What is Market?
We often hear the term market, however many times it has been used imprecisely in expressions such as the European common market, supermarkets, stock market.
The market is a group of people or organizations that have the ability and willingness to buy a product or service for consumption. People are understood to be those who, based on their needs and desires, decide to purchase a product or service. Whoever buys a product is called a customer, who usually consumes or uses it. When the person who uses a product is not the one who bought it, it is called a user.
Then, the market must be considered as the set of effective or potential customers, who individually or in an organized way, need products or services of some kind and have the possibility (purchasing capacity), the desire (willingness to purchase) and the authority to buy or rent them.
Types of markets
According to the characteristics of the people or organizations that make up a market, these are classified into three basic categories:
Consumer market: made up of those individuals who acquire the product for their consumption or benefit in its use where there is no objective of obtaining profits on it.
Industrial markets: it is made up of individuals or organizations, who buy a specific class of products to be used directly or indirectly in the manufacture of other products or for use in the daily operations of their business.
Resellers market: they are made up of intermediaries such as wholesalers and retailers who buy finished products and resell them in order to make a profit.
What is Marketing?
The concept of marketing begins with the knowledge of the current and potential clients of the company and their needs; plans a coordinated set of products and programs to meet these needs and aims to produce profits by creating meaningful satisfaction.
The concept of marketing mix
The marketing mix refers to the ideal balance of all the elements taken into account in the marketing of products and services, within which are the 4Ps, namely: Product, Price, Place and Promotion.
Product is the good or service that is sold, at a price that identifies the perception of value that the consumer has about it, in a place or place of purchase, and which has been made known and has generated buying interest through campaigns promotional.
This basic relationship, is oriented is an approach oriented to the understanding of the concept of the 4Ps, but it encompasses a fairly complex study, focused on all aspects related to each element. For example, the product element refers to the quality, status, security, functionality and modernity that the consumer perceives of it; the price is subject to costs, expenses, profits, special characteristics of the product, functionality, brand positioning, competition, novelty, season, legislation, inflation, etc.; the place is determined by the location, access, coverage, availability of inventories, forms of payment, customer service among others; and the promotion stands out for the stimulation of demand through communication strategies that motivate a consumer's buying interest,in which the effectiveness of the media (mass media such as radio, press, television and targeted such as direct mail, coupons, events) and the efficiency and effectiveness of the channels (distributors, resellers, web site, sales force, allies, call center).
What is Segmentation?
It is the process of dividing a potential market into different subsets or segments of consumers that have needs, characteristics or behaviors that are homogeneous among themselves but heterogeneous between segments, which could require products and / or services and which can be reached through different mixes of marketing tailored to each group.
What are the requirements to segment?
A segmentation process must respond to certain technical conditions, these are:
Measurability, that the segment in question can be measurable or quantifiable.
Accessibility, that selected market segments can be served and reached effectively.
Sustainability is associated with a concept of materiality, that is, how large (quantity) or interesting (profitable) is the segment to use.
Drive is related to the possibility of creating or designing adequate and effective plans for the segment in question.
What variables or criteria to take into account to segment?
The selection criteria for using segmentation variables will depend on the objectives pursued. The use of variables can be used individually or in combination.
Some variables allow disaggregation:
Demographic segmentation: division of the target market into consumer groups classified by age groups, income, gender, family size, family life cycle, occupation, educational level, profession, religion, race and nationality.
Geographical segmentation, allows the market to be divided into different geographical units. Such as countries, regions, states, departments, cities, zones.
Socioeconomic segmentation, consists of differentiating the population of a market according to social strata in the case of individuals, or the economic activity, size or character of its resources in the corporate case.
Other criteria allow adding:
Psychographic segmentation classifies buyers into different groups based on the characteristics of their social class, lifestyle, role models, and personality.
Behavioral segmentation, classifies buyers into groups, based on their knowledge of a product, their attitude to it, the use and value they give it, or the way they respond to a price or promotion. Among the groups, the following stand out: expected benefits, purchase occasion, rate of use, degree of loyalty, degree of knowledge, and attitude towards the product.
Once the consumer segments are clearly identified, it is necessary for the company to define the most appropriate strategy to manage these segments.
What are the objectives of segmentation?
Standardize the offer of products and services
Reduce costs
Maximize customer satisfaction
What are the strategies related to the market segments?
There are 3 possible strategies.
- Offer only one product and try to reach buyers with a single marketing program that is called UNDIFFERENTIATED MARKETING (in the case of Coca-Cola in its origin, only packaging, a single message: refreshes better).Project separate products and / or different marketing programs for Each segment is called DIFFERENTIATED MARKETING (In the case of soft drinks with different packaging, can, 2 liters, one liter, personal, etc.) Concentrate all efforts on one or more profitable market segments, which is called CONCENTRATED MARKETING.
What is the market segmentation process?
Market segmentation can have several focuses of work. It can be focused on the customer based on the segmentation criteria in which the profiles or their buying behavior are analyzed (analysis of before, during and after the purchase, frequency, volume, occasion); focused on products / services in which knowledge of purchase motivators, differentiators, primary and secondary benefits, etc.; Vendor-centric, leading to a special focus on image, opinion, and preference. And regardless of the focus, segmentation must be dynamic (constant and periodic) because consumers and social rules change over time, as well as perceptions about products and suppliers.
The market segmentation process covers the stages of study, analysis and preparation of customer profiles.
Study: The market is examined to determine the specific needs satisfied by current offerings, those that are not and those that could be recognized. Exploratory interviews are carried out and group sessions (focus groups) are organized to better understand the motivations, attitudes and behaviors of consumers (psychographic and behavioral segmentation). Collects data on attributes and importance given to them, brand awareness and brand ratings, usage patterns and attitudes towards product category; as well as demographic, geographic, socioeconomic data of the participants.
Analysis: The data is interpreted to eliminate the variables and group or build the segment with consumers who share a particular requirement and what distinguishes them from other market segments with different needs.
Profile preparation: A profile of each group is prepared in terms of distinctive attitudes, behaviors, demographics, geography, etc. And each segment is named based on its dominant characteristic. The segmentation must be repeated periodically because the segments change. The hierarchy of attributes that consumers consider when choosing a brand is also investigated, this process is called market partitioning. This can reveal new market segments.
Segmentation is effective to the extent that the company is able to make differentiated offers for each segment. These differences must be perceived by clients and considered relevant.
The use of information technologies facilitates the analysis and profiling stages, and microsegmentation. The latter is based on the proper management of customer behavior and consumption databases.
Database management, associated with micro-segmentation processes, makes it possible to distinguish between active and inactive, important and secondary customers, monitor the value of a customer over time, predict their purchasing behavior, identify prospects similar to the most important customers, personalize communication. As well as the profitability of customers and segments, the productivity of the sales force, abandonment rates or loyalty among others.
Benefits of Market Segmentation.
- It enables the identification of customer needs within a sub-market (micro-segmentation process) and the most effective design of the marketing mix to meet them. Businesses can grow faster if they gain a strong position in niche market segments. The company creates a more refined product or service offering and sets the appropriate price for the target audience Facilitates the selection or improvement of the efficiency of distribution and communication channels The company faces fewer competitors in a specific segment. new growth opportunities and the company gains a significant competitive advantage.
Customer Oriented Marketing Strategies:
Some customer-oriented marketing strategies focus on loyalty and getting new customers. This requires continuous improvement in marketing processes, sales force management, and after-sales service management.
What is loyalty for?
- To sell more profitably To retain customers To sell more to my best customers (up-selling and cross-selling) To clone the best customers
Bibliography
- Kotler, Philip - Marketing Management, Prentice-Hall International Edicion, 2003 Porter, Michael E. Competitive Advantage creating and sustaining superior performance, Touchstone
