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Marketing Diploma Course – Questions on Unit Four Aleksandre Ananiashvili – S12976

Name of student: Aleksandre Ananiashvili (S12976)


Name of lecture: Marketing Diploma Course
Date of assignment: 11/Sep/2009
Assignment Title: Answer the Questions on Unit Four

With reference to Resource Items 4.2, 4.3 and 4.4, answer the following questions:

1. Identify the methods of market segmentation being used by each these companies.

Market segmentation is the first of three important steps in developing marketing


strategy. Segmentation groups customers with similar needs and responses; targeting determines which
segments to serve; positioning is about how the product (or product portfolio) should compete with
others in the market. The objectives of market segmentation are to more accurately meet the needs of
selected customers in a more profitable way.
According to the Resource items 4.2, 4.3 and 4.4 methods of market segmentation used by each
these companies are demographic approach.
The demographic approach assumes that either customer differs according to some criteria about
themselves or about the company, they work in. Consumers can be grouped based on characteristics
such as age or household composition. This is easy to do and it is easy to reach such segments with
media. However, age and other demographics are only loosely related to behaviour. Demographic
information on its own does not define a marketing proposition; it does not define the product or
service required, or the promotional attitude to take. Demographics play a role in segmentation, but that
role is not to 'define' segments. The role it plays is to help you identify for each segment a profile of the
typical customer to be found in each segment. In other words, who is found in each segment. This in
turn helps to understand how to reach each segment.
Resource Item 4.2 says, researches showed that Prima is read by single women, young married
women, women with young families and women with older families. It means Prima is segmented for
women of all age, whatever their age is; they still share the same fundamental attitudes.
Resource Item 4.3 and 4.4 are nearly similar as they both produce the same product, breakfast
cereal. All family and age group appeal enjoy ready-to-eat breakfast cereals. However, major growth
areas are undoubtedly in the child and adult health sectors. It means ready-to-eat breakfast cereals are
segmented for the child and adults.

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Marketing Diploma Course – Questions on Unit Four Aleksandre Ananiashvili – S12976

2. What are the key trends occurring in the breakfast cereal markets?

The market can be segmented into ready-to-eat cereals, cold cereals and hot cereals. The latter
sector includes both traditional porridge oats and the newer `instant' varieties. Breakfast cereals can
also be classified by category of product, i.e. staples, children's, health, adult indulgence and muesli.
The two largest sectors are staples and children's cereals.
The key trends occurring in the breakfast cereals markets are a programme of strong promotions
and advertising including TV ads, packaging, customer satisfaction and the variety of product. As the
cereal market is very wide because of big number of competitors, manufacturers try to produce the
product that will most fit the customers’ requirements. It will help the company to increase rate of sale.

3. What benefits do these articles illustrate that derive from the process of market
segmentation?

These articles has outlined the market segmentation process from the initial analysis of the market
through to segmenting the market, selecting viable market segments and determining a product’s
position within the market segment. It lies at the heart of the overall philosophy of marketing. Success
stories abound of companies who have successfully adopted and implemented market segmentation
into their planning process. Equally, their failures are all to frequent as companies poorly define their
markets, treat all customers in their market the same, do not evaluate market segments rigorously of
finally, and fail to position the product appropriately or communicate this position effectively.
In order to create a unique position in the consumer’s mind, it is important to differentiate your
product from its competitors, both in terms of its design and in the communications, you make about it
to your target market. Positioning offers marketers the opportunity to compete more effectively for the
mind of the consumer. The appropriate positioning of a brand is fundamental to that brand’s success.
The example of Quaker and Kellogg show the importance of the product’s core attributes and values
being recognized and accepted by the customers.

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Marketing Diploma Course – Questions on Unit Four Aleksandre Ananiashvili – S12976

4. What evidences can u find that demonstrate how both the product is positioned and
communications are designed to meet the needs of the targeted consumers?

Positioning involves designing your product or service so that it occupies a distinct and valued
place in your target consumers’ minds. To position a product or service, an organization must select the
differences it wishes to appeal most strongly to its target audience and communicate these differences
clearly. The concept of positioning therefore has a strong influence on both the development of the
product and on the way its attributes are communicated to its target market.
Researches show that people are motivated to meet the needs of the company by recognition of
the brand, understanding the product quality and content, empathy and identification with the product.
In the researches, customers were also asked to describe themselves, their interests and needs, name
brands they used and thought appropriate to them and select from a wide range of advertisements those
brands they considered most suitable for them. Researches also investigate how customers feel
advertising should interrelate with the product. They select from the wide range of advertisements
those brands they feel are most suitable for the product, and are asked to place them where they would
most like to see them, which contain no advertisements. It is obvious that customers acknowledge the
logical placing of advertisements in or near a relevant feature stimulated the desire to buy. They also
feel the advertisement suggested a complementary product or mood. By appealing to this personality
profile in a lively and non-patronising way, prima became Britain’s bestseller and number one monthly
magazine straight from its first lunch. It retains its position by consistently delivering a package with
which its customers can identify.
The product features the famous brand through a programme of strong promotions and
advertising. Throughout the advertising campaign, the brand will be supported through a steady stream
of engaging and eye-caching promotions, the next of which will be new product for larger families to
collect. The new pack should be particularly developed to satisfy increasing customer demand for
larger, better value packs. Product will be supported by carefully targeted consumer press advertising,
communicating the key message of the brand. If the relaunch is necessary, it has to be supported by a
promotional campaign. Since that, customers have been giving consistent sales growth on a year-on-
year basis.

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Marketing Diploma Course – Questions on Unit Four Aleksandre Ananiashvili – S12976

In order to rescue the Close Shave brand you have been called in by the Managing Director
of B & G Shoprite Ltd. Read the Case Study at the back of the question paper and answer the
questions that follow.

5. Write a shot report to the Managing Director advising him of:

a. The importance of market segmentation, targeting and positioning for a branded


product aimed at the consumer.

Segmentation, targeting, and positioning together comprise a three stage process. We first
determine which kinds of customers exist, and then select which ones we are best off trying to serve
and, finally, implement our segmentation by optimizing our products/services for that segment and
communicating that we have made the choice to distinguish ourselves that way.
The importance of market segmentation results from the fact that the buyers of a product or a
service are no homogenous group. Actually, every buyer has individual needs, preferences, resources
and behaviors. Since it is virtually impossible to cater for every customer’s individual characteristics,
marketers group customers to market segments by variables they have in common. These common
characteristics allow developing a standardized marketing mix for all customers in this segment.
Market segmentation is the segmentation of markets into homogenous groups of customers, each
of them reacting differently to promotion, communication, pricing and other variables of the marketing
mix. Market segments should be formed in that way those differences between buyers within each
segment are as small as possible. Thus, every segment can be addressed with an individually targeted
marketing mix.
There are a huge number of variables that could be used for market segmentation in theory. They
comprise easy to determine demographic factors as well as variables on user behavior or customer
preferences. In addition, there are differences between private customers and businesses.
As already mentioned, segmentation is the basis for developing targeted and effective marketing
plans. Furthermore, analysis of market segments enables decisions about intensity of marketing
activities in particular segments. A segment-orientated marketing approach generally offers a range of
advantages for both, businesses and customers.
In the next step, we decide to target one or more segments. Our choice should generally depend
on several factors. First, how well are existing segments served by other manufacturers? It will be
more difficult to appeal to a segment that is already well served than to one whose needs are not

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Marketing Diploma Course – Questions on Unit Four Aleksandre Ananiashvili – S12976

currently being served well. Secondly, how large is the segment, and how can we expect it to
grow? (Downside to a large, rapidly growing segment is that it tends to attract competition). Thirdly,
do we have strengths as a company that will help us appeal particularly to one group of
consumers? Firms may already have an established reputation. For example: McDonald’s has a great
reputation for fast, consistent quality, family friendly food, it would be difficult to convince consumers
that McDonald’s now offers gourmet food. Thus, McD’s would probably be better off targeting
families in search of consistent quality food in nice, clean restaurants. You cannot sell something that
everybody wants, so you have to pick out a certain target market. From a marketing perspective, it is
used to define your primary target markets.
Positioning involves implementing our targeting. For instant, Apple Computer has chosen to
position itself as a maker of user-friendly computers. Thus, Apple has done a lot through its
advertising to promote itself, through its unintimidating icons, as a computer for “non-geeks.” The
Visual C software programming language, in contrast, is aimed a “techies.”

b. How B & G Shoprite Ltd might consider segmenting the market for A Close Shave.

As we have already mentioned above, the division of a market into different homogeneous groups
of consumers is known as market segmentation.
Rather than offer the same marketing mix to vastly different customers, market segmentation
makes it possible for firms to tailor the marketing mix for specific target markets, thus better satisfying
customer needs. Not all elements of the marketing mix are necessarily changed from one segment to
the next. For example, in some cases only the promotional campaigns would differ.
A market segment should be:

 measurable
 accessible by communication and distribution channels
 different in its response to a marketing mix
 durable (not changing too quickly)
 substantial enough to be profitable

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Marketing Diploma Course – Questions on Unit Four Aleksandre Ananiashvili – S12976

A market can be segmented by various bases, and industrial markets are segmented somewhat
differently from consumer markets.
A basis for segmentation is a factor that varies among groups within a market, but that is
consistent within groups. One can identify four primary bases on which to segment a consumer market:

 Geographic segmentation is based on regional variables such as region, climate, population


density, and population growth rate.
 Demographic segmentation is based on variables such as age, gender, ethnicity, education,
occupation, income, and family status.
 Psychographic segmentation is based on variables such as values, attitudes, and lifestyle.
 Behavioural segmentation is based on variables such as usage rate and patterns, price
sensitivity, brand loyalty, and benefits sought.

The optimal bases on which to segment the market depend on the particular situation and are
determined by marketing research, market trends, and managerial judgment.
While many of the consumer market segmentation bases can be applied to businesses and
organizations, the different nature of business markets often leads to segmentation on the following
bases:

 Geographic segmentation - based on regional variables such as customer concentration,


regional industrial growth rate, and international macroeconomic factors.
 Customer type - based on factors such as the size of the organization, its industry, position in
the value chain, etc.
 Buyer behaviour - based on factors such as loyalty to suppliers, usage patterns, and order size.

The identified market segments are summarized by profiles, often given a descriptive name. From
these profiles, the attractiveness of each segment can be evaluated and a target market segment
selected.

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Marketing Diploma Course – Questions on Unit Four Aleksandre Ananiashvili – S12976

c. Some possible parameters by which A Close Shave might be positioned.

We must realize that our product or service cannot be all things to all people. Very few items on
the market today have universal appeal. Even when dealing in basic commodities like table salt or
aspirin, marketing people have gone to all sorts of extremes to create brand awareness and product
differentiation. If our product or service is properly positioned, prospective purchasers or users should
immediately recognize its unique benefits or advantages and be better able to assess it in comparison to
our competition's offering. Positioning is how we give our product or service brand identification.
Positioning involves analyzing each market segment as defined by our research activities and
developing a distinct position for each segment. We have to ask ourselves how we want to appear to
that segment, or what we must do for that segment to ensure that it buys our product or service. This
will dictate different media and advertising appeals for each segment. For example, we may sell the
same product in a range of packages or sizes, or make cosmetic changes in the product, producing
private labels or selecting separate distribution channels to reach the various segments. “A Close
Shave”, for example, is sold on containers and tubes, cases, or other several sizes. The “A Close
Shave” is the same but each package size may appeal to a separate market segment and have to be sold
with a very different appeal and through different retail outlets.
We have to remember that our marketing position can, and should, change to meet the current
conditions of the market for our product. The ability of your company to adjust will be enhanced
greatly by an up-to-date knowledge of the marketplace gained through continual monitoring. By having
good data about our customers, the segments they fit into and the buying motives of those segments,
we can select the position that makes the most sense. While there are many possible marketing
positions, most would fit into one of the following categories:

 Positioning on specific product features - A very common approach, especially for industrial
products. If our product or service has some unique features that have obvious value this may
be the way to go.
 Positioning on benefits - Strongly related to positioning on product features. Generally, this is
more effective because we can communicate to our customers about what our product or service
can do for them. The features may be nice, but unless customers can be made to understand
why the product will benefit them, we may not get the sale.
 Positioning for a specific use - Related to benefit positioning. Consider Campbell's positioning
of soups for cooking. An interesting extension is mood positioning: "Have a Coke and a smile."

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Marketing Diploma Course – Questions on Unit Four Aleksandre Ananiashvili – S12976

This works well when we can teach our customers how to use our product or when we use a
promotional medium that allows a demonstration.
 Positioning for user category - To be sure we show our product being used by models with
whom our customers can identify.
 Positioning against another product or a competing business - A strategy that ranges from
implicit to explicit comparison. Implicit comparisons can be quite pointed. Explicit
comparisons can take two major forms. The first form makes a comparison with a direct
competitor and is aimed at attracting customers from the compared brand, which is usually the
category leader. The second type does not attempt to attract the customers of the compared
product, but rather uses the comparison as a reference point.
 Product class disassociation - A less common type of positioning. It is particularly effective
when used to introduce a new product that differs from traditional products. People have
become accustomed to change and new products and are more willing to experiment than was
true ten years ago. Even so, some people are more adventuresome and trusting than others and
more apt to try a revolutionary product. The trick is to find out who are the potential brand
switchers or experimenters and find out what it would take to get them to try our product or
service. The obvious disadvantage of dealing with those who try new products is that they may
move on to another brand just as easily. Brand loyalty is great as long as it is to our brand.
 Hybrid bases - Incorporates elements from several types of positioning. Given the variety of
possible bases for positioning, small business owners should consider the possibility of a hybrid
approach. This is particularly true in smaller towns where there are not enough customers in any
segment to justify the expense of separate marketing approaches.