Basics of Marketing
...o buy the product belong to the qualified available market. The target market consists of the segment of qualified available market that the company has chosen to serve. The last market is the penetrated market which contains the consumers who have purchases the product. Since a market consists of consumers whose wants and needs differ a company need to analyze and understand those needs for the their selected market. Therefore the next step is to segment their chosen market. 1.5 Market Segmentation ¡°Only the one who knows the goal can hit it¡± (Greec saying). Even if a company has chosen a market it wants to serve, their penetration market, they still will not be able to satisfy each and every customer. Although their customers of the target market have the same characteristics, they still differ from their expectations to the product. Segmentation allows the company to better understand and satisfy the needs of its potential customers. Segmenting the target group gives the company a higher chance for success than implementing their marketing strategy on a highly scattered market of buyers. To segment a company has to recognize the diversity of the customers in their target market. The following criterias help to segment the target market: Identifyable: to find out the attributes and characteristics that make the consumers within the target group unique and identifyable. Accessible: it must be possible for the company to reach the different segments through communication and distribution channels. Substantial: the segment should be large enough to justify the resources required to target it. Unique needs: it must be proofen that the consumers differ by different responses to the marketing mix. Durable: to keep and minimize the cost of frequent changes a company is going to spend on the segment it has to be relatively stable. To segment a consumer market the following characterisics should be analyzes: Geographic segmentation: here a company can differentiate their target group into the consumers specific regions like continent, country, state, city, or neighborhoods. Also the size of the metropolitan area can be analyzed according to their size of population, followed by the density of the population classified into urban suburban, or rural. Another geographic segment could be the climate, where the weather patterns for certain geographic regions are observed. Demographic segmentation: here the market gets divided into its characteristics by age, gender, family size, familiy lifecycle, income, occupation, education, ethnicity, nationality, religion, and social class. The demographic segmentation is used the most because it is very easy to measure and correlates very often with the geographic segmentation. Examples show how important the demographic segmentation is. A baby of three months shows different preferences for toys than a six months old baby. The company Lego has different models for every age, from ¡°Duplo¡± toys for babies to ¡°Techno-Lego¡± for Lego specialists in the teenage years and up. Psychographic Segmentation: here consumers are segmented by their lifestyle and personality. A consumer tries to express his personality by the products he buys. He reflects his personality by his lifestyle with the purchased products. Categories for segmentation could be activities, interests, opinions, attitudes , or values. Examples here would be for the cosmetic industry, fashion, or food. The cosmetic industry offers different lotions for the young generation or anti-wrinke creams for the older generation from the age of 40 and up. Behavioralistic segmentation: here the consumers behavior towards the product is analyzed and segmented. Consumers get tested on their knowledge of the product, their oppinion, usage rate, brand loyalty, benefits sought, brand loyalty, user status (potentioal, first-time, regular, etc.), readiness to buy, and occasions (holidays and events that stimulate purchases). 1.6 Market Analysis The market analysis predicts the direction of a market, determines the attractiveness of a market and helps to understand the opportunities and threads of it based on technical data. Dimensions of a market analysis are: Market size: of the current or future situation, based on present sales and on potential sales if the products use were expanded. Information can be sourced from: government data, trade associations, financial data from major players and customer surveys. Market growth rate: can either be done by extrapolating historical data into the future, which may lack of important turning points, or observe demographic information and sales growth in complementary products and then estimate the shape of the curve. Market Profitability: Five factors, known as Porter¡¯s five forces, are the framework for influencing factors of the market profitability, which are buyer power, supplier power, barriers to entry, threat of substitute products, and rivalry among firms in the industry. Industry Cost Structure: helps to identify key factors for success by using e.g. Porter¡¯s value chain model , and also to formulate strategies to develope a competitive advantage, e.g. for a cost advantage curve a company could use the experience curve. Distribution channels: different channels like e.g. existing distrubution channels, trends and emerging channels, or the channel power structure could be analyzed. Market trends: differ in each industry, but always offer new opportunities and threads; e.g. changes in price sensitivity, demand for variety, level of emphasis on service and support. Key Success Factors: are e.g. access to essentail unique resources, aility to achieve economies of scale, access to distribution channels, or technological progress. A company needs these elements to reach their goals in marketing and are important to be reviewed since products change constantly through their life cycle . 1.7 Target Market The target market is the market the company chose to be its qualified market to penetrate with its marketing strategy. The company adobts its product to the wants and needs of the potential consumers in the target market. But before choosing a target market the company has to find out the attractiveness of the segment it wants to work in and the suitability of the segment to the company¡¯s objectives, resources, and capabilities. To find out the attractiveness aspects like the size, growth rate, brand loyalty of existing customers, sales potential for the company, expected profit margins in the segment should be considered as well as the required market share to break even and the market share attained through promotional budgets and competitors¡¯ expenditures. For the suitability of the segment to the company aspects like the ability to offer superior value to the customer, the accessibility to distribution channels, the impact the company will have on the segment with its image, and if the company has the money for the resources required to serve the segment. After considering those and other specific factors important for the company¡¯s product the target market can be chosen and marketing strategies can be found for implementation. 1.8 The Marketing Process The process of finding out the needs, wishes and demands can be modelled in four steps: The Marketing Process Situation Analysis ¡ý Marketing Strategy ¡ý Marketing Mix Decisions ¡ý Implementation & Control Corporat Vision , Defining the Business, Corporate Culture, Corporate Philosophy, and Corporate Identity have a strong influence on the marketing goals, -strategies and ¨Coperations. Definition: Corporate Vision (CV): The vision is the driving power and orientation for the company and the marketing division to find strategies and goals. Defining the Business: The company has to define ¡®what¡¯, in which field of the textile market it operates, e.g. ladies clothing, mens clothing, etc., and the ¡®how¡¯, in which genre the product should be produce, e.g. high genre (high quality), to low genre. Corporate Culture (CC): higher-than-average service, strong efficiency- and results-orientation, and a high quality and motivation of the emloyees within the company lead to success of the whole company. Corporate Philosophy (CP): belief, principles, and code of behaviour set by the chief of the company. Corporate Identity (CI): is the attitude of the company towards the environment and within the company itself. It is divided into components of the identity mix (Corporate Design, Corporate Behaviour, Corporate Communication). 1.8.1 Situation Analysis The situation analysis has the task of identifying the customer¡¯s needs, the firm¡¯s own capabilities and its environment. It should analyse the chances a firm has on the market. The environment can be divided into two parts. Internal are the firm¡¯s micro environmental factors (customers, competition, markets, suppliers), and external are the macro environmental factors (political, economic, societal, technological factors) that any firm is in. To better satisfy the customers wants and needs the analysis should include past, present and future aspects, and it should try to forecast the trends which can reduce the chances of failure of a new product on the market and have a successful company which is better than its competition. There are several ways how to analyse the situation of a firm, its opportunities and threads: 5C Analysis analyses micro- and macro-environmental factors for a marketing decision - Company (product line, image in the market, technology and experience, culture, and goals) - Customer - Competitors (market size, market growth, tangible and intangible benefits of the product, place of purchase, place of information resource of product, trends, buying process) - Collaborators (distributors, suppliers, alliances) - Climate (macro-environmental factor) PEST analysis (¡®climate¡¯ of 5 C framework) to find out the macro-environmental situation. It measures the market. SWOT analysis shows the strength and weaknesses, opportunities and threats of a company. It can measure a business unit, a company, a business idea, an investment opportunity, and much more. 1.8.2 Marketing Strategy To find out a Marketing Strategy is the program of events to place the product into the market. Therefore market research is necessary to provide specific information of the target market and allow the company to plan a strategy that matches the market the best by segmentation, targeting (target market selection), positioning the product within the target market, and propose a value to the target market. 1.8.3 Marketi...