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MARKETING MANAGEMENT
QUESTION 1
The essence of marketing is a transaction-an exchange. it is customer and competition
oriented and focuses on customer satisfaction-Explain

Answer
According to Philip Kotler, marketing is a social process by which individuals and groups obtain
what they need and want through creating and exchanging products and values with others. In
boarder term, marketing is the analysis, planning, implementation, and control of carefully
formulated programs designed to bring about voluntary exchanges of values with target markets
for the purpose of achieving organizational objectives. It relies heavily on designing the
organizations offering in terms of the target markets needs and desires, and on using effective
pricing, communication, and distribution to inform, motivate, and service the markets. (Philip
Kotler)
The main key points of marketing are as follows:
Managerial Process involving analysis, planning and control.
Carefully formulated programs and not just random actions.
Voluntary exchange of values; no use of force or coercion. Offer benefits.
Selection of Target Markets rather than a quixotic attempt to win every market and be all
things to all men.
Purpose of marketing is to achieve Organizational Objectives. For commercial sector it is profit.
For non-commercial sector, the objective is different and must be specified clearly. Marketing
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relies on designing the organizations offering in terms of the target markets needs and desires
rather than in terms of sellers personal tastes or internal dynamics. User-oriented and not seller-
oriented. Marketing utilizes and blends a set of tools called the marketing mix product design,
pricing, distribution and communication. Too often marketing is equated either with just
advertising or with just personal selling. In marketing, it is always assume that it needs some
selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to
know and understand the customer so well that the product or service fits him and sells itself.
Ideally, marketing should result in a customer who is ready to buy. All that should be needed
then is to make the product or service available. (Peter Drucker). Examples: Sonys Walkman,
Nintendos superior video game Marketing includes selling but should be preceded by needs
assessment, marketing research, product development, pricing and distribution. Selling focuses
on products, aggressive selling and sales promotion with emphasis on price variations to close
the sale. Maximize profits through sales volume. Marketing focus on customer needs. Integrated
marketing plan encompassing product, price, promotion and distribution, backed up by adequate
environmental scanning, consumer research, and opportunity analysis with emphasis on service.
Maximize profits through increased customer satisfaction and hence raise market share. The
marketing concept is a consumers needs orientation backed by integrated marketing aimed at
generating consumer satisfaction as the key to satisfying organizational goals. A human need is a
state of felt deprivation of some basic satisfaction. (Food, clothing, shelter, safety, belonging,
esteem etc.) Abraham Maslow noticed that some needs take precedence over others. They are
physiological needs, safety and security needs, love and belonging needs and esteem needs.
Human wants are desires for specific satisfiers of these deeper needs. Demands are wants for
specific products that are backed by an ability and willingness to buy them.
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Marketing is a process thats ultimate goal is to create exchanges that will satisfy and benefit
both the customer and the organization. Marketing is the function of an organization that
identifies their current and potential customers, creates products or services that meet the needs
and wants of customers, informs and persuades the customers to purchases these products or
services, and reinforces the customers confidence in the purchase that they made.
It is important for marketing efforts to be customer-oriented. When marketing a product or
service, the organization must be certain that the product or service that they are providing is one
that the customer wants. Quite often marketing efforts fail when the organization developed the
product/service first, then tried to convince its customer to buy it.
Marketing exists through exchanges. Exchange is the act or process of receiving something from
someone by giving something in return. The something could be a physical good, service, idea
or money. Money facilitates exchanges so that people can concentrate on working at things they
are good at, earn money (itself an exchange) and spend it on products that someone else has
supplied. The objective is for all parties in the exchange to feel satisfied so each party exchanges
something of less value to them than that which is received. The idea of satisfaction is
particularly important to suppliers of products because satisfied customers are more likely to
return to buy more products than dis-satisfied ones. Hence, the notion of customer satisfaction as
the central pillar of marketing is fundamental to the creation of a stream of exchanges upon
which commercial success depends.
Companies achieve their profit and other objectives by satisfying (even delighting) customers.
