Market
The word market is used in many ways. Some people can go to the market; others may plan to market a product.
There are many terms. A market can be defined as a place where buyers and sellers meet, goods or services are offered for sale and transfer of ownership occurs. It can also be defined as the demand for a product or services. By certain groups of buyers and sellers, goods or services are offered for sale and transfer of ownership occurs. It can also be defined as the demand for a product or service, on the other hand, from a certain group of possible buyers.
These market definitions may be precise enough to be useful at this time. Thus, the term market was defined as a group of people with needs to satisfy, money, and a willingness to spend it. The market demand for any product or service has three factors that must be considered: people with needs, purchasing power, and purchasing behaviors.
Target market selection
The organization's marketing planning begins with deciding its market goals. Once goals are established, the next step in the strategic planning process is to select and analyze the organization's target markets. A target market is a group of customers that the organization tries to guide its marketing effort.
Guides in relation to market selection
The first is that the target markets must be compatible with the goals and image of the organization, a second guide consists of relating market opportunities with the company's resources.
Businesses must generate profits. This more or less obvious point translates into something that an obvious guide to market selection. The organization consciously seeks markets that generate sufficient volume of low-cost sales, prar results in a profit. They put the profit factor aside when they want to hit high-volume markets. The goal is to just increase sales volume, rather than increase productive sales. The company should generally seek a market where the number of competitors and their size is minimal. You should not enter a market saturated with competitors, unless you have a competitive advantage over existing companies.
We define the market as the group of people with 1) needs to be satisfied, 2) money, and 3) willingness to spend it. To select the target market, management must analyze these three components. The first must be studied by analyzing geographic distribution and demographic composition. The second is analyzed through the distribution of income and expenses to determine "willingness to spend", it must be studied to determine purchasing behavior.
To select its target market, the company must make quantitative estimates of the size of the sales volume in the market for the product or service.
Management must prepare a sales forecast, usually for a period of one year. The sales forecast is the basis for the budget and for planning the operation in the short term.
When the organization adopts the market unification strategy, it treats its total market as a unit; whose parts are considered similar in their main characteristics. Management seeks to satisfy as many customers as possible. develop a product for the whole group; establishes a pricing structure and distribution system for your product aimed at the entire market. When is it convenient for an organization to adopt the strategy of unifying the market? When a large number of customers in the total market have the same opinion about the needs that the product satisfies. A unified marketplace is adopted when you want to have a single uniform group of potential buyers.
Market segmentation
The total market for most products is not very varied, very heterogeneous. This lack of uniformity may indicate that there are differences in purchasing habits, in the way the product is attached, in the reasons for its purchase or in other factors. Market segmentation takes these differences into account.
What is market segmentation?
The total, heterogeneous market for a product is divided into several segments, each of which tends to be homogeneous in all its significant aspects. Consider segments or parts each of them uniform. Management selects one of these segments as the target market and each segment develops a separate marketing mix which means determining various demand schedules; one for each market segment.
Simple and multiple segmentation
Management can choose between single and multiple segmentation.
Simple segmentation means selecting as a target market a homogeneous group of the total market to satisfy a unique segment that allows a company to penetrate a small market and acquire a reputation as a company of experts or specialists in the limited market. You can enter that market with limited resources. The risk is that the seller bets everything on a single number. If the potential market decreases, the seller may have serious problems.
Multiple segmentation in this, two or more different groups of potential customers are identified as target market segments. A separate marketing mix is developed to target each segment; A company will develop a different variety of the basic product for each segment as part of the multiple segmentation strategy. It can also be done without product changes, with separate marketing programs targeting a different segment of the market.
Benefits of market segmentation
A small company with limited resources can compete effectively in one or two market segments; the same company would be in trouble if it went to the total market. I was able to design products that meet market demand using the market segmentation strategy. Advertising media can be used more effectively because promotional messages and the media chosen to present them can be directed more specifically towards each market segment.
Conditions for effective segmentation
Three conditions help management meet its objective.
- The characteristics used to classify customers must be measurable and the data accessible. The "desire to purchase environmentally friendly products" can be a useful feature. The market segment should be accessible through existing marketing institutions (distribution channels, advertising media, company sales force, etc.) at cost Each segment must be large enough to generate a profit. You can treat each customer as a separate segment. The company should not develop a large number of styles, colors, sizes and prices when segmenting a market.
Bases (criteria) for market segmentation
End consumer and industrial users: the single rule for this segmentation is the reason for purchase. End consumers buy or use products or needs for non-commercial purposes; it is what is called the "consumer market". Industrial users with business organization, industrial or public, who buy products or services is to use them in their own businesses or to manufacture other products.
Bases for consumer market segmentation
The model that we will use is related to the three components of the market defined previously.
- People with needs: we can segment the market on demographic bases such as:
- Regional population distribution Urban population - suburban-rural Age Sex Phases of the family life cycle and others:
- race religion nationality education occupation
- Sociological
- cultural groups broad social classes small groups, including the family.
- Personality Attitudes Desired benefits of the product
- Regional population distribution Urban population - suburban-rural Age Sex Phases of the family life cycle and others:
Bases for the segmentation of industrial markets
Like consumer markets, industrial markets must be segmented to develop effective marketing programs that reach industrial users.
Bases of demographic segmentation
Population distribution and composition
People are the main component of a market. They should analyze the geographic distribution and demographic composition of the population as a first step to understanding the consumer market.
- Total population: This total market is so large and so diverse in its characteristics that it must be analyzed in segments. There have been significant changes in the regional and urban-rural population distribution models. Market differences by age, sex, lifestyle, and ethnic background pose a problem for marketers. Regional Distribution - This is important to marketing staff because local differences impact differences in demand for many products. The differences may be related to weather, social customs, and other factors. Urban, rural and suburban distribution: The population decline in the countryside has caused some marketing experts to ignore the rural market. This market, both the industrial market for agricultural equipment, and the consumer market with increased purchasing power, is still very large. Patterns have considerable influence on buying behavior. Age Group: Segmenting the consumer market by age group is a useful approach in the market for many products.
- The children's market (with school age from 5 to 13 years) has three ways in which to market. First, children can influence parents' purchases. Second, parents spend hundreds of millions of dollars on this group. Third, children make purchases of goods and services for their personal use… the adolescent market is an important and difficult market to conquer. Young people are not all the same; the 13-16 age group is certainly very different from the 17-20 age group. Marketing staff must understand young consumers because of the size of the market and why their members have an increasing amount of money to spend. They are good consumers of music, cars, cosmetics, clothing, jewelry, and other products.Young adult market (age group 20-39) of particular importance because at that age, typically, people start their careers, marry, start a family and spend a lot of money. fifth and sixth decade of life. This mature market is large and economically promising. Its members are at the peak of their purchasing power and no longer have financial responsibility to their children. The other age group includes people over 65; Members of this age group are logical prospects for small, low-cost homes, cruises, travel abroad, health products, and cosmetics prepared especially for the elderly.They start a family and spend a lot of money. One is the group of people in their fifth and sixth decades of life. This mature market is large and economically promising. Its members are at the peak of their purchasing power and no longer have financial responsibility to their children. The other age group includes people over 65; Members of this age group are logical prospects for small, low-cost homes, cruises, travel abroad, health products, and cosmetics prepared especially for the elderly.They start a family and spend a lot of money. One is the group of people in their fifth and sixth decades of life. This mature market is large and economically promising. Its members are at the peak of their purchasing power and no longer have financial responsibility to their children. The other age group includes people over 65; Members of this age group are logical prospects for small, low-cost homes, cruises, travel abroad, health products, and cosmetics prepared especially for the elderly.The other age group includes people over 65; Members of this age group are logical prospects for small, low-cost homes, cruises, travel abroad, health products, and cosmetics prepared especially for the elderly.The other age group includes people over 65; Members of this age group are logical prospects for small, low-cost homes, cruises, travel abroad, health products, and cosmetics prepared especially for the elderly.
- Single stage: young people without marital ties. Young married couples without children. Full nest. Young married couples with children Full nests. Older married couples with children still dependent Empty nest: older married couples without dependent children Older people living alone Still working or already retired.
Other demographic segmentation bases
The market for some consumer products is influenced by factors such as education, occupation, race, national origin, and religion. With a larger number of people who have a higher level of education, for example, we can expect to see 1) changes in preference for products 2) more demanding buyers and 3) higher income. Occupation may be a more significant element.
People are different because of their attitudes, interests, and other lifestyle factors.
Consumers with geographic mobility constitute a unique segment of the market, of considerable size that is beginning to pay attention where many of these consumers have high incomes. Their mobility forces them to develop new shopping habits, to seek new sources of products and services, and to develop new brand preferences.
Consumer income and its distribution.
They are essential factors in any market analysis and segmentation strategies.
What is income? There are so many different concepts of income.
National income: total income from all sources, including wages, business profits, and other income.
Less: business profits and social security contributions
Plus: dividends, transfer of government payments to individuals and net interest paid by the government
Same:
Personal income: income from wages, salaries, dividends, rents, interest, businesses and professions, social security and agricultural activities.
Less: all federal, state and local taxes and non-tax payments
Same:
Available Personal Income - The amount available for personal consumption and savings.
Less: 1) essential expenses for food, clothing, household items and local transportation, 2) fixed expenses for rent, mortgage payments, insurance and installment payments.
Less:
Discretionary Income: It is the amount of disposable personal income that remains after the fixed commitments. and basic needs. Let's also listen to the terms monetary income: it is the amount that a person receives in cash or check for salary, rent, interest and dividends. Real income is what money income can buy in goods and services; it's buying potential.
Income distribution.
To have a complete income analysis we must study the variations and trends in the distribution of income between certain regions and between certain population groups. Regional entry data are useful to specify the specific market that the company wants to reach. Income data for cities or inner urban areas may indicate the best location for downtown shopping malls and suburban retail branches.
Meaning of entry data in marketing.
The decline in the percentage of families classified in poverty, along with increases in the high-income group, promises explosive growth in discretionary purchasing power. As discretionary income grows, so will the demand for items that were considered luxury.
The increase in two-income families has significant sociological and marketing implications. Double income generally allows a family to counteract the effects of inflation, it allows a family to buy in the short term the things that parents have had a much harder time getting.
Consumer spending patterns
Spending patterns are not the same for all families. The patterns vary considerably, depending on family income, life cycle stage, and other factors are influenced by the consumer's life cycle stage. Marketing staff must be concerned with the contrasts in spending factors between people in stage I of marriage with very young children, and people in the empty nest stage, that is, with all stages of the family life cycle.
Relations with income distribution.
The results tell us the type of information that sellers should obtain from the analysis of spending patterns by income group.
- There is a high degree of uniformity in spending patterns in the middle interest groups, the structure of social classes often represented a significant characteristic in determining spending patterns.For each product category there is a considerable absolute increase in spending, as income increases, when we compare an income group with a higher income group. Low-income families spend a larger percentage of their total spending on some product categories such as food. In each successive higher-income group, the amount of food spending decreases as a percentage of total spending.
Guidelines for selecting markets.
The first establishes that they must be compatible with the goals and images of the organization. You have to tailor the marketing opportunity to the company's resources.
In the long run a business must generate a profit if it is to survive, many companies often neglect the profit factor in their search for high volume markets. Often the goal was exclusively sales volume, not profitable volume. A company will usually look for a market where the number of competitors and their size are minimal. An organization should not enter a market that is already saturated by competition, often with a great competitive advantage that allows it to take customers away from other companies.
Nature of market segmentation.
The total market for most types of products is too varied (too heterogeneous) for managers to view it as a single, uniform entity. This lack of uniformity can be attributed to differences in shopping habits. To the ways in which the product is used, the reasons for the purchase or other factors. Market segmentation takes these differences into account.
What is market segmentation?
The is the process of dividing the total heterogeneous market for a product into several segments, each of which tends to be homogeneous in all important respects. Market segmentation is the opposite of market aggregation. Market aggregation (unification) is the strategy whereby an organization treats its total market as a unit.
In the language of economic theory, in this type of market the seller assumes that there is only one demand curve for his product. It actually assumes that the product has broad market appeal. In contrast, in market segmentation the market is seen as a series of demand curves.
Advantages of market segmentation.
Customers' needs within a submarket (segment) are first ascertained and then met. Market segmentation we use an individual approach and Market aggregation is a joint approach.
The market segmentation strategy, a company can design products that really correspond to the demands of the market. Advertising media can be better used because promotional messages can be targeted more specifically to each market segmentation.
Limitations of market segmentation.
This strategy has some limitations regarding costs and market coverage. It can be a costly activity in production and production marketing. With segmentation, marketing expenses increase in several ways. The costs of the total inventory are raised by being precise to maintain sufficient inventories of each style, color, etc… the costs of advertising create because different ads may be required for each segment. Administrative expenses create when management must plan and carry out various marketing programs.
Conditions for good segmentation.
- The segmentation criterion must be measurable, and the information must be accessible. The market segment must be accessible through current marketing institutions with a minimum of cost and loss of time. Each segment should be large enough to be profitable.
Bases of market segmentation.
General categories: end consumers and industrial users. Some of the bases with which these two general markets are further segmented.
Criteria for segmenting the consumer market.
The criteria can be grouped into four general categories:
- geographic psychographic demographic product behavior
BASE OF SEGMENTATION OF THE CONSUMER MARKETS.
Geographical:
- Region City or size of MSA Rural urban Climate.
Demographic:
- Age Sex Family Life Cycle School Occupation Religion Ethnicity Income
Psychographic:
- social class, personality, lifestyle
Behavior before the product
- Desired benefits Use rate.
When applying these segmentation criteria we must point out two points. First, buying behavior can rarely be attributed to a targeting factor. Useful segmentation is almost always obtained by including variables based on different criteria.
The other point to observe is the interrelation between these factors, especially among the demographic ones.
1. Geographical segmentation.
Many organizations segment their market based on some geographic criteria: census region, city size, urban, suburban, or rural area, and climate. Several sell their products exclusively in a limited geographic region.
2. Demographic segmentation.
The most widely used criterion is a demographic factor: age, sex, income, stage in the family life cycle, ethnic origin, etc.
All demographic actors can serve as the basis for obtaining operational segments as they meet the conditions for good segmentation: measurable, accessible, and large enough.
Age we know very well that our wants needs change over the years. In recognition of this fact, countless companies use age categories as criteria to segment the markets for their products.
Sex has been commonly used as the basis of segmentation for many products.
Income segmenting markets by income is a strategy applied by companies that sell products and services such as cars, homes, travel, jewelry, and furs. Income is usually combined with some other criteria as well. Social class may be a more reliable predictor of behavior than simple income.
3. Psychographic segmentation.
Three common bases of psychographic segmentation of consumer markets are social class structure, personality characteristics, and lifestyle.
Social class has a profound influence on your choice among many product categories.
Characteristic of personality. Personality traits should be a good yardstick for segmenting markets. Personality characteristics pose some problems that reduce their usefulness in market segmentation. Those traits are often virtually impossible to measure accurately quantitatively.
