,
markets can be grouped into narrow clusters based on commitment to a product class
or readiness to purchase a given brand. The two components of it are internal and
external, internal. The internal environment of the business includes all the forces and
factors inside the organization which affect its marketing operations. These
components can be grouped under the Five MS of the business, which are: Men,
Money, Machinery, Materials, and Markets. The internal environment is under the
control of the marketer and can be changed with the changing external environment.
Nevertheless, the internal marketing environment is as important for the business as
the external marketing environment. This environment includes the sales department,
marketing department, the manufacturing unit, the human resource department, etc.
whereas the external environment constitutes factors and forces which are external to
the business and on which the marketer has little or no control. The external
environment is of two types: The micro-component of the external environment is
also known as the task environment. It comprises of external forces and factors that
are directly related to the business. These include suppliers, market intermediaries,
customers, partners, competitors and the public, Suppliers include all the parties
which provide resources needed by the organization. Market intermediaries include
parties involved in distributing the product or service of the organization. Partners
are all the separate entities like advertising agencies, market research organizations,
banking and insurance companies, transportation companies, brokers, etc. which
conduct business with the organization. Customers comprise of the target group of
the organization. Competitors are the players in the same market who targets similar
customers as that of the organization. Public is made up of any other group that has
an actual or potential interest or affects the company’s ability to serve its customers.
Macro Environment The macro component of the marketing environment is also
known as the broad environment. It constitutes the external factors and forces which
affect the industry as a whole but don’t have a direct effect on the business. The
macro-environment can be divided into 6 parts. Demographic Environment The
demographic environment is made up of the people who constitute the market. It is
characterized as the factual investigation and segregation of the population according
to their size, density, location, age, gender, race, and occupation. Economic
Environment The economic environment constitutes factors which influence
customers’ purchasing power and spending patterns. These factors include the GDP,
GNP, interest rates, inflation, income distribution, government funding and subsidies,
and other major economic variables. Physical Environment The physical
environment includes the natural environment in which the business operates. This
includes the climatic conditions, environmental change, accessibility to water and raw
materials, natural disasters, pollution etc. Technological Environment The
technological environment constitutes innovation, research and development in
technology, technological alternatives, innovation inducements also technological
barriers to smooth operation. Technology is one of the biggest sources of threats and
opportunities for the organization and it is very dynamic. Political-Legal
Environment. The political & legal environment includes laws and government’s
policies prevailing in the country. It also includes other pressure groups and agencies
which influence or limit the working of the industry and/or the business in the
Society.
5. A company can differentiate itself from competitors along the lines of product,
services, channels, people, or image. Through product differentiation, brands can be
differentiated on features, performance, or style and design. Beyond differentiating its
physical product, a firm can also differentiate the services that accompany the
product. Some companies gain services differentiation through speedy, convenient, or
careful delivery. Firms that practice channel differentiation gain competitive
advantage through the way they design their channel’s coverage, expertise, and
performance. Companies can also gain a strong competitive advantage through
people differentiation —hiring and training better people than their competitors do.
Even when competing offers look the same, buyers may perceive a difference based
on company or brand image differentiation. A company or brand image should
convey a product’s distinctive benefits and positioning. Developing a strong and
distinctive image calls for creativity and hard work.
6. Vodafone is continuing to grow a solid, loyal customer base because the company
offers excellent product along with excellent customer service. The company
continues to offer a variety of services, including data, messaging, voice and
broadband. It's continuous advancement in the data services, they offer by developing
its 3G networks and the capabilities of various handsets. SEGMENTATION:-
Segmentation is the process of splitting (segmenting) the entire market into smaller
groups. Demographics is the most common variable of market segmentation that
includes age, gender, and income, geographic, psychographic and behavioral.
Markets are made up of many distinct groups of people who have common
characteristics as consumers. Some of those groups may not be immediately obvious.
All of them command tremendous buying power. But they direct it to products and
services that address them as a highly individual subdivision or segment of the
market. Vodafone’s Segmentation: Demographics - Age > 13 to 65Income > Small,
Middle and High level Markets (Both B2B and B2C)Urban, Semi-urban and rural
areas Psychographics - Preferably Youth and People in the urban and Semi-urban
areas People who are willing to pay more for a premium service Vodafone's
Targeting Strategies:-B2C Market: Recharge plans starting from as low as INR 10
and going up to INR 500. Data plans ranging from INR 44 to INR 250 B2B Market:
Recently launched plans and packages for SMEs as well as large scale Businesses
which can be customized according to their needs. Value Added Services and
Discounts: To target home-makers, students & professionals Due to the extensive
price range of its various voice, messaging and data services and it's variety of value
added services which can be customized as per individual customers' needs and
wants, Vodafone strategically targets customers and consumers of all ages and
incomes. Vodafone's Positioning:-Product: Both Premium and Basic (Voice, data
and messaging services as well as Mobile transfer and IT solutions for businesses)
Price For small, middle and high level markets (Depending on the requirements,
Voice, data and messaging packages are available in different price ranges)
Distribution: Exclusive Retail Stores as well as sales at small retail shops to reach as
many customers as possible.
7. Requirements for Effective Segmentation
There are many ways to segment a market, but not all segmentations are effective. For example,
buyers of table salt could be divided into black and brown hair customers. But hair color
obviously does not affect the purchase of salt. Furthermore, if all salt buyers bought the same
amount of salt each month, believed that all salt is the same, and wanted to pay the same price,
the company would not benefit from segmenting this market be useful, market segments must be
Measurable
The size, purchasing power, and profiles of the segments can be measured. Certain segmentation
variables are difficult to Measure. For example, there are approximately 30.5 million left-handed
people in the United States, which is nearly the entire population of Canada. Yet few products
are targeted toward this left-handed segment. The major problem may be that the segment is hard
to identify and measure. There are no data on the demographics of lefties, and the U.S. Census
Bureau does not keep track of left handedness in its surveys. Private data companies keep reams
of statistics on other demographic segments but not on left-handers.
Accessible
The market segments must be effectively reached and served. Suppose a fragrance company
finds that heavy users of its brand are single men and women who stay out late and socialize a
lot. Unless this group lives or shops at certain places and is exposed to certain media, its
members will be difficult to reach.
Substantial
The market segments are large or profitable enough to serve. A segment should be the largest
possible homogeneous group worth pursuing with a tailored marketing program. It would not
pay, for example, for an automobile manufacturer to develop cars especially for people whose
height is greater than seven feet.
Differentiable
The segments are conceptually distinguishable and respond differently to different marketing
mix elements and programs. If men and women respond similarly to marketing efforts for soft
drinks, they do not constitute separate segments.
Actionable
Effective programs can be designed for attracting and serving the segments. For example,
although one small airline identified seven market segments, its staff was too small to
develop separate marketing programs for each segment