Target Market Segment and Composition - Literature review Example

Marketing Management Target market segment and composition Target markets and segmentation In market not everyone can be satisfied by one marketer for instance, not all consumers like automobile therefore a given marketer must have what is known as market segmentation. Market segmentation identifies and categorizes each group of buyers with a common interest in varying products or market mixes. A marketer can identify a given market segment which gives it bigger opportunity by researching location or areas where they stay and behavioral differences among the potential buyers in the market. If a firm has selected a given market as its target, it should develop market offering. The marketers normally select marketing programs. For instance, the offers are strategically positioned into the mind of the consumers where they belief to have a collective benefits from the marketer , for instance Volvo cars are positioned as the safest automobile to the customers by the marketer because that’s what is the main issue with customers . According to Kotler (2000), market is viewed as an industry while buyers are viewed as market. 1. Brand loyalty The commitment made by a consumer to purchase a given product is what is defined as brand loyalty. Brand loyalty can be evident when customers continuously buy a given product several times not because there are no other options but because it’s a commitment they have made in their mind. According to marketers, such as p. Kotler et al (1991), it is very important to measure consumer loyalty in terms of how they use the products with the ability to spend more on than product than opting to another alternative which may be cheaper. Kotler et al, says that ‘heavy users’ are very important in a market where they consumer most of the supplied product up to 80%. Loyalty It is very important to determine if a customer is committed to a given brand, Philip Kotler clearly gives four patterns of behavior that can be considered to determine this important point in marketing which include 1. Hardcore consumers who are loyal to the brand they will buy it every time. 2. Split consumers who are divided in between two or three brand products. 3. Shifting consumers who shifts from one brand to another. 4. Switchers they categorize them as switchers because these consumers can move from one brand to another may be because of the deals or just looking for a different taste of the product. Factors which may influence the brand loyalty There are several factors that may contribute to the consumer loyalty to a brand ranging from psychological processes. Some of the factors include; the customers perceived value and what they stand for, the truest they have in a given brand in terms of taste and quality over other brands, how customers are satisfied by a given product. The loyalty of a brand is considered by the repetitive purchase and commitment of the buyers (Kotler et al, 1991). Long loyal customers to a brand are less sensitive to the price changes compared to switching customers who purchase a brand basing on the price deals. For marketers it is therefore necessary to build customer loyalty because this is a perfect way to be profitable in a competitive market. Market research five steps There are five steps involved in an effective market research. The steps are illustrated in the figure below Kotler et al (2000), illustrates the five steps using American Airlines, where they wanted to introduce phone services as a new way of serving customers and marketing manager undertakes a research. The following steps are illustrated; Step 1 : Define the problem and research objectives The Airline should not state and define a wide or narrow statement of problem. It should be achievable and significant enough to make decisions. There should be well defined objectives for instance the Americn Airline should have the following objectives; 1. What is the main reason of customers using the phone services 2. Who are most likely in need of the services 3. How many users will use the services if implemented? 4. How long will be company benefit from this kind of services in terms of their image to competitors and customers? STEP 2: DEVELOP THE RESEARCH PLAN In this step one should come up with an effective plan for collecting information needed. The marketing manager should clearly evaluate the cost of carrying out data collection process before appending their signatures. The research should be worthy undertaking where the organization realizes profit both in short run and long run. Designing a market research plan entails making decision on sources of data, which approaches you will use in research, the instruments of research, how to sample the data and the method of data collection. STEP 3: COLLECTION THE INFORMATION The stage needs a careful consideration because it is an expensive and it is error prone. The sample population should be carefully selected because errors may arise when users give dishonest response because they feel obliged to respond to the questions, if a target population is not met then the research must be redone. Recent advancements in information technology have reduced the chances of errors where they have a centralized location with systems that capture error free data. 5. New product It is crucial for an organization to develop new products after carefully identifying their market target. It an important role played by the marketers in developing new products which bring about innovation in the products. Marketers normally identify new areas to venture into, carry out research and do other stages of development. The future of a company is shaped by the its initiative to produce new products this does not only make it remain relevant to customers and have a competitive edge against the competitors in the market. New products can be produced by the company using its own equipments and manpower or hire another company to produce on its own. Kotler(2000) in the millennium edition identifies six categories of new products defined by Booz, Allen & Hamilton they are stated below; 1. New_to_world products: new products to the market. 2. New products lines: a new product entering established market. 3. Additions to existing product lines: these are the new products that supplement an existing product in the product. 4. Improvement and revision of existing products: products which provide improved performance or greater perceived values. 5. Repositioning: these are existing products but there is a new market or segment of the market. 6. Cost reductions: these are new products that are cheap and perform same functions. Product development is very important because an organization which do not produce new products are at risk because existing products may not meet the consumers’ changing needs and taste while technological advancement may have great impact to them where other products can be produced at a cheaper price using new technology. On the other hand venturing in to product is also risky where the company may incur losses in what they are doing. If the new products do not take off successfully in the market. Therefore it is vital to do a lot of research and make sure that a given new product is viable and feasible to the current changing market. 5. Public relations Public is defined as any group that has interest that will impact on an organization’s ability to accomplish its goals and objectives (Kotler, 2000). Public relations are the activities that promotes a company’s image, the products or services of a company. Every organization has a public relation department. The public relation departments have five functions that they perform these includes; press relations where they make sure the company has a positive image in the news, product publicity where they publicize a given product, corporate communication where internal and external communication facilitates the understanding of the company, lobbying – it deals with legislators and government officials to protect legislation or regulation and finally, public relations department carries out counseling where they offer advice to management on issues dealing with public issues and company images. Tools in marketing PR 1. Publications- published materials like brochures, annual report, articles and on-line newsletters among other. 2. Events: conferences, on-line chats, exhibitions, contests and competitions among others 3. News: This is the major function of the department where it finds news that is good for the organization. 4. Speeches: it builds the image of the company it is a perfect tool if utilized effectively by an organization. 6. Consumer decision making model The marketers should learn what really influences the decision buyers make when purchase. The marketers should clearly understand who makes decisions, what are the types of buying decisions they make, and stages in the buying process. Buying behavior The buyers are identified through various products they buy. For instance men in US are identified by their choosing of shaving equipment. There are five people identified that play important role in making decisions on what to buy. The first person is the “initiator” who first suggests the product they would want to buy then an “influencer” these is the person who advices or influences what decision will be taken, then a “decider” is the person who decides where to buy, what to buy and how to buy while a “buyer” decides what is to be purchased actually and finally, a users is the person who actually uses the product or enjoys the services. Buying behavior The buying behaviors of the customers are influenced by the degree of involvement of the buyer in buying a given product and the differences is brand. Complex and very expensive goods and services involve more buyers’ concentration and decision making than less expensive product. High Involvement Low involvement Significant differences between brands Complex buying behavior- when the goods and services which are expensive, risky and being bought for the first time. It involves creating interest in a product then making a decision. There is high involvement by the consumers. Variety-seeking buying behavior- consumers in this case decide to move to another product for the sake of variety but not satisfaction. The buyer is does not get involved in the buying process so much and evaluates the product during consumption. Few Differences between Brands Dissonance-reducing behavior – this occurs when the buyer does not buy the product regularly the product is expensive and risky in this case the buyer purchases the product and feels dissonance although they stick on information supporting for buying decisions. Habitual buying behavior- happens when the product is cheap and bought regularly. There is no need for buyer to belief, have attitude and behavior but they make decisions basing on how familiar they are to a given product. References P. Kotler, 1991, 'Marketing Management '7th edition, Prentice-Hall, Philip Kotler, 2000, Marketing Management Millenium Edition, Tenth Edition, Prentice-Hall, Inc. Read More