This is the traditional idea underlying marketing. However, it neglects a fundamental aspect of
commercial life: competition. The traditional marketing concept is a necessary but not a
sufficient condition for corporate achievement. To achieve success, companies must go further
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than mere customer satisfaction; they must do better than the competition. Many also-ran
products on the market could have been world-beaters in the mid-1990s. The difference is
competition. The modern marketing concept can be expressed as Marketing concept, Customer
orientation, Integrated effort and Goal achievement.
To apply this concept, three conditions should be met. First, company activities should be
focused upon providing customer satisfaction rather than, for example, producer convenience.
This is not an easy condition to meet. Second, the achievement of customer satisfaction relies on
integrated effort. The responsibility for the implementation of the concept lies not just within the
marketing department. The belief that customer needs are central to the operation of a company
should run right through production, finance, research and development, engineering and other
departments. The role of the marketing department is to play product champion for the concept
and to coordinate activities. But the concept is a business philosophy not a departmental duty.
Finally, for integrated effort to come about, management must believe that corporate goals can
be achieved through satisfied customers.
Market-driven businesses know how their products and services are being evaluated against
those of the competition. They understand the choice criteria that customers are using and ensure
that their marketing mix matches those criteria better than that of the competition.
Businesses that are driven by the market base their segmentation analyses on customer
differences that have implications for marketing strategy. Businesses that are focused internally
segment by product (e.g. large bulldozers versus small bulldozers) and consequently are
vulnerable when customers requirements change. A key feature of market-driven businesses is
their recognition that marketing research expenditure is an investment that can yield rich rewards
through better customer understanding.
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Attitudes towards competition also differ. Market-driven businesses try to understand
competitive objectives and strategies, and anticipate competitive actions. Internally driven
companies are content to ignore the competition. Marketing spend is regarded as an investment
that has long-term consequences in market-driven businesses. The alternative view is that
marketing expenditure is viewed as a luxury that never appears to produce benefits. Intensive
competition means that companies need to be fast to succeed. Market-driven companies are fast
to respond to latent markets, innovate, manufacture and distribute their products and services.
They realize that strategic windows soon close. A key feature of marketing-orientated companies
is that they strive for competitive advantage. They seek to serve customers better than the
competition. Internally orientated companies are happy to produce me-too copies of offerings
already on the market. Finally, marketing-orientated companies are both efficient and effective;
internally orientated companies achieve only efficiency.
Exceeding the value offered by competitors is key to marketing success. Consumers decide upon
purchases on the basis of judgments about the values offered by suppliers. Once a product has
been bought, customer satisfaction depends upon its perceived performance compared to the
buyers expectations. Customer satisfaction occurs when perceived performance matches or
exceeds expectations. Successful companies place customer satisfaction at the heart of their
business philosophy. Companies facing difficulties have failed to do so as customers needs and
expectations have changed.

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Question 2
A recent survey on washing machines conducted among housewives showed that most of
them belong to middle income households, were generally working, had growing-up
children and preferred a compact easy-to-use, top loading washing machine. They wanted
a machine that gets clothes clean and comes with a trouble free service. If you were the
marketer of whirlpools washing machine, how will you use this information for planning
your marketing strategy? What additional information will you look for before evolving
the strategy?
Answer
Marketing strategy is a process that can allow an organization to concentrate its limited resources
on the greatest opportunities to increase sales and achieve a sustainable competitive advantage.
A marketing strategy should be centered on the key concept that customer satisfaction is the
main goal.
Marketing strategy is a method of focusing an organization's energies and resources on a course
of action which can lead to increased sales and dominance of a targeted market niche. A
marketing strategy combines product development, promotion, distribution, pricing, relationship
management and other elements; identifies the firm's marketing goals, and explains how they
will be achieved, ideally within a stated timeframe. Marketing strategy determines the choice of
target market segments, positioning, marketing mix, and allocation of resources. It is most
effective when it is an integral component of overall firm strategy, defining how the organization
will successfully engage customers, prospects, and competitors in the market arena. As the
customer constitutes the source of a company's revenue, marketing strategy is closely linked with
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sales. A key component of marketing strategy is often to keep marketing in line with a
company's overarching mission statement.
The strategic marketing planning process flows from a mission and vision statement to the
selection of target markets, and the formulation of specific marketing mix and positioning
objective for each product or service the organization will offer. Leading authors like Kotler
present the organization as a value creation and delivery sequence.
The basic elements of a marketing strategy consist of (1) the target market, and (2) the marketing
mix variables of product, price, place and promotion that combine to satisfy the needs of the
target market. The product strategy involves deciding what goods and services the firm should
offer to a group of consumers and also making decisions about customer service, brand name,
packaging, labeling, product life cycles and new product development. The pricing strategy deals
with the methods of setting profitable and justifiable prices. Marketers develop place
(distribution) strategy to ensure that consumers find their products available in the proper
quantities at the right times and places. Place-related decisions involve the distribution functions
and marketing intermediaries (channel members). In the promotional strategy, marketers blend
together the various elements of promotion to communicate most effectively with their target
market. Many firms use an approach called Integrate Marketing Communications (IMC) to
coordinate all promotional activities so that the consumer receives a unified, consistent and
effective message. Marketers do not make decisions about target markets and marketing mix
variables in a vacuum. They must take into account the dynamic nature of the five marketing
environmental dimensions competitive, political- legal, economic, technological and social-
cultural dimensions. Marketers compete for the same consumers. So the developments in the
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competitive environment will have lot of repercussions. The political-legal environment includes
the governing and regulatory bodies who impose guidelines to the marketers. Adherence to the
law of the land is an imperative for a marketer to be a good and responsible corporate citizen.
The economic environment dictates the mood in the target market who take decisions such as to
buy or save, to buy now or later. The technological environment can spell life or death for a
marketer with break-through technologies. Marketers often leap forward or get left behind owing
to the changes in the technological environment. The social-cultural environment offers cues for
the marketers to connect well with the target market. Failure on part of the marketer to
understand the social-cultural environment will have serious consequences.

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Question 3
Explain the concept of marketing environment. Discuss the role of cultural elements and
show how these affect the marketing programmers.
Answer
The marketing environment surrounds and impacts upon the organization. There are three key
elements to the marketing environment which are the internal environment, the
microenvironment and the macro environment. Marketers build both internal and external
relationships. Marketers aim to deliver value to satisfied customers, so we need to assess and
evaluate our internal business/corporate environment and our external environment which is
subdivided into micro and macro.
The microenvironment refers to the forces that are close to the company and affect its ability to
serve its customers. It includes the company itself, its suppliers, marketing intermediaries,
customer markets, competitors, and publics.
The company aspect of microenvironment refers to the internal environment of the company.
This includes all departments, such as management, finance, research and development,
purchasing, operations and accounting. Each of these departments has an impact on marketing
decisions. For example, research and development have input as to the features a product can
perform and accounting approves the financial side of marketing plans and budgets.
The suppliers of a company are also an important aspect of the microenvironment because even
the slightest delay in receiving supplies can result in customer dissatisfaction. Marketing
managers must watch supply availability and other trends dealing with suppliers to ensure that
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product will be delivered to customers in the time frame required in order to maintain a strong
customer relationship.
Marketing intermediaries refers to resellers, physical distribution firms, marketing services
agencies, and financial intermediaries. These are the people that help the company promote, sell,
and distribute its products to final buyers. Resellers are those that hold and sell the companys
product. They match the distribution to the customers and include places such as Wal-Mart,
Target, and Best Buy. Physical distribution firms are places such as warehouses that store and
transport the companys product from its origin to its destination. Marketing services agencies
are companies that offer services such as conducting marketing research, advertising, and
consulting. Financial intermediaries are institutions such as banks, credit companies and
insurance companies.
Another aspect of microenvironment is the customers. There are different types of customer
markets including consumer markets, business markets, government markets, international
markets, and reseller markets. The consumer market is made up of individuals who buy goods
and services for their own personal use or use in their household. Business markets include those
that buy goods and services for use in producing their own products to sell. This is different from
the reseller market which includes businesses that purchase goods to resell as is for a profit.
These are the same companies mentioned as market intermediaries. The government market
consists of government agencies that buy goods to produce public services or transfer goods to
others who need them. International markets include buyers in other countries and includes
customers from the previous categories.
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Competitors are also a factor in the microenvironment and include companies with similar
offerings for goods and services. To remain competitive a company must consider who their
biggest competitors are while considering its own size and position in the industry. The company
should develop a strategic advantage over their competitors.
The final aspect of the microenvironment is publics, which is any group that has an interest in or
impact on the organizations ability to meet its goals. For example, financial publics can hinder a
companys ability to obtain funds affecting the level of credit a company has. Media publics
include newspapers and magazines that can publish articles of interest regarding the company
and editorials that may influence customers opinions. Government publics can affect the
company by passing legislation and laws that put restrictions on the companys actions. Citizen-
action publics include environmental groups and minority groups and can question the actions of
a company and put them in the public spotlight. Local publics are neighborhood and community
organizations and will also question a companys impact on the local area and the level of
responsibility of their actions. The general public can greatly affect the company as any change
in their attitude, whether positive or negative, can cause sales to go up or down because the
general public is often the companys customer base and finally, those who are employed within
the company and deal with the organization and construction of the companys product.
The macro environment refers to all forces that are part of the larger society and affect the
microenvironment. It includes concepts such as demography, economy, natural forces,
technology, politics, and culture.
Demography refers to studying human populations in terms of size, density, location, age,
gender, race, and occupation. This is a very important factor to study for marketers and helps to
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divide the population into market segments and target markets. An example of demography is
classifying groups of people according to the year they were born. These classifications can be
referred to as baby boomers, who are born between 1946 and 1964, generation X, who are born
between 1965 and 1976, and generation Y, who are born between 1977 and 1994. Each
classification has different characteristics and causes they find important. This can be beneficial
to a marketer as they can decide who their product would benefit most and tailor their marketing
plan to attract that segment. Demography covers many aspects that are important to marketers
including family dynamics, geographic shifts, work force changes, and levels of diversity in any
given area. Another aspect of the macro environment is the economic environment. This refers to
the purchasing power of potential customers and the ways in which people spend their money.
Within this area are two different economies, subsistence and industrialized. Subsistence
economies are based more in agriculture and consume their own industrial output. Industrial
economies have markets that are diverse and carry many different types of goods. Each is
important to the marketer because each has a highly different spending pattern as well as
different distribution of wealth.
The natural environment is another important factor of the macro environment. This includes the
natural resources that a company uses as inputs and affects their marketing activities. The
concern in this area is the increased pollution, shortages of raw materials and increased
governmental intervention. As raw materials become increasingly scarcer, the ability to create a
companys product gets much harder. Also, pollution can go as far as negatively affecting a
companys reputation if they are known for damaging the environment. The last concern,
government intervention can make it increasingly harder for a company to fulfill their goals as
requirements get more stringent.
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The technological environment is perhaps one of the fastest changing factors in the macro
environment. This includes all developments from antibiotics and surgery to nuclear missiles and
chemical weapons to automobiles and credit cards. As these markets develop it can create new
markets and new uses for products. It also requires a company to stay ahead of others and update
their own technology as it becomes outdated. They must stay informed of trends so they can be
part of the next big thing, rather than becoming outdated and suffering the consequences
financially.
The political environment includes all laws, government agencies, and groups that influence or
limit other organizations and individuals within a society. It is important for marketers to be
aware of these restrictions as they can be complex. Some products are regulated by both state
and federal laws. There are even restrictions for some products as to who the target market may
be, for example, cigarettes should not be marketed to younger children. There are also many
restrictions on subliminal messages and monopolies. As laws and regulations change often, this
is a very important aspect for a marketer to monitor.
The final aspect of the macro environment is the cultural environment, which consists of
institutions and basic values and beliefs of a group of people. The values can also be further
categorized into core beliefs, which passed on from generation to generation and very difficult to
change, and secondary beliefs, which tend to be easier to influence. As a marketer, it is important
to know the difference between the two and to focus your marketing campaign to reflect the
values of a target audience.
When dealing with the marketing environment it is important for a company to become
proactive. By doing so, they can create the kind of environment that they will prosper in and can
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become more efficient by marketing in areas with the greatest customer potential. It is important
to place equal emphasis on both the macro and microenvironment and to react accordingly to
changes within them.
The role of cultural elements and show how these affect the marketing programmers.
In relation to international marketing, culture can be defined as the sum total of learned beliefs,
values and customs that serve to direct consumer behaviour in particular country market (p.85)
(Doole & Lowe, 2001). Culture is made up of three essential components: (Usunier, 1993)
Beliefs which is a large number of mental and verbal processes which reflect our
knowledge and assessment of products and services (Usunier, 1993)
Values which are the indicators consumers use to serve as guides for what is appropriate
behaviour, they tend to be relatively enduring and stable over time and widely accepted
by members of a particular market (Usunier, 1993)
Customs which are modes of behaviour those constitute culturally approved or acceptable
ways of behaving in specific situations. Customs are evident at major events in ones life
like birth, marriage, death, and at key events in the year like Christmas or Easter
(Usunier, 1993)
Beliefs, values and customs are the three components of culture which influence the international
marketing (Usunier, 1993). These three components affect consumption behaviours and the
purchase pattern of the individual. Each individual buy products thanks to some references in his
own culture. Beliefs, values and customs send direct and indirect messages to consumers
regarding the selection of goods and services; it is the cultural message (Doole & Lowe, 2001).
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The culture a customer live determines and affects its decision process. Companies must adapt
their product and promotion to suit their area of operation. (Usunier, 1993)
However, there are also eight characteristics of culture defined by Doole and Lowe (2001) which
form a convenient framework for examining a culture from a marketing perspective. For the
characteristic education is easy to understand that the degree of literacy play an important role on
the labeling of product. For the characteristic aesthetics, a firm needs to ensure that use of colour,
music, architecture or brand names in their product and communications strategies is
sympathetic and acceptable to the local culture (Doole & Lowe, 2001).
Hofstedes presented five cultural dimensions; four plus one cultural dimensions which are
relevant for understanding the influence of culture on international marketing.
According to Holden (2002), Mc Sweeney (2002) and Myers & Tan (2002), Hofstedes
theory has some weaknesses and strengths. The main weaknesses are that the study of
Hofstede seems to be outdated and therefore obsolete, he doesnt take into consideration
different cultural groups in a same country (example: in Spain there are Catalans, Basques
and Castilians). Also, Hofstedes respondents worked within a single industry and a single
multinational, IBM. And finally, the definition of the dimensions may be different from
culture to culture. For instance, Japanese collectivism is organization based but Chinese
collectivism is family based. Even if there are a lot of weaknesses, we choose to take the
framework of Hofstede because of his strengths: in reality many companies use Hofstedes
cultural dimensions. Also, the study is based on a large sample (116 000 respondents). The
information population is controlled across countries which means that comparisons can be
made. The four dimensions tap into deep cultural values and make significant comparisons
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between national cultures. The connotations of each dimension are highly relevant. And
finally, no other study compares so many other national cultures in so much detail (Myers
and Tan, 2002). Due to this, we think it is important to explain what culture, according to
Hofstede, is.
In international business it is sometimes amazing how different people in others cultures
behave. We tend to have a human instinct that deep inside all people are the same, but
they are not. Therefore, when a businessman works into another country and makes
decisions based on how (s)he operates in her/his own country, the chances are (s)he will
make some very bad decisions (Hofstede, 1980).
Geert Hofstedes research gives us insights into others cultures so that we can be more
effective when interacting with people in others countries. Moreover, he gives the edge of
understanding which translates to more successful results. According to Hofstede (1980),
the way people in different countries perceive and interpret their world varies along four
plus one dimensions:
Power Distance Index (PDI) that is the extent to which the powerless members of
organizations and institutions (like the family) accept and expect that power is
distributed unequally (Hofstede, 1980).
Uncertainty Avoidance Index (UAI) deals with a societys tolerance for uncertainty
and ambiguity; it ultