By aiming a businesses mixes at more market segments, the business sales usually increase in the collective market.
“A company with excess production capacity may find a multi- segment strategy advantages because the sale of other products to additional segments may absorb this excess capacity”[1]
(Dibb, Ferrell, Pride Ssimkin Marketing concepts and Strategies, 3rd European edition1997, Houghton Miffin Boston New York, p224 ISBN 039 574 0050)
For example:
Lever Brother is a manufacturer of detergents. The detergents they produce range form different brands (Persil to Surf) to different contents (liquid, powder, tablets etc). If one of their products is not selling to well then it is likely that another product can meet the shortfall until a decision is made to either, stop producing the product or update the product.
A disadvantage of multi-segment market strategy is that it means more productions processes, materials and people involved; therefore costs will be higher for production and marketing.
After identifying the above information it is clear that there are both advantages and disadvantages that need to be taken into consideration.
By looking at both concentration marketing and multi segment strategy, a business must consider a number of issues when making the decision to enter a new segment or not.
These issues include:
- What the customer wants and needs are.
- Size, structure and future potential of the segment.
- Company resources availability
- Competition
- Existing market shares
- Possible production/marketing scale economies.
4.1 Consumer buyer behaviour decision making model, Purchase Class and Buyer Roles
When consumers make their decision to buy a product or use a service, there is a process which they tend to follow. This is known as the Consumer Decision Making Process as illustrated below.
Consumer Decision Making Process
Problem recognition: this is when a consumer becomes aware of a problem or a need. These can be solved by buying a product or by the use of a service.
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Information search: this is when a consumer starts to look for what will satisfy their needs. This is done through researching information on the product or service. Different ways of researching are; internet, magazines, professional opinions, word of mouth etc.
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Evaluation of alternatives: the consumer then looks at the different types and options available to them. They will prioritise their needs and wants, and create a short list of the suitable products based on price, durability, colour, optional extras etc.
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Purchase: once the consumer has made a decision on the product/service that they want, they will the go on to buy it.
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Post Purchase Evaluation: after the consumer has purchased the product/service they will then assess it and identify as to whether their need has been met. They will seek reassurance, that they have made the right decision. If they have made the right decision or not they are now in a position to retain the information for future, even relying upon it were they to get through the information search again in the future. This information can also be used to recommend others too.
After the purchase of the product, consumers often have doubts about the decision they made to buy it and may even continue to shop around to reassure them that they have made the correct decision. This is called cognitive dissonance.
Decision Making Unit
Once problem recognition is achieved, it may mean that others need to be involved with the decision of what to purchase.
Below are the 5 different roles involved, when buying a product.
Initiator: the person that recognised the need to make a purchase.
Influencer: a person with knowledge and experience or purchasing specific products.
Decider: the person that makes the final decision and makes the purchase.
User: the person that will actually use the purchase.
It is not always the case of a different person carrying out each role, sometimes it can be just one person that fulfils all these roles, at other times its partners or families contributing to the decisions or even people making the decision for others.
Due to the different roles of decision making marketers should identify this, so as to be able to get their messages across to the correct buyers.
Here is an example of the consumer decision making process and who might be involved in the decision of buying the product.
Problem Recognition: you are pregnant and will need to get a pram.
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Information Search: Mother and Baby magazines
Internet
TV
Word of mouth
Baby shows/events
Pram shops
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Evaluation of alternatives: here you would prioritise what your needs and wants are from a pram such as:
Durability, colour, size, style, make & model, accessories,
Types of tyres, price, special offers etc
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Purchase: buy the pram that fits and suits your needs.
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Post Purchase Evaluation:
- Has it met your needs and expectations
- Can you recommend it or not
- What do others think of it
- Look around to confirm you have paid a good price, got the right colour etc…..
There are also different purchase classes that a business should consider too when marketing a product.
These include:
Impulse purchases: these purchases are not thought out and planned but are sudden and instant. It is the availability and seeing the product that encourages a purchase straight away and are often small items.
For example, a new household bleach with an introductory offer.
Routine Purchases: these are normally low in cost and are bought often and regularly. They do not need a lot of thought put in to the purchase decision.
E.g. Baked Beans, though the consumer plans on buying these, they do not need to really put much effort in selecting them.
Unfamiliar Purchases: this requires more effort when making the decision to purchase the product as it is not often that the consumer buys these products. These purchases are normally high in cost that the above mentioned purchases.
E.g. Booking a Holiday
Familiar purchases: when a consumer has bought a product before but is looking for something new and different.
E.g. buying a new laptop, the consumer may have bought one before, but would like a newer version with the latest software and hardware. They may look at different at different brands or see what different suppliers can offer.
Critical Purchases: consumers put a lot of though and effort into the decision to buy these purchases. This is because if they make a bad decision then the consequences can be serious as these purchases are normally expensive or long term.
E.g. when buying house it is important to have a survey done, to ensure that there won’t be serious problems with it in the future such as structural damage or landslide etc…
4.2 Organisational buyer behaviour decision making model, Purchase Class and Buyer Roles
Organisational buying behaviour has significant different factors to consumer buying behaviour.
These are:
The business environment influences organisational buyer behaviour as opposed to social environment. An organisation will have to consider the internal and external factors when making purchases, such as:
- Internal - Demand from customers
Suppliers
Culture of the company
Competitors
- External –Strength of the economy
Environmental concerns
Social trends
Political and legal concerns
Organisational objectives and strategies will give direction to organisational buyers, when making the decision to make a purchase, that the organisation needs to carryout its objectives.
Organisational systems - There are many different organisational systems that an organisation uses and each effect the buying decision.
For example, the “Just In Time” (JIT) system. This is when an organisation will buy products just before they need it.
Individual circumstances - the role of the buyer will affect the buyers decisions, such as their training and experience.
Just as there is the consumer buying decision making process there is also the organisational buyer decision making process, but there are different factors and more people involved.
The following process illustrates the organisational decision making process.
Problem recognition - Someone within the organisation will identify that a problem can be resolved by making a purchase.
E.g. The administrator say her computer is old and not able to keep up with the demands of the business, there fore a new one needs to be bought with the latest software to keep up with the advances in technology.
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Product specification - The organisational buyer will, with the help of others involved in the buying decision, consider all specific requirements of the product. They will then make a short list prioritising their requirements.
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Supplier search - An organisation will look at which suppliers can provide the required elements, from the short list.
To ensure continuous supply, an organisation will often use more than one supplier.
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Ordering - When an organisation makes an order it will either pay by invoice, or open a credit account, with the supplier. In both cases a contract with terms and conditions will be discussed and agreed on.
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Performance evaluation - By recording and reviewing of previous suppliers an organisation will be able to draw on this information should they need to make similar purchases in future. In doing this it often motivates suppliers to provide continuous excellent service.
As mentioned earlier the consumers will put different amounts of effort into the decision
making process, so to will organisations. Organisational buyers use different categories
to consumer buyers, these include:
Straight re-buy – This is when an organisation buys a product routinely and regularly. Once the decision process is complete, it is then just automatically re-bought there after. By making purchases this way, it is harder for new suppliers to break in and offer their products/service.
Modified Re-buy - New suppliers can break through straight re-buy, when an organisation has a problem and has to consider modifying the way they buy or when they are seeking a more efficient buying system or simply to gain more cost efficient products/services.
New Task - When an organisation is buying for the first time they will have to go through all the steps of the decision making process, but depending on the product the amount of research carried out will differ.
As with consumer buying roles, there will also be different buying roles within the organisation. These roles do differ from the consumers roles, and a lot more people are involved in the decision.
The people involved in making the decision will vary depending on the product and their role. The roles are as follows:
The Gate Keeper – this is the person that filters the information sent into an organisation, so as to stop the amount of unwanted information reaching the decision making unit.
The Decider – this is the person that recognises the need to make a new purchase.
The Buyer – is the person that arranges the transactions.
The Influencer – is a person with technical expertise or seniority.
The User - this is the person that will be using the purchase, and may have a say in what will be required from the purchased product/service.
Below is two examples of different products and who is involved in the decision of buying them.
Example 1, Office Supplies.
The deciding person maybe the user too, e.g. administrator using stationary. But it would also in clued looking at other influences, this could be someone who has used other suppliers or again it could be the same person who has made a previous order form the suppliers before. They may also be responsibly for buying the product too or it could be a manager or even another person whose job is to buy for the whole company.
Example 2, IT Systems.
The person responsible for buying the company’s IT systems, would probably go to professional for their expertise and influence. They would probably listen to the users advice to, so as to gain an insight as to what is needed to use the product. The buyer would then probably have to gain permission form senior management to make the purchase. When making this decision, the senior management would expect to have all information made available to them, including alternative products, so as to make a sound informed decision.
By looking at the above examples, it is clear that within an organisation, that it can be either a quick and straight forward decision to make a purchase or a long, drawn out, complex decision. These decisions depend on the product and the size of the organisation.
5.0 Marketing Mix for Two different segments in consumer markets
A business needs to create a successful mix when marketing its products. The marketing mix should include:
Promotion - This consists of its visual appearance, including packaging and how well it works.
Price- The price must be set at the right level to suit the segment of the market it is aimed at, but it must also be able to compete with its competitors.
Promotion- This should be done in such a way so that its target market is aware of its existence and form where it is available from.
Place - The product needs to be in the right place at he right time, where customers can see and access it easily. It should be in a place that the customer would expect to find it.
By implementing the marketing mix successfully a business can sometimes have one
product that fits into the marketing mix but for two different segments of the market.
Below is a table showing an example of this for Johnson’s Wipes.
Johnson’s Wipes are the same product, but they are marketed at two different segments
one is for babies the other for ladies faces.
6.0 Service Marketing:
6.1 Discuss Unique Service Features
Intangibility is often described as a service that is not physical, therefore is cannot be touched, seen, tasted, smelt nor can it be possessed.
Examples of intangible services are:
- Insurance services – Life insurance, holiday insurance etc....
- Guarantees
- Warranties
- Personal services – nursing, maintenance etc...
Intangible services comprise of activities, benefits or satisfaction, therefore they are seen as a high risk purchase as they difficult to examine before making the purchase.
Perishability is often associated to food, as these are perishables and have limited dates for consumption on them, but perishability is also referred to in services too. This is were the service cannot be stockpiled as it will either be out of date or not reusable. The price structure of a perishable service is reflected in the fact that it can not be stockpiled.
E.g. An airline will sell tickets for a seat on a flight. The price will normally start at an appropriate price. As the time gets closer to the flight, if the seats are still empty, the airline will reduce the price, to entice a sale. If the seat remains unsold once the flight has gone, it can never again be sold and therefore it is a perishability.
Another example of a perishable service is tickets for a theatre show. The price structure will reflect the time and day of the show. Such as evening shows are more expensive than matinees and weekend shows are more expensive again. As with the above example, once the show has performed if seats were not sold that money has perished and cannot be regained.
Inseparability is a service feature with characteristics that makes part of the service inseparable from production and the customer’s experience. Each of them are useless with the other.
An example of this is buying a ticket from the theatre. A customer can’t see the performance that they have paid for without producing a ticket.
Or
Going for physiotherapy, a customer needs to be there to receive the physiotherapy, as does the physiotherapist so they can give the therapy.
Heterogeneity represents the quality of a service provided by people. As people do not perform identically to each other, it is therefore a given that there will be variances in the service provided.
Examples of heterogeneity include:
No two visits to the doctors are the same. A patient may see the doctor twice, but their complaint may be a different one each time. The doctor will still be providing the same service and level of healthcare, but the outcome will be different.
Or
News readers on the TV or radio will be informing the viewers/listeners of the same stories, but as it would be two different news readers the quality will vary.
Most consumers will often be influenced by brands or logos that they recognised, when there are inconsistencies in the service, e.g. when a customer wishes to take out a bank loan they would go to a bank with a recognisable name or logo, rather than a bank they have not heard of before.
6.2 Detriments of perceived service quality
Some service qualities are easily measured, but not so with others. Below is an example of the service quality perceived when a customer is looking to join a gym.
When a customer has made the decision to join a gym, there are many factors that they have in mind when they are choosing which gym to join, these are as follows:
They will ask around, their family and friends that already attend a gym or know about a gym or have heard good and bad comments about certain gyms.
The customer may also have had past experience of gym memberships or have attended open days or even been invited along as a guest for the day of one of their friends gyms.
The customer will also think about what their needs are of a gym such as, is there a swimming pool, is it female/male only, do they have personal instructors/advisors/programmes, are there extra classes, special introductory offers such as no joining fees, first month free, free trial etc....
When trying to find a gym and what they have to offer, they may look for advertisements. These could be found on the internet, in the news paper, leaflets through the door, billboards and signs on the edge of roads, posters in health shops or even recommendations in the doctor’s surgery.
Once the decision has been made as to which gym to join, the customer will look at the following dimensions of quality and see if they match their perceived expectations.
Tangibles – are the machines what they expected, is there a swimming pool, are the changing facilities appropriate.
Reliability – is the gym open at the correct or expected times, are classes often cancelled is the pool always available, are the direct debits collected on time.
Responsiveness – are queries answered with in a respectable time, are suggestions and complaints dealt with properly and taken on board.
Competence – are instructors competent to give a lesson or class, are the admin staff competent in keeping your personal records and giving a customer the correct forms.
Courtesy – are staff polite, are other users considerate to each other.
Credibility – are their certificates on display to show qualifications and awards.
Security – are there lockers available, is there someone on the door to let you in and out, is there CCTV around, and is there a safe car park.
Access – is there disabled access, is it easily accessible by public transport, and is there a car park?
Communication – does the gym let you know of any changes coming up such as offers, open days, building work, price changes etc...
Understand the customer – does the gym listen when you make suggestions and act upon them, send out questionnaires to gain feedback to improve facilities.
By looking at these dimensions a customer can measure the quality of the service they are receiving with the service they perceived and expected.
6.3 The 7 P’s
Below is a table detailing the 7P’s in a service marketing mix, relating to the purchase of a photocopier for Wirral Metropolitan College.
7.0 International Marketing
International marketing is marketing in different countries other than your home company.
Simply explained, is when a small business supplies its product to a customer in another country. Though this is not a simple as it sounds. There are still many decisions and problems to overcome. These include the following; what currency will the price be quoted in, who will cover shipping costs, import duties and other taxes, what documentation is required, transportation costs and insurance to name a few.
Once a product is shipped a business will have to consider the after sales care, which will be different form domestic arrangements, e.g. will the product need constructing and who will construct it, would it be someone from the home country or would you employ someone from the country the product was sent to etc.
When seeking international markets, it becomes more complicated as the business will have to promote their product to suit the countries market. This will mean making considerations of the following; language, culture, religion, business practice, laws etc.
For example a company selling women’s sanitary products can advertise on billboards in most Western countries but it would not be acceptable in a predominantly Muslim country.
If a business is going to be doing long term business overseas, it may need to consider having a physical presence in the other country. This may be in the form of a sales office and/or rep, distribution centre, warehouses etc….
If the business has a physical presence overseas but still operates from its home country supplying customers in other countries this is called exporting.
With larger businesses, or as small businesses grow, exporting becomes more complicated. This is because more of a physical presence will be required or even the need to set up a manufacturing company. Should they set up a manufacturing company this would mean that they are part of an international group.
Once an international group is set up, the manufacturing company becomes concerned with the local market and does not market across other countries. The manufacturing company will mainly be self ruling, with the parent company only really getting involved with issues regarding strategic direction, resource allocation and product strategies etc. Some organisations will advertise the fact that they are an International Group and market it in a positively reassuring way.
For example: HSBC Bank markets themselves as being the 2nd largest bank globally. They manage to do this by showing that they adapt to each country and take into account any considerations of that country such as in one of their TV adverts when they suggest how they know how important the number 8 is in China.
When considering the above information it is clear that international marketing is more complicated that the first simple explanation suggested.
Below is a table outlining the main differences between domestic and international marketing.
“Lynch (1994) proposed 5 brand categories of European organisation that will differ in their attitude and approach towards international marketing”[2]
(Bassington, petit, Principles of Marketing,2ndedition 1995,p1000)
Appendix 1.
Conclusions
This assignment has shown that what the different segmentation criteria’s are and how substantial they are and how relevant they are in purchasing behaviour. It has shown that segmentation is just as important in the organisation markets as it is in the consumer markets.
The assignment went on to show the differences and benefits/drawbacks between concentration and multi-segment marketing strategies. It leads you to think that concentration is better for small businesses and new business until they have grown or expanded, but if they become specialists they might not be able to enter into the multi-segment market, due to its customers recognising them for their existing products.
Consumer buying and organisation buying decisions and behaviours are very different to one another. Organisational buying is a more drawn out and complex decision than that of a consumer, therefore marketers need to adapt different strategies when targeting these different buyers.
In task 5 it shows that by using the correct marketing mix it is possible to market one product to at least 2 different segments.
Task 6 highlighted that there is a difference of marketing an intangible product and the different marketing mix that is used when marketing a service as opposed to a product.
Finally the assignment identifies the differences in domestic and international marketing. It is not and easy decision to make to enter the international market and there is a lot of considerations to take into account when making that decision.
Bibliography
Books and Notes
Brassington F and Pettitt S – Principles of Marketing 3rd Edition (FT/Prentice Hall, 2003) ISBN: 02773657917
BPP – Marketing, (BPP Publishing, 2007) ISBN 978 0 7517 4473 6
Chee H and Harris R, - Marketing A Global Perspective (Pitman Publishing, 1993)
ISBN 0 273 03793 5
Dibb, Ferrell, Pride, Simkin – Marketing, Concepts and Strategies, 3rd European Edition (Houghton Mifflin, 1997) ISBN 0 395 790005 0
Fieldstead Marion- Marketing Handouts, Wirral Metropolitan College (2009/2010), England
Websites
Netmba.com/marketing/market/segmentation
Tutor2u.net/business/marketing/segmentation_bases_geographic.asp
Business teacher.org.uk markets/market-segmentation/
Decisionanalyst.com/publ_art/marketsegmentation.dai
www.boots.com
www.johnson.co.uk
http://www.bized.co.uk
http://www.google.com
www.wikipedia.com
www.ask.com
http://www.ikon-direct.co.uk/lp-lease-photocopiers.htm?gclid=CKzghvf81p8CFdoB4wodsFzNbA
http://www.photocopiersdirect.co.uk/lease-copier.php
http://www.plus.approvedphotocopiers.co.uk/UK/questionnaire6/uk-companies.aspx?gclid=CJy2-4j91p8CFcJd4wodfQuvcQ
References
1. Dibb, Ferrell, Pride Ssimkin Marketing concepts and Strategies, 3rd European edition1997, Houghton Miffin Boston New York, p224 ISBN 039 574 0050
2. Bassington, petit, Principles of Marketing,2ndedition 1995,p1000
Self Evaluation
I enjoyed most of this assignment. It gave me more of an understanding of the subject; by making me research and study the concepts of marketing further. By taking out books from the library, attending lessons regularly and receiving handouts from my tutor and also by searching the internet I gained more knowledge of the influences of marketing and targeting decisions and segmentation. I also learned how buyer behaviour affects marketing decisions.
I felt I was able to explain the different marketing approaches when marketing to an organisation as opposed to a consumer.
Lastly I was able to identify the differences in how and why international market is different from domestic marketing.
I feel that the study and research used for this assignment and the knowledge and experience gained will help me in the future, particularly the service marketing part of the assignment, as I would eventually like to start my own business providing a service, as an events organiser
I had a problem with trying to get prices for leasing and purchasing photocopiers, the prices were not readily available on the internet. I did fill in quite a few online forms requesting quotes but I am still awaiting responses from the companies.
I completed the assignment by reading the course notes and the appropriate course text books, using the internet and discussions with my tutor provided further information.
I have again gone over the word count, in my last assignment I said that I would use more appendices to overcome this problem but I am not very confident in how to do this and have only managed to insert one appendix.
Timetable:
