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MARKETING AND SALES MANAGEMENT
CHECK POINT 84: TARGET MARKETING

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1. what is target marketing?
2. market segmentation
3. market targeting
4. target markets
5. target markets coverage strategies
6. market positioning
7. the marketing mix
8. factors in the consumer market segmentation process
9. types of market segmentation in the consumer market
10. geographic segmentation
11. demographic segmentation
12. psychographic segmentation
13. behavioral segmentation
14. factors in the business market segmentation process
15. north american industry classification system
16. business classification based on size
17. business classification based on geographic location
18. composite profile
19. target marketing steps in the business market
20. advantages of the target marketing process
21. for serious business owners only
22. the latest information online
 

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MARKETING AND SALES MANAGEMENT
CHECK POINT 84: TARGET MARKETING

Please Select Any Topic In Check Point 84 Below And Click.

1. what is target marketing?
2. market segmentation
3. market targeting
4. target markets
5. target markets coverage strategies
6. market positioning
7. the marketing mix
8. factors in the consumer market segmentation process
9. types of market segmentation in the consumer market
10. geographic segmentation
11. demographic segmentation
12. psychographic segmentation
13. behavioral segmentation
14. factors in the business market segmentation process
15. north american industry classification system
16. business classification based on size
17. business classification based on geographic location
18. composite profile
19. target marketing steps in the business market
20. advantages of the target marketing process
21. for serious business owners only
22. the latest information online
 

DO I NEED TO KNOW THIS CHECK POINT?

 

WELCOME TO CHECK POINT 84

TUTORIAL 1 General Management TUTORIAL 2 Human
Resources Management
TUTORIAL 3 Financial Management TUTORIAL 4 Operations Management TUTORIAL 5 Marketing
And Sales Management
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2 7 12 17 22 27 32 37 42 47 52 57 62 67 72 77 82 87 92 97
3 8 13 18 23 28 33 38 43 48 53 58 63 68 73 78 83 88 93 98
4 9 14 19 24 29 34 39 44 49 54 59 64 69 74 79 84 89 94 99
5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
 

HOW CAN YOU BENEFIT FROM CHECK POINT 84?

 
The main purpose of this check point is to provide you and your management team with detailed information about Target Marketing and how to apply this information to maximize your company's performance.
 
In this check point you will learn:
 
• About three elements of target marketing.
• About the basic steps in the target marketing process.
• About identification of suitable marketing segments.
• About specialized types of marketing for various market segments.
• About market segmentation variables for consumer and business markets.
• About target market coverage strategies.
• About the basic steps in the market positioning process.
• About strategies for effective product positioning.
• About in the four elements of marketing mix ("the four Ps").
• About factors in the consumer market segmentation process... and much more.
 

LEAN MANAGEMENT GUIDELINES FOR CHECK POINT 84

 
You and your management team should become familiar with the basic Lean Management principles, guidelines, and tools provided in this program and apply them appropriately to the content of this check point.
 
You and your team should adhere to basic lean management guidelines on a continuous basis:
 
Treat your customers as the most important part of your business.
Provide your customers with the best possible value of products and services.
Meet your customers' requirements with a positive energy on a timely basis.
Provide your customers with consistent and reliable after-sales service.
Treat your customers, employees, suppliers, and business associates with genuine respect.
Identify your company's operational weaknesses, non-value-added activities, and waste.
Implement the process of continuous improvements on organization-wide basis.
Eliminate or minimize your company's non-value-added activities and waste.
Streamline your company's operational processes and maximize overall flow efficiency.
Reduce your company's operational costs in all areas of business activities.
Maximize the quality at the source of all operational processes and activities.
Ensure regular evaluation of your employees' performance and required level of knowledge.
Implement fair compensation of your employees based on their overall performance.
Motivate your partners and employees to adhere to high ethical standards of behavior.
Maximize safety for your customers, employees, suppliers, and business associates.
Provide opportunities for a continuous professional growth of partners and employees.
Pay attention to "how" positive results are achieved and constantly try to improve them.
Cultivate long-term relationships with your customers, suppliers, employees, and business associates.

1. WHAT IS TARGET MARKETING?

IDENTIFICATION OF SUITABLE MARKETS FOR YOUR COMPANY

Business owners and marketing managers must be fully familiar with target marketing procedures, which include market segmentation, market targeting, and market positioning, to succeed in a competitive business environment.

One of the prime responsibilities of the business owner and the marketing manager is to utilize the Marketing Intelligence and to reveal the extent of the company’s trading potential and suitability of various markets, where the company may have good marketing opportunities.

Each market, called Target Market, is filled with many individuals and organizations representing different needs, buying habits, and characteristics. It is essential to identify markets, to break them into meaningful market segments, to select the most suitable market segments, to plan the approach to each target market individually, and to position the company for an overall success in the marketplace.

The process of identifying markets, selecting suitable markets to enter, and positioning the company for success is called Target Marketing and it consists of three important elements described below.

THREE ELEMENTS OF TARGET MARKETING

   
Market
Segmentation
  Market
Targeting
  Market
Positioning

Market Segmentation entails dividing the market into a distinctive group of buyers, who may purchase the company’s products and services on the basis of their specific needs, characteristics, or behavior.

Market Targeting entails evaluating each market segment in terms of its attractiveness and suitability for the company’s products and services.

Market Positioning entails various activities, which the company must undertake to position its’ products and services in the buyers’ minds to ensure its competitive advantage in the marketplace.

The Target Marketing Process entails several important marketing management tasks and steps outlined below. (18)

BASIC STEPS IN THE TARGET MARKETING PROCESS

Step 1: Market Segmentation - Determine The Basis For Market Segmentation.

Step 2: Market Segmentation - Develop Specific Profiles Of Each Market Segment.

Step 3: Market Targeting - Identify Parameters For Selecting Suitable Target Markets.

Step 4: Market Targeting - Select Suitable Target Markets.

Step 5: Market Positioning - Develop Positioning For Each Target Market.

Step 6: Market Positioning - Develop Marketing Mix For Each Target Market.

 

ADDITIONAL INFORMATION ONLINE

What Is Target Marketing? By StudioLogicLasVegas.
How To Find Your Target Market By Stacey Kinney.
How To Identify Your Target Market? By BusinessIdeas.
What Is Market Positioning? By Peggy Morgan Collins, eHow.
Positioning, Differentiation And Value Proposition By Brian K. McCarthy.

2. MARKET SEGMENTATION

MARKET SEGMENTATION

According to the marketing experts and authors Philip Kotler and Gary Armstrong, Market Segmentation can be defined as:

"The process of dividing a market into smaller groups with distinct needs, characteristics, or behavior that might require separate marketing strategies or mixes." (18)

Many small and medium-sized companies offer specialized types of products and services in the marketplace. Business owners and marketing managers, therefore, must realize that a “one-type-fits-all” marketing approach can’t be effective in producing positive results. For this reason it is essential to identify specific types of markets, or Market Segments, which may be most appropriate for offering the company’s products and services, to ensure profitable performance.

Identification of suitable marketing segments entails finding answers to a number of important questions, as outlined below. This process will also help the marketing manager in formulating an effective marketing plan and developing an effective marketing and sales team.

IDENTIFICATION OF SUITABLE MARKETING SEGMENTS

1.

In which market segments are our products or services most successful at present?

2.

In which market segments may our company have an additional business advantage during the next fiscal period?

3.

How successful are our products and services in the consumer markets?

4.

How successful are our products or services in the commercial markets?

5.

How successful are our products or services in the government markets?

Moreover, because of their high level of specialization, many small and medium-sized companies practice specialized types of marketing to improve their overall performance as described below. (18)

SPECIALIZED TYPES OF MARKETING FOR VARIOUS MARKET SEGMENTS

1.

Segment Marketing.
Segment marketing is a practice which isolates broad segments that make up the market and adapts its products and services to meet specific needs of one or more market segments.  One example of segment marketing is Online Marketing, which is introduced below.

2.

Niche Marketing.
Niche marketing focuses on more narrowly defined sub-groups within specific market segments, which have distinctive traits that may seek a special combination of benefits. A Niche is described as a more narrowly defined group of customers with a specific set of requirements.

3.

Micromarketing.
Micromarketing represents the practice of tailoring product, services, and marketing programs to meet the specific needs of customers in local markets and individual customers, and consists of two types of marketing described below.

4.

Local Marketing.
This micromarketing process entails developing brands and promotions to meet the specific needs of customers in a defined local area.

5.

Individual Marketing.
This micromarketing process entails designing products, services, and marketing programs to meet the specific needs of customers on an individual basis.

 

ELEMENTS OF ONLINE MARKETING

Business owners and marketing managers must pay special attention to the fastest growing type of segment marketing, called Online Marketing or Online Advertising. In light of recent developments in online marketing methods, including Search Engine Optimization (SEO) and Pay-Per-Click (PPC), this type of marketing may offer the most significant results for many small businesses. The online marketing methods are summarized below.

 

Organic Search
Based On Search Engine
Optimization (SEO)

 

Pay-Per-Click
Based On Google
AdWord Program (PPC)

• Local.

• National.
• International.
 

• Local – by ZIP Code, City, State.

• National – by country.
• International.

Online Marketing is discussed in detail in Tutorial 5.

ADDITIONAL INFORMATION ONLINE

Market Segmentation Introduction By Logi Karlsson.
Market Segmentation By Matt Alanis, Alanis Business Academy.
How To Segment Your Customers? By Mark Wolters, Woltersworld.
What Is Market Segmentation? By Luke Hohmann, OpenViewVenture.
How To Use Market Segmentation By Matt Alanis, Alanis Business Academy.

3. MARKET TARGETING

MARKET TARGETING

According to Philip Kotler and Gary Armstrong, Market Targeting can be defined as:

"The process of evaluating each market segment's attractiveness and selecting one or more target segments, or target markets, to enter." (18)

Many business owners and marketing managers realize that because of strong competition in the marketplace, it may be more cost-effective to identify local or narrow-base markets in various geographic areas where the company may have a qualitative advantage over competitors. It is important, therefore, to identify one or several market segments, based on specific Market Segmentation Variables.

Market segmentation variables for Consumer Markets are described below.

MARKET SEGMENTATION VARIABLES FOR CONSUMER MARKETS

     
Geographic
Variable
  Demographic Variable   Psychographic Variable   Behavioral
Variable

Market segmentation variables in a Business Market are also described below.

MARKET SEGMENTATION VARIABLES FOR BUSINESS MARKETS

Demographics

Operating Variables

Purchasing Approaches

Situational Factors

Personal Characteristics

Market Segmentation Variables are discussed in detail in Tutorial 5.

ADDITIONAL INFORMATION ONLINE

Target Marketing By Kate Beever, Katelwills.
What Is A Target Market? By Summer Alexander.
Market Segmentation And Targeting By Noel Capon And Ron Boire.
Target Market Research - Identify Your Target Audience By NBCCartoon1.
Target Marketing, Segmentation, And Positioning By S. Taslimi, FiveSixMedia.

4. TARGET MARKETS

TARGET MARKETS

According to Philip Kotler and Gary Armstrong, Target Markets can be defined as:

"Market segments established as a result of the market segmentation process which entails the grouping of various customers, or markets, on the basis of similarity of their requirements and characteristics." (18)

The main objective of market segmentation is to determine a set of target markets that can be effectively reached and served by the company, utilizing a suitable Marketing Mix, also known as "The Four P's'", which includes the following four elements described below.

“THE FOUR P” IN THE MARKETING MIX

     
Product
Or
Service
  Price   Promotion   Place 
(Distribution)

Each element of the Marketing Mix is discussed in detail in Tutorial 5.

ADDITIONAL INFORMATION ONLINE

Why You Need A Niche By Tad Hargrave.
International Internet Marketing By Alan Clements, UKTI.
How To Find Hot Niches With Google Insights By Travis Petelle.
Target Market - Attracting Loyal Customers By Christopher Loch.
How To Use Google Trends To Do Target Market Research By Anthony Tran.

5. TARGET MARKET COVERAGE STRATEGIES

TARGET MARKET COVERAGE

Upon the identification of suitable Target Markets, the marketing management team must decide which target markets will actually be served by the company and how will the company serve each selected market.  The management may adopt one of the three Market-Coverage Strategies described below. (18)

MARKET-COVERAGE STRATEGIES

1.

Undifferentiated Marketing, Or Mass Marketing.
In this market-coverage strategy, the marketing management team decides to ignore various market segments and go after the entire market with one marketing offer. Mass marketing entails mass production, mass distribution, and mass promotion of the same products or services to the entire market in the same way.

2.

Differentiated Marketing, Or Segmented Marketing.
In this market-coverage strategy, the marketing management team decides to treat each market segment separately, based on its specific characteristics and needs, by designing a special marketing offer for each segment.

3.

Concentrated Marketing.
In this market-coverage strategy, the marketing management team decides to go after a large share of one of several market segments, by designing one strong marketing offer.

Small business owners and marketing managers often use the concentrated marketing strategy, which can be very effective for companies with limited marketing resources. This strategy can provide the small businesses with a highly effective way of getting a foothold against larger competitors in the marketplace.

Small business owners and managers should also consider using various Internet Marketing or Online Marketing options, developing a functional Website, and applying suitable online marketing methods. Additional information about Online Marketing is provided in Tutorial 5.

ADDITIONAL INFORMATION ONLINE

What Is A Target Market By Tanya Aliza.
ACT Market Coverage By William McNeil.
Your Target Market By Dr. Neene, Newbiebiz.
Niche And Mass Marketing By CompassPerform.
Niche Marketing Vs Mass Marketing By Jerry, Yattara2011.

6. MARKET POSITIONING

MARKET POSITIONING

Upon selecting specific market segments for the company’s products and services, the marketing management team must finalize its Market Positioning Strategy for each selected market segment.

According to Philip Kotler and Gary Armstrong, Market Positioning can be defined as:

"The process of arranging for a product or service to occupy a clear, distinctive, and desirable place relative to competing products or services in the minds of target consumers. This process also includes formulating competitive positioning for a product or service and identifying a detailed marketing mix." (19)

The Market Positioning Process consists of four steps outlined below.

BASIC STEPS IN THE MARKET POSITIONING PROCESS

Step 1: Identify Possible Advantages Upon Which The Company Can Build An Effective  Position In The Selected Market Segment.

Step 2:  Select Most Suitable Competitive Advantages For The Company’s Products And Services In The Selected Market Segment.

Step 3: Select Overall Market Positioning Strategy For The Company.

Step 4: Develop A Suitable Marketing Mix For Each Selected Marketing Segment.

 

PRODUCT POSITION AND COMPETITIVE ADVANTAGE

Market positioning represents an important stage, which permits the company to develop a specific product or service position for various products or services, which are offered to customers. A Product Position, or Service Position, reflects the way a particular product or service is defined and viewed by consumers in comparison with other competing products or services.

By creating a special product or service position for various products or services, the company may gain a competitive advantage in the marketplace. Competitive Advantage represents an advantage which a company may gain in the marketplace by offering consumers greater value, either through lowers prices or by providing more benefits to justify a higher price.

The company may consider developing a competitive advantage in selected target markets in several ways described below. (19)

STRATEGIES FOR EFFECTIVE PRODUCT POSITIONING

1.

Product And Service Differentiation.
This strategy prescribes promoting better quality, durability, reliability and consistency of products and services in comparison with what is available in the marketplace.

2.

Channel Differentiation.
This strategy prescribes more user-friendly ways of distributing and delivering products and services in comparison with other companies in the marketplace.

3.

People Differentiation.
This strategy prescribes hiring and training a better quality and friendlier employees who will give their company a competitive edge in providing products and services in comparison with other companies in the marketplace.

4.

Image Differentiation.
This strategy prescribes promoting a unique image of the company or special brand of the company’s products and services, which may give the company a competitive edge in comparison with other companies in the marketplace.

5.

Unique Value Proposition.
This strategy prescribes the company to develop products and services which will provide customers with a unique mix of benefits, or specific brand's unique value proposition. This unique value proposition will enable the company to stand out among competitors in the marketplace.

Business owners and marketing managers should consider the development of the following elements, which could provide a competitive advantage to their products and services in the marketplace, as described below.

ELEMENTS OF  A COMPETITIVE ADVANTAGE

1.

Importance.
Consumers receive a highly desirable set of additional benefits, which are not offered by other companies.

2.

Specialty.
The company offers a distinctive product or service, which is not offered by other companies.

3.

Superiority In Quality.
The company offers a product or service, which is superior in quality in comparison with other companies.

4.

Unique Design.
The company offers a product or service, which can’t be easily duplicated by other companies.

5.

Affordability.
Buyers can afford to pay for the difference in products and services offered by the company in the marketplace.

6.

Profitability.
The company can introduce the difference in its products and services in a profitable manner.

It is important, therefore, that the marketing management team pay serious consideration to the abovementioned factors to ensure successful long-term results and profitable performance.

ADDITIONAL INFORMATION ONLINE

Positioning By Sean D'Souza.
Brand Positioning By Sean D'Souza.
Positioning Statement By Sean D'Souza.
What Is Positioning Or Brand Positioning? Part 1 By Kamil Ali.
Creating Competitive Advantage With A Positioning Idea By Yochi Slonim.

7. THE MARKETING MIX

 THE MARKETING MIX

The business owner and the marketing manager must have a good understanding about several basic elements, which comprise the Marketing Mix.

The marketing mix, described earlier, represents one of the key concepts in modern theory on marketing management. Marketing mix is also known as "The Four P's" concept and includes four marketing variables illustrated below.

FOUR ELEMENTS OF THE MARKETING MIX (“THE FOUR P")

     
Product  

Price

  Promotion   Place

• Features.
• Size.
• Quality.
• Brand name.
• Packaging.
• Service.

• Warranties.
 

• Selling price.
• Discounts.
• Credit terms.

• Payment terms.
 

• Advertising.
• Personal selling.

• Publicity.
• Online presence.
 

• Distribution
   channels.
• Area coverage.
• Geographic
   location.

• Transportation.
 

ADDITIONAL INFORMATION ONLINE

The Seven P's Of Marketing Mix By Victor Holman.
A New Look At The 4P's Of Marketing By FirepoleMarketing.
What Is The Marketing Mix By Sarah Gross, YourMarketingProf.
Introduction To Marketing Mix By Matt Alanis, Alanis Business Academy.
Time To Rethink The Marketing Mix By M. Learmonth, J. Nelson, L. Twohill.

8. FACTORS IN THE CONSUMER MARKET SEGMENTATION PROCESS

BALANCING OF THE MARKETING MIX

Correct balancing of resources allocated to each element of the Marketing Mix plays an important role in the market segmentation process. This process depends upon the type of market in which a company may have a business interest as illustrated below.

FOUR TYPES OF MARKETS

     
Consumer
Market
 

Producer 
Market

  Reseller 
Market
  Government
 Market

Market segmentation also depends upon specific Company Characteristics And Requirements which relate to a particular customer as illustrated below.

SPECIFIC COMPANY CHARACTERISTICS AND REQUIREMENTS

Product 
And Service
 Requirements

Company's
 Buying
 Practices

Company's 
 Size

Company's
 Resources

Company's
 Geographic
 Location
 

ADDITIONAL INFORMATION ONLINE

Consumer Analysis By MarketingProfessorCH.
Understand Consumer Marketing Trends By Tfreers.
AT&T Partner Exchange Reseller Program By Brooks McCorcle.
Government Market Overview Cloud Gov. 2013 By Kevin Plexico, SIIA12
How To Market Your Business In Government Contracting By Max K. Timko.

9. TYPES OF MARKET SEGMENTATION IN THE CONSUMER MARKET

MARKET SEGMENTATION

According to Philip Kotler and Gary Armstrong, the Market Segmentation process in the consumer market can be carried out on the following basis illustrated below.

FOUR TYPES OF MARKET SEGMENTATION IN A CONSUMER MARKET

     
Geographic Segmentation  

Demographic Segmentation

  Psychographic Segmentation   Behavioral Segmentation

Each type of market segmentation depends substantially upon a broad range of variables which are discussed next.

ADDITIONAL INFORMATION ONLINE

Market Segmentation By Danny Abramovich.
Market Segmentation By Tony Seba, Stanford CSP.
How To Segment Your Market By Soma D. Jurgensen.
Creating A Geographic Segmentation Filter In Logaholics.
Market Analysis - Market Segmentation By James Slocombe.

10. GEOGRAPHIC SEGMENTATION

GEOGRAPHIC SEGMENTATION

Geographic Segmentation is based on the geographic segmentation variables, such as world region or country, regions, counties by population, cities by population, population density, and climate.

A typical breakdown of the Geographic Segmentation Variables is summarized below.

GEOGRAPHIC SEGMENTATION VARIABLES

Segmentation
Variable

Geographic
Breakdown

World Region Or Country

North America, Central America, South America, Western Europe, Eastern Europe, Middle East, Far East, North Africa, Central Africa, Southern Africa, Australia and Oceania.

Regions

North West, South West, North East Central, South East Central, North East, North West Central, South West Central, South East Central, Mid-Atlantic.

Counties By Population

Under 100,000, 100,000 - 500,000, 500,000 - 750,000, 750,000 -1,000,000, 1,000,000 - 1,500,000, 1,500,000 - 2,000,000, 2,000,000 - 5,000,000, over 5,000,000.

Cities By Population

Under 5,000, 5,000 - 10,000, 10,000 - 50,000, 50,000 - 100,000, 100,000 - 150,000, 150,000 - 200,000, 200,000 - 300,000, 300,000 - 500,000; 500,000 - 1,000,000, 1,000,000 - 2,000,000, 2,000,000 - 5,000,000, over 5,000,000.

Population Density

Urban, suburban, rural, semi-rural.

 

ADDITIONAL INFORMATION ONLINE

Mobile Maps For MicroStrategy By Visual Crossing.
Making Your Territories Work For You And Your Business By MapMechanics.
Territory Analysis And Management Using Visual Crossing By Visual Crossing.
Geodemographics - How To Spot Your Customer In A Crowd By MapMechanics.
Enterprise Exploring With Visual Crossing For MicroStrategy By Visual Crossing.

11. DEMOGRAPHIC SEGMENTATION

DEMOGRAPHIC SEGMENTATION

Demographic Segmentation is based on the demographic segmentation variables, such as age, gender, family size, family status, household income, profession, education, religion, race and ethnicity.

A typical breakdown of the Demographic Segmentation Variables is summarized below.

DEMOGRAPHIC SEGMENTATION VARIABLES

Segmentation
Variable

Demographic
Breakdown

Age

Under 1, 1 - 5, 5 - 10, 10 - 20, 20 - 30, 30 - 40, 40 - 50, 50 - 60, 60 - 70, 70 - 80, over 80.

Gender

Male, female, transgender.

Family Size

1, 1 - 2, 2 -3, 3 - 4, 4 -5, 5 and over.

Family Status

Young and single, young and married without children, young and married with one child, young and married with two or more children, divorced with one child, divorced with two or more children, older and married without children, older and married with one child, older and married with two or more children, older and single.

Household Income

Under $10,000, $10,000 - $20,000, $20,000 - $30,000, $30,000 - $40,000, $40,000 - $50,000,  $50,000 - $60,000, $60,000 - $70,000,  $70,000 - $80,000,  $80,000 - $100,000, $100,000 and over.

Profession

Engineer, doctor, attorney, educator, business owner, manager, government employee, technician, contractor, farmer, clerical person, sales person, artist, craftsman, policeman, serviceman, sportsman, homemaker, unemployed.

Education

Grade school, high school graduate, college graduate.

Religion

Catholic, Protestant, Jewish, Mormon, Buddhist, Muslim.

Race And Ethnicity

African American, Hispanic, Asian American, Native American, Alaskan, Samoan American, White.

Generation

Baby boomers, Generation X, Echo boomers, Millennials (Millennial Generation or Generation Y), and Generation Z.

Nationality

American, Canadian, Mexican, Brazilian, British, French, German, Italian, Swiss, Israeli, Egyptian, Moroccan, Australian, Japanese.

 

ADDITIONAL INFORMATION ONLINE

Demographic Segmentation By Sonia Huang.
Demographic Segmentation By Ernest Barbaric.
Consumer Profile - Demographics By Jason Richea.
Age And Life Cycle Segmentation By B2B WhiteBoard.
Demographic Segmentation By Dr. Bob, MktSegmentationDoc.

12. PSYCHOGRAPHIC SEGMENTATION

PSYCHOGRAPHIC SEGMENTATION

Psychographic Segmentation is based on the psychographic segmentation variables, such as social class, personality, and lifestyle.

PSYCHOGRAPHIC SEGMENTATION VARIABLES

Segmentation
Variable

Psychographic
Breakdown

Social Class

Upper class, upper middle class, middle class, working class, lower middle class, lower class.

Personality

Open-minded, conscientious, extravert, introvert, agreeable, and neurotic.

Lifestyle

Very modest lifestyle, modest lifestyle, above average modest life style, extravagant lifestyle.

 

ADDITIONAL INFORMATION ONLINE

VALS Framework Explained By B2BWhiteBoard.
Consumer Profiles - Psychographics By Jason Richea.
Psychographic Segmentation By Jeanne Hurlbert And Mike Koenigs.
What Are Psychographics In Marketing By Alex Guererros, eHowFinance.
Psychographic Profile: Communicating With Your Target Market By MelbourneGraphics.

13. BEHAVIORAL SEGMENTATION

BEHAVIORAL SEGMENTATION

Behavioral Segmentation is based on the behavioral segmentation variables, such as purchase occasion, benefits required, user status, frequency of the product or service use, loyalty toward the product or service, readiness to purchase the product or service, opinion about product or service.

A typical breakdown of the Behavioral Segmentation Variables is summarized below.

BEHAVIORAL SEGMENTATION VARIABLES

Segmentation
Variable

Behavioral
Breakdown

Purchase Occasion

Regular occasion, seasonal occasion, special occasion.

Benefits Required

Quality, technical support, after-sales service, warranty, cost-effectiveness, longevity.

User Status

Non-user, former user, potential user, first-time user, regular user.

Frequency Of Product Or Service Use

Extremely light user, light user, average user, heavy user.

Loyalty Toward The Product Or Service

Zero, weak, average, strong, complete.

Readiness To Purchase The Product Or Service State

Unaware, aware, well-informed, interested, plans to buy.

Opinion About The Product Or Service

Very positive, positive, indifferent, negative, very negative.

 

ADDITIONAL INFORMATION ONLINE

Behavioral Segmentation By B2BWhiteBoard.
Behavioral Segmentation By John Gattorna.
Behavioral Marketing Defined By Bryan Brown, Silverpop.
Marketing Segmentation By Nance Rosen And Bobby Borg.
The Road To Behavioral Marketing By Fabrice Druelle, British Museum Co Ltd.

14. FACTORS IN THE BUSINESS MARKET SEGMENTATION PROCESS

CLASSIFICATION OF COMPANIES

In order to succeed in the Business Market, the marketing management team must be familiar with various elements of target marketing in the business market environment.

Market Segmentation
in the business markets is normally affected by a broad range of factors summarized below.

KEY FACTORS IN MARKET SEGMENTATION IN THE BUSINESS MARKETS

1.

Type Of Industry.
What types of industries buy our products or services?

2.

Size Of The Organization.
On what size of companies should we focus our attention?

3.

Geographic Location.
On which geographical areas should we focus our attention?

4.

Product Or Service Application.
Should we focus our attention on buyers who need our products or services for specific applications or should we attend to all buyers irrespective of application details?

5.

Product Or Service Urgency.
Should we focus our attention on buyers who need our products or services in a planned manner, or should we also try to accommodate the urgent need buyers?

6.

Product Or Service Usage Rate.
Should we focus our attention on companies that buy our products or services frequently or should we also include the infrequent buyers?

7.

Purchasing Criteria.
Should we focus our attention on buyers who are specifically looking for a low price; or high quality; or a combination of a fair price and high quality?

8.

Size Of Order. 
Should we focus our attention on buyers who place only large purchase orders, or should we also attend to buyers who place small, but frequent purchase orders?

 

ADDITIONAL INFORMATION ONLINE

Market Segmentation Strategy By Stephen C. Campbell.
Market Segmentation By HSC Business Studies, HSC Hub.
Business Marketing And Market Segmentation By Brian Hopper.
How To Improve Your Market Segmentation By Bob Hull, TRC Research.
How Do You Do Market Segmentation Properly By Ian Dunbar, Oxford Learning Lab.

15. NORTH AMERICAN INDUSTRY CLASSIFICATION SYSTEM

NORTH AMERICAN INDUSTRY CLASSIFICATION SYSTEM (NAICS)

The North American Industry Classification System (NAICS) is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. NAICS is the first economic classification system to be constructed based on a single economic concept.

NAICS was developed under the auspices of the Office Of Management And Budget (OMB), and adopted in 1997 to replace the Standard Industrial Classification (SIC) System. It was developed jointly by the following US, Canadian, and Mexican government agencies:

U.S. Economic Classification Policy Committee (ECPC).
Statistics Canada.
Instituto Nacional De Estadistica Y Geografia (Mexico).

The prime objective of NAICS is to allow for a high level of comparability in business statistics among the North American countries.

NORTH AMERICAN INDUSTRY CLASSIFICATION SYSTEM (NAICS)

Manufacturers

Service
 Organizations

Wholesalers

Retailers

Non-
Profit Groups

Government Groups, Agencies,
And
 Institutions

All abovementioned business organizations are further classified as follows:

  • Major Sub-Groups.
  • Industry Sub-Groups.
  • Detailed Industry.
  • Product Or Service Range.
  • Specific Product Or Service Description.

A typical example of a NAICS Structure is illustrated below.

KEY FACTORS IN MARKET SEGMENTATION IN THE BUSINESS MARKETS

X

Industry Sector (20 broad sectors up from 10 SIC).

XX

Industry Sub sector.

XXX

Industry Group.

XXXX

Industry.

XXXXX

U.S., Canadian, or Mexican National specific industry.

The NAICS Classification consists of a broad list of industrial sectors presented below.

20 INDUSTRIAL SECTORS IN NAICS CLASSIFICATION

11

Agriculture, Forestry, Fishing and Hunting.

21

Mining.

22

Utilities.

23

Construction.

31-33

Manufacturing.

42

Wholesale Trade.

44-45

Retail Trade.

48-49

Transportation and Warehousing.

51

Information.

52

Finance and Insurance.

53

Real Estate and Rental and Leasing.

54

Professional, Scientific, and Technical Services.

55

Management of Companies and Enterprises.

56

Administrative Support, Waste Management and Remediation Services.

61

Education Services.

62

Health Care and Social Assistance.

71

Arts, Entertainment, and Recreation.

72

Accommodation and Food Services.

81

Other Services (except Public Administration).

92

Public Administration.

 

USEFUL WEBSITES

You can obtain additional information about the North American Industry Classification System (NAICS) online:

North American Industry Classification System (NAICS)
NAICS Association
NAICS Structure

ADDITIONAL INFORMATION ONLINE

NAIC Industry Code By B2BWhiteBoard.
NAIC Industry Codes By LIONTV: Library Information.
Identifying NAICS (Industry Codes 2013 By Steve Cramer.
North American Industry Classification Codes By Olivier Charbonneau.
Reference USA SIC And NAICS Code Searches By Reference USA, Infogroup.

16. BUSINESS CLASSIFICATION BASED ON SIZE

CLASSIFICATION OF COMPANIES

Classification Of Companies according to their size represents an important method of business market segmentation. The prime indicators of company size are illustrated below.

CLASSIFICATION OF A COMPANY BASED ON SIZE

   
Number
Of
Employees
  Annual
Sales
  Number
Of
Subsidiaries

The number of employees in the organization.

 

The monthly or annual level of sales.

 

The number of subsidiary companies within the organization.

 

Many banks and financial institutions, for example, categorize business organizations according to their size and financial capabilities. Subsequently, larger organizations are sometimes offered additional incentives outlined below.

ADDITIONAL INCENTIVES OFFERED TO LARGER COMPANIES

1.

Lower interest rates.

2.

More favorable credit conditions.

3.

More favorable discount structure.

 

HOW BUSINESS ORGANIZATIONS CLASSIFY CUSTOMERS?

Business owners frequently categorize customers by Company Size and Future Business Potential. Many organizations develop a special pricing procedure for preferred customers and maintain a discount structure based on the average volume of business placed by a particular customer.

Note:

Pricing Strategies and Discount Structures are discussed in detail in Tutorial 5.

17. BUSINESS CLASSIFICATION BASED ON GEOGRAPHIC LOCATION

CLASSIFICATION OF BUSINESSES

It is often convenient to classify business organizations by their Geographic Location. Depending upon the specific marketing requirements, such a classification may take place on the following basis illustrated below.

 CLASSIFICATION OF BUSINESSES BASED ON GEOGRAPHIC LOCATION

By
State

By
County

By
City

By
ZIP Code

By
Industrial
Or Rural Area
 

IMPORTANCE OF THE MARKET SEGMENTATION

Market Segmentation based on a geographic location is particularly useful when the sales potential of a specific target market area is evaluated. This method of segmentation provides basic information for allocating different market areas and sales quotas to sales employees.

Sometimes it may be useful to classify business organizations and consumers on the basis of Product Or Service Application and Usage Rate. This type of classification is particularly important because other classification methods do not always provide accurate data.

18. COMPOSITE PROFILE

COMPOSITE PROFILE

Apart from identifying the type and size of a business organization and evaluating the sales potential of a particular geographic location, it is often necessary to develop a Composite Profile of each market segment. 

This requires a sound understanding of buying behavior in a specific market segment, and an examination of three important Composite Profile Factors outlined below.

COMPANY COMPOSITE PROFILE FACTORS

1.

What is purchased?

2.

When are products or services purchased?

3.

In what quantities are products or services purchased?

4.

How often are products or services purchased?

5.

How long does it take to make a purchase decision?

19. TARGET MARKETING STEPS IN THE BUSINESS MARKET

TARGET MARKETING IN THE BUSINESS MARKET

Small and medium-sized companies, just like the larger organizations, have to constantly fight for additional business in the marketplace, so it is essential that the marketing manager pays serious attention to Target Marketing in the Business Market. This process provides meaningful information for the formulation of the company's marketing strategy and the development of an overall marketing plan.

A typical Target Marketing Process in the business market environment entails six steps, which must be undertaken by the marketing manager, as illustrated below.

THE TARGET MARKETING PROCESS IN THE BUSINESS MARKET

Step 1: Identify Potentially Suitable Market Segments.

Various segments should be identified in accordance with the SIC or NAICS system by type and size of business, geographic location, application, and usage rate of products and services.

Step 2: Collate Marketing Information.

This entails collecting data about each selected market segment using available MIS and results obtained from appropriate marketing research.

Step 3: Develop Composite Profiles.

This entails profiling each market segment in terms of who buys, what they buy, how much they buy, how they buy, why they buy, and when they buy.

Step 4: Estimate Market Potential.

This entails evaluation of possible business volume that may be generated by each market segment that is identified and examined in the above process.

Step 5: Analyze Marketing Opportunities.

This entails examination of competitive situations in the marketplace and development of a suitable marketing program for each market segment in terms of an estimated profit potential.

Step 6: Select A Preliminary Marketing Strategy.

This represents the beginning of an important process in which various marketing strategies are evaluated in terms of current positioning of the company in the marketplace, existing and potential market requirements, and prevailing competition.

The target marketing process represents the beginning of an active marketing planning effort. The Marketing Planning Process entails four steps outlined below.

THE MARKETING PLANNING PROCESS

Step 1: Measure Selected Market Segments.

Step 2: Prepare A Business Potential Forecast In Selected Market Segments.

Step 3: Formulate A Suitable Marketing Strategy.

Step 4: Develop An Effective Marketing Plan.

Marketing Planning is discussed in detail in Tutorial 5.

20. ADVANTAGES OF THE TARGET MARKETING PROCESS

TARGET MARKETING

The Target Marketing process provides the company with a number of important advantages outlined below.

ADVANTAGES OF THE TARGET MARKETING PROCESS

1.

Management is in a better position to identify suitable market opportunities.

2.

Management can make improved adjustments of their products and services in accordance with particular market requirements.

3.

Management can develop the most suitable marketing mix of product, price, promotion and distribution.

4.

Management can develop sound marketing programs and budgets based on well-identified factors of specific market segments.

After completing the target marketing process, management should proceed with measurement and forecasting of selected market segments. These activities are discussed next.

Market Measurement And Forecasting is discussed in detail in Tutorial 5.

ADDITIONAL INFORMATION ONLINE

Target Market Selection Process By Anthony Idle.
Focus On One Target Market By Evan Carmichael.
How To Find Your Ideal Target Market By Melissa Galt.
Target Market And Market Segmentation By Larry Wilson.
5 Simple Steps To Find Your Target Market By Roland Hanekroot.

21. FOR SERIOUS BUSINESS OWNERS ONLY

ARE YOU SERIOUS ABOUT YOUR BUSINESS TODAY?

Reprinted with permission.

22. THE LATEST INFORMATION ONLINE

 

LESSON FOR TODAY:
To Succeed In Any Market You Have To Fit The Market!

Joe Griffith

Go To The Next Open Check Point In This Promotion Program Online.