Lifestyles Being cautious, skeptical, ambitious, workaholic, or a copycat can be considered both a personality trait and lifestyle characteristics. Lifestyles are related to activities, interests, and opinions.
They are segmented by nine lifestyle categories:
- Survivors Emulators Experimenters Supporters Achievement-oriented Stakeholders in society People with a sense of belonging Egocentric Integrated
Lifestyle segmentation is a useful marketing tool, it has some of the same limitations, properties of segmentation made from the characteristics of the personality. It is difficult to accurately measure the size of lifestyle segments in a quantitative way.
Bases related to the product.
Some marketers regularly try to segment their markets based on consumer behavioral characteristics related to the product. Two of these segmentation criteria related to the product.
Desired benefits this type of segmentation is compatible with the idea that a company should sell the benefits of the product and not simply its physical or chemical characteristics. From the point of view of consumers, they are actually buying the benefits of the product and not simply the product. The customer will want a smooth surface (the benefit) and not sand it (the product).
To be effective, there are two tasks to do. First, a company must be able to identify the benefits that the public seeks in the product or service. 1) sensory aspect, 2) social aspect, 3) concerns, 4) independent aspects.
Once these individual benefits have been determined, the second task is to describe the demographic and psychographic characteristics of the members of each segment. And so the salesperson is in a position to launch a product and a marketing program to reach the selected target segment.
Usage rate we have categories of non-users, medium users and large users.
Sometimes the target market is the non-user or the heavy user, and then the goal is to attract those customers to a higher utilization category. Once the light user categories are discovered, management can address them directly by using a low-priced introductory offer. or it could increase the rate of use by promoting a) new application of the product, 2) new times of use; 3) multiple packing.
Segment the industrial market
Some of the bases or criteria used to segment the consumer market could also be used to segment the extensive industrial market. You could do the segmentation based on criteria related to the product; some bases that are used exclusively when industrial markets are segmented. Three in particular that are: Types of customers, the size of the customer, and the type of purchase situation.
Customer type
A corporation that sells its products to men's clothing manufacturers may start with prospective customers listed with the number 23 of the two-digit clothing manufacturing code. After the three-digit code 232, tell potential customers that they build men's and children's furniture. Finally, the code number 2321 identifies manufacturers of shirts and nightwear.
Client size
High-volume customers sell the sales force directly to high-volume customers directly sell the sales force. Smaller clients. The seller will use an agent of the manufacturer or some other form of intermediary.
Types of the purchase situation.
Buy new, buy back and buy back without change. Then you could develop three marketing programs to reach each of the two or three segments.
TARGET MARKET STRATEGIES
The three options are aggregation (unifying) of markets, concentration of a single segment and segmentation by multiple segments.
Aggregation (unification) of markets.
Market aggregation, also called mass market or undifferentiated market. This is a massive, unified market whose parts are considered alike in all fundamental respects. Management then develops a single marketing mix to reach the largest possible number of customers in it. In other words, it develops a single product for this massive audience.
Market aggregation is a production-oriented strategy. It enables a company to maximize its economies of scale in production, physical distribution, and promotion. Manufacturing and marketing a product for a market means longer production runs at lower unit costs. Inventory costs are kept to a minimum when the variety of product colors and sizes is absent or very limited.
This strategy is almost accompanied by product differentiation, which is the strategy whereby a firm tries to distinguish its product from the brands that the competition offers to the same aggregate market.
Single segment concentration strategy.
The single-segment concentration strategy requires selecting a homogeneous segment within the total market as a target market. A marketing mix is then developed to reach it. This strategy enables a company to penetrate a small market in depth and gain a reputation as a specialist or expert in that narrow market.
The great risk and limitation of the single segment strategy is that the seller has all the new ones in one basket. If that segment declines in market potential, the seller will suffer.
Public segment strategies.
In the multi-segment strategy, two or more groups of potential customers are identified as target market segments. Then a marketing mix prepares to reach each one. As part of the multiple segmentation strategy, an organization will often come up with a variety of the basic product for each segment. A multi-segment strategy typically achieves a higher sales volume than a single-segment technique. Multiple segmentation is also useful for a company facing a seasonal demand for its product.
Market demand forecast.
Forecasting market demand means estimating a company's total market sales volume and the expected sales volume in each segment. This step requires estimating the total industry potential for the company's product in the target market. And then the seller must estimate his share of the total market.
The main requirement is to prepare the sales forecast, it is the foundation of all budgets and operational plans of all departments of a company: marketing, production and finance.
Definition of some basic terms.
Market factor and index.
The market factor is an element that exists in a market, can be measured quantitatively and is related to the demand for the product or service. The market index is simply the market factor expressed as a percentage or in some other quantitative way, related to the base figure.
Market potential.
The market potential is a product is the expected total sales of it by sellers during a specified period and in a specified market. Sales potential is the share of a potential market that a company hopes to obtain. Market potential and sales potential are equal when a company has a monopoly on its market, as with some public services.
Sales forecast.
The sales forecast can be defined as an estimate of sales during a specific future period and in a marketing plan previously established in the company.
Sales forecast and marketing plan.
The sales forecast is based on these goals and strategies established beforehand. Different forecasts will be obtained depending on whether the marketing goal is to liquidate excess inventory of Product A or to expand market share through aggressive advertising.
The sales forecast, becomes the central factor of control in all the operational planning of the company. The forecast is the foundation of a successful budget. Financial planning for working capital needs, plant utilization, and other needs are based on forecasting sales.
Sales forecast period.
The period most used to make the sales forecast is 1 year, although many firms review the annual forecasts every month or every quarter.
Forecasts of less than one year of projection are desirable when activity in the firm's industry is so volatile that it is not possible to make a forecast for an entire year.
Demand forecasting methods.
A company can forecast its sales using two fundamental procedures: top-down method, management should generally:
- start with a forecast of general economic conditions, as a basis for determining the total market potential in the industry for a product; then measure the participation that the company is obtaining in this market; Measurement of items 2 and 3 forms the basis for forecasting product sales.
In reconstruction techniques, managers will estimate future demand in market segments or from organizational units. Of the company. Then you just add up the individual estimates to get a total forecast.
Market factor analysis
This method is based on the assumptions that future demand for a product is related to the behavior of certain market factors.
The key to a good application of this method lies in the selection of the appropriate market factors. It is also important to minimize the number of market factors that are used. The two procedures used to translate the behavior of market factors into an estimate of future sales with the direct derivation method and correlation analysis.
Direct Bypass A: The direct bypass method offers many advantages. Its application is relatively simple and cheap, and requires little statistical analysis, it is quite easy to understand, so that executives without statistical training can follow the method and interpret the results.
Correlation analysis: It is a mathematical refinement of the direct derivation method. When applying correlation analysis, the degree of relationship between the potential sales of the product and the market factor is taken into account. It measures, on a scale of 0 to 1, the variation between two series of data.
This method has two major limitations. First, you have to have a detailed sales history to do a really satisfying job. The other drawback is that very few marketing executives know correlation analysis and can actually perform the necessary calculations.
Survey of purchase intentions.
Another forecasting method is to interview a sample of potential customers. Another fundamental problem is the selection of the sample of potential buyers, there is another very serious limitation. It is one thing for consumers to intend to purchase a product and quite another for them to actually purchase it.
Purchasing intention surveys are likely to be most effective when 1) there are relatively few buyers; 2) they are willing to express their purchase intentions; 3) The background indicates that your follow-up actions are consistent with your expressed intentions.
Test Marketing
Test marketing is often used when deciding whether there is sufficient sales potential for a new product, it also serves as the basis for evaluating various product features and alternative marketing strategies. You can tell management how many people actually buy the product, rather than just showing how many said they intended to buy it.
Past sales and trend analysis.
This technique is widely used by retailers whose primary goal is to "beat last year's numbers." And it simply consists of applying a percentage increase to the volume achieved in the previous year or to the average volume of the last few years. Trend analysis includes a long-term projection of the sales trend, or a short-term projection
Opinion of sales force sales
This is a reconstruction method that can be used to forecast sales or estimate market potential. It consists in obtaining from all sellers and intermediaries an estimate of sales in their territories during the period covered by the forecast.
The opinion of the sales force is a method that takes advantage of the specialized knowledge that salespeople have regarding their own market.
Executive trial
This method comprises a wide range of possibilities, it consists of obtaining opinions regarding the future volume of sales from one or more executives.
Market segmentation is the process of dividing a total and heterogeneous market into several homogeneous segments. An individual marketing mix is then developed for each segment that the marketer selects as a target market.
The main drawback is that it requires higher production and marketing costs than if a mass market strategy were applied for a product. The conditions for effective segmentation are that the segmentation criteria are measurable with accessible data; that the segments are also accessible to current marketing institutions; the segments are large enough to be profitable.
The total market can be divided into two general segments: end consumers and industrial users.
The segmentation strategies admit three alternatives from which a marketer can choose when choosing a target market, namely: market aggregation, concentration in a single segment and multiple segmentation; Before choosing a target market, the company should forecast the demand in the total market and in each segment.
Segmentation analysis. It is based on the assumption that once the most useful ways to segment a market have been discovered. There has been the beginning of a solid marketing strategy.
Unique advantages.
Segmentation analysis has been developed based on several key premises:
In today's economy, each brand seems to effectively sell only to certain segments of any market and not to the entire market.
Solid marketing objectives depend on knowing how the segments that represent the largest number of customers for a company's brand differ with respect to requirement and susceptibilities, than the segments that produce the largest number of customers for competitive brands.
Traditional demographic methods of market segmentation generally do not provide this insight. Analyzes of market segments by age, sex, geography, and income level are not likely to provide such guidance for the marketing strategy required by management. Once the CMO discovers the most useful practical way to segment their market, it becomes a new standard for almost all of their evaluations. You will use it to assess the strengths or vulnerabilities of your competition, to plan your product line, predetermine your sales and advertising strategy, and establish precise market objectives against which performance can be measured. In specific terms, segmentation analysis helps you:
Direct the appropriate effort of promotional attention and money to the segments of your market that are potentially the most profitable;
Design a product line that is actually focused on market demands, rather than one that is too much for some areas and insufficient for other potential segments;
Noticing the first sign of a major trend in the rapidly changing market, and thus having time to prepare to take advantage of it;
Determine the points of interest that will be most effective in your company's advertising campaign; in those cases where there are several points of interest, quantify the market segments that are sensitive to each point;
Choose the advertising media with greater objectivity and determine the production of the budget to be assigned to each medium in relation to the expected impact;
Correct the programming of advertising and promotional efforts, so that they are maximized during the weeks, months and seasons in which the resistance of sales is lower, and their sensitivity is likely to reach a maximum;
Understand demographic information about the market that would otherwise be meaningless, and apply it effectively in many ways. These forms are applicable both in the case of packaged product and durable goods, both for commercial and industrial products and for consumer products.
Segmentation analysis allows you to penetrate through the information that a marketing director possesses when trying to set goals based on total markets, or when it depends mainly on demographic distributions. It is a systematic approach that allows the marketing planner to choose the most important segments, and thus be able to design brands, products, packaging, messages and marketing strategies based on them. They infinitely simplify goal setting.
THE FALSE SEGMENTATION ……
Some market segments are more apparent than real. This frequently occurs with respect to segments that have been defined after the fact, in terms of the product that is purchased. If it seems that there are big differences between two or more products, it is easy to conclude that the people who buy it will also have to be different from each other and will constitute different market segments.
THE TRUE SEGMENTATION ……….
True market segmentation is recommended when certain products have a strong impact on some people, but not others. To identify products of this type, categorization scales can be used. The product that attracts only one segment of the market should receive high ratings from that segment and relatively low ratings from the rest of the population. To check this conclusion, it is useful to examine the demographics and other characteristics of the people who do like the product.
TARGET MARKET
The target market is known as the purchase and sale of a product to satisfy a future consumer.
It can also be considered that a market is the people who have a need to satisfy, characterized by a common interest or problem that could use our products. And take advantage of this where there is a purchase and a sale that could lead through a means of communication.
Goal
It is in order to achieve the objective of an action
Target market
It satisfies the needs of a specific group of consumers who are found by researching an empty niche in the market.
It is any economic activity organized for the production, transformation, circulation, administration or custody of goods; for the provision of services.
The business market is also responsible for producing products and selling them in the same way to its customers.
One of the difficulties in managing a small business is the lack of information about operations, that is, about what and how many products in process or finished we have; about how many tools; materials; furniture and machines we have and what is its price.
In addition, as entrepreneurs, sometimes we do not carry how many either because it does not seem important to us, or because we do not know a simple way to do it, one that adapts to our needs.
This market is divided into two:
- Business market: it is composed of intermediaries or resellers who in turn sell to their retailer to obtain a profit. Reseller market: their fundamental activity or difference from other segments of the company's market, consists of buying products from suppliers or Sell them in essentially the same way to your customers.
2. Industrial market or industrial users: they buy the raw material and transform it into finished products. It is made up of the factories. They buy goods to produce other goods or industrial goods.
This market is divided into:
- Agricultural Markets: It is one of the main markets for high-income life companies. Agriculture is shared in a modern industry. Farming, in turn, seeks to improve its ways of projecting it, deducting expenses, and managing its cash flow, thus technology being an important part of that process.Governmental market: these are the processes of acquisition and expenses, which are carried out at the state level and municipal, by law a large part of government procurement. They must be carried out through competitive bidding systems.
There is no doubt that to be great businesses. With the government, specialized Marketing technique and abundant information are required.
Service market s: these types of companies seek a service that meets the needs of a community.
Service includes transportation, utility company, and financial insurance companies. The organizations that produce and sell services such as housing for rent, amusement activities of proportions, belong to this market. Medical care, personal care and business services.
Non-profit markets: these are all companies that present a service without. profit motive, such as churches, universities, museums, hospitals and others… health care institutions.
International markets: they are the companies that are dedicated to exporting a lot.. of their products and in large quantities.
exports and imports: among these we have the philips,. good year, daewo.
and. Consumer markets: they are people who buy a product or a consumer good in order to satisfy their own needs and desires to those of the family.
Types of consumers:
F. buyers: they are those who look for and buy a product.
g. Users: are those who already use the product.
TARGET GROUP
Market segmentation or target group.
It is the process of dividing a market into different groups of buyers who may require separate products or combined marketing.
Market segmentation divides potential consumers of a particular product into various submarkets or segments. Each of which tends to share one or more significant characteristics.
Segmentation allows organizations to design a marketing strategy that match the needs to the wants of the market.
Most companies do not have the ability to sell their products effectively to all possible segments, so they select one or two target audience markets from the available market segments.
Conditions to segment a market:
- It must be measurable: (that can be measured) such as sex, place, race, etc. That it is obtainable: (that we can obtain data) example: social classes, stratum, etc. That it is accessible: that it can be reached through of marketing institutions Make it big: The segment must be large enough to be profitable.
Variables of segmentation for markets.
1. Demography: study of the social and economic factors that influence human behavior.
Demographic: studies the economic and social factors that influence the behavior of an individual consumer.
Classification:
- Age = children, youth, adult-elderly Sex = male and female Family status = the way of life of each family Education = educational level Occupation Income Race and ethnic groups = religion, race, nationality
2. geographic: geographic location description of where people live.
Study of the sales patterns of different regions of the country or countries.
- country size region city size density: number of inhabitants climate
3. psychographic: is the division of the market into different groups according to social class, state of life or personality characteristics.
- social class life style personality
4. behavioral: form of conduct, is the division of the market into groups based on their knowledge, their attitudes, their employment or responses to a product.
- frequency of purchase benefits sought user level user index loyalty level loyalty stage preparation stage attitude towards the product.
Target market selection
Segmentation within marketing reveals the opportunities that each marketing segment offers the company. Now she has to decide how many segments she wants to cover and how to identify the most suitable ones.}
Three alternatives for market coverage
The company can adopt one of three strategies: undifferentiated marketing, differentiated marketing, and concentrated marketing.
1. Undifferentiated marketing. By using an indifference marketing strategy, a company may decide to ignore the differences between segments and try to reach the entire market with a single offer. It focuses on what is common to consumer needs rather than what is different, designs a product and market program that will appeal to the most customers, relies on mass distribution and advertising. He strives to give the product a superior image in everyone's mind.
Undifferentiated marketing saves costs, in effect a limited product line reduces production, inventory and transportation costs, as well as the absence of research and marketing planning by segments lowers the costs of research and product management.
Most people who study the market do not accept these strategies. Indeed, it is very difficult to develop a product or a brand that everyone likes.
Companies that use undifferentiated marketing tend to develop an offering dedicated to the broadest segments of the market. When there are several that do this, there is strong competition in the broader segments.
2. Differentiated marketing. It is when a company decides to target various market segments and designs different offers for each one of them. Example: a car company tries to produce a car for each pocket, purpose and personality. By offering variations within the products the company expects to obtain higher sales and a stronger position within each of the segments. And that consumers will increasingly identify the company with a certain product category.
Differentiated marketing tends to create more total sales than undifferentiated marketing.
3. Concentrated marketing. It is a market coverage strategy in which a company tries to bring a large percentage of one and several submarkets and it is the one that has limited resources and through this a company achieves a solid market position in the segment it serves. You acquire a deep understanding of your needs. Along with a good reputation. It also achieves much lower operating costs and thanks to its specialization in the field of production, distribution and promotion, if you choose the segment well, the company can provide high returns on investment.
Market classes:
- Business: Consumers: consumer products for example: food, personal hygiene, etc.
- Business - Industrial Resellers:
- agricultural mining
- non-profit governmental international
- Business - Industrial Resellers:
Segmentation of the consumer market.
The division of the total market in the segments of the final consumers and of companies of origin to subdivisions that continue being wide and diverse for generality of the products. We can divide the consumer market into smaller segments using the following characteristics:
- geographic demographic psychographic shopping behavior
When using the above characteristics as criteria to segment consumer markets, we have to keep several things in mind.
First, buying behavior can rarely be attributed to one feature alone. Therefore, a useful segmentation is obtained by including several characteristics.
They are due to the fact that the needs of the consumer and the use of the products are usually related to one or more of these subcategories. Geographic features are also measurable and accessible, two of the conditions required for good segmentation.
Many companies segment their market by the size of the cities or by the concentration of the population; that is, they use an urban-suburban-rural distribution
Age: Since needs change throughout our lives, the distribution of the population by age is a useful criterion to segment the market in many products.
The market for children (12 and under) influences spending in three ways. First, children influence the purchase that their parents make.
Second, both parents and grandparents invest a lot of money in this group.
Third, children also buy goods and services for their personal use.
For ages 6 to 11, it contains writing and art projects featuring ads for Crayola crayons, Pentel pens and Fruti Stripe gum. This trend is also reflected in the fact that 80 new children's magazines have been launched on the market since 1096.
Teens are a large market for videotapes, clothing, cosmetics, automobiles, stereos, records, and other products.
The group of those whose age fluctuates between fifty and sixty years. It is a large market with great purchasing power. Its members are in the period of greatest perceptions and generally no longer have the responsibility of supporting their children. Therefore, they are a good target market for companies that sell high-quality, expensive goods and services. For example, these people are very interested in health and nutrition, but they do not want to be considered old.
The other group is made up of people over 65, a segment that is growing both in absolute numbers and as a percentage of the total population.
Genres: For many years, market segmentation by gender has been a logical option for products such as clothing, shoes, and grooming items, and a less obvious option for other products such as cars and magazines.
In the case of clothing, some traditionally male products were redesigned and repositioned for the female segment of the market.
Family life cycle: the main factor that explains the differences in consumption habits between two people of the same age and sex is the fact that they are in different stages of the life cycle.
- single stage: young people, single married young people: married couple with children full nest: married young people with children Single parents: young or middle-aged people with dependent children Divorced and lonely: divorced without dependent children Mature marriage: old marriage mature, childless Full nest: mature couples with dependent children Empty nest: elderly couples, no children living with them Elderly single: single who are still working or have already retired.
The stage of the family life cycle is a central factor in consumer behavior.
Income: people do not constitute a market by themselves; it is essential that you have money to spend. Income distribution is one of the most common criteria for segmenting consumer markets.
Social class: the most common indicator of social class includes the level of education, type of occupation and neighborhood classes in which a person lives. Social class is a composite demographic measure. The social class of a person.
Other demographic variables of segmentation: factors such as schooling, occupation, religion and ethnic origin influence the market for some consumer products.
Psychological segmentation: The behavior of buyers and why they are relatively easy to obtain. Psychological segmentation consists of examining attributes such as personality and lifestyles.
Characteristic of the personality: the characteristics of the personality of an individual are usually described from the traits that influence behavior
The characteristics pose problems that limit their usefulness in practical market segmentation. First, its presence and strength in the population are practically impossible to measure.
Lifestyle: this variable is related to activities, interests and opinions. Our lifestyle reflects how we use time and our convictions on various socio-economic and political issues. It is a broad concept that even encompasses what, for many, are personality traits.
Lifestyle influences which products we buy and which brands we prefer.
Psychography: The term psychography was coined to designate a wide series of psychological and behavioral descriptions of the market, values are one of those descriptors, values reflect our needs adapted to the reality of the world where we live.
- Self-respect Sense of achievement Self-realization Fun and enjoying life Security Being respected Sense of belonging Having a loving relationship Emotion
Once the individual benefits are known
SEGMENTATION BY BEHAVIOR
A behavioral segmentation. In this section we will briefly examine two topics: the desired benefits of a product and the rate at which the consumer uses it.
Desired benefits: the benefits sought by each and the possibly preferred brands
Identify the specific benefits consumers are looking for.
SEGMENTATION OF BUSINESS MARKETS.
We can segment these markets by applying geographic criteria. Some industries show great geographic concentration. Thus, companies that process natural resources are installed close to the source of them in order to minimize the scabs of shipments. Vehicle manufacturers are geographically concentrated simply because the most recent ones chose to settle close to the pioneers of the industry.
Likewise, the company presents demographic aspects that can be used to segment a market. For example, the size of a company, its types of businesses.
Sellers can also be segmented according to the benefits desired by the buyer or the rate of use. For the reader to have a more concrete idea of market segmentation 1. by type of customers, 2 by customer size and 3 by type of purchase situation.
Customer size. It can be measured by factors such as sales volume, number of employees, number of plants and sales offices.
Your sales forces can sell directly to the most important customers. Instead, you can use an intermediary to reach smaller customers.
Strategy related to target markets:
The company can adopt one of three strategies: aggregate the markets, focus on a single segment, or select multiple segments as the target market. If they want to evaluate strategies, executives must determine the market potential for each of the segments they identified. But before selecting a strategy, they have to calculate the potential of the segments. And for this it is necessary to establish some guidelines that govern the selection of the target market.
Guidelines for selecting the target market.
Four guidelines govern how to determine which segments will constitute the target market. The first is that those markets must be compatible with the goals or images of the organization.
A second guideline, compatible with our definition of strategic planning, consists of adapting the market opportunity represented by the identified segments to the organization's resources.
Fourth, a company should normally seek a market where there is less competition.
Aggregation strategy.
Also called a mass market or undifferentiated market strategy, a salesperson treats their total market as a single segment. Members of an aggregate market are considered equal with respect to the demand for the product. Thus, managers will be able to design a single marketing mix and reach most of the marketplace with it. In other words, a single product is developed for this massive audience; a price structure and a distribution system are established for the product; and a single promotional program is intended for the entire market.
Single segment strategy.
Or concentration, consists of selecting a single segment of the total market as the target market. A marketing mix is then designed to reach it. A company may wish to focus on a second individual in order to fight with many rivals in a larger market.
A single segment strategy allows the seller to penetrate deeply into a market and acquire a good reputation as specialists or experts in it, they can undertake this type of strategy even with few resources, and as long as the segment does not grow, it is very likely that the large competitors do not penetrate it.
Strategy oriented to various segments:
Two or more different groups of prospects are identified as target markets, a special Marketing mix is prepared for each segment. In a multi-segment strategy, a salesperson sometimes creates a special version of a basic product for each segment, however, segmentation is also achieved without introducing any changes to the product, but by using individual distribution channels or messages. promotions specially designed for a particular segment.
Almost always, a multi-segment strategy favors higher sales volume than a single-segment strategy. It is also useful for the company that has a seasonal demand. Due to the low occupancy of the dormitories in the summer, many universities sell the vacant spaces to tourists, another segment of the market.
Multiple segments bring benefits to an organization, although the strategy is not without disadvantages regarding costs and market coverage. First, it does the marketing in various expensive segments both in terms of production and marketing.
In the following video-lesson, Professor Paola Valencia, from the San Francisco University of Quito, makes a very good synthesis of the subject of market segmentation, explains what a market is, what a market segment is, what market segmentation is, why is it important to segment a market, what are the criteria for a successful segmentation, what are the variables to segment, the segmentation of consumer and business markets, the step-by-step process to perform a segmentation and the strategies to select the target market, among other topics. Very good complement to advance in the study of this fundamental topic of marketing strategy.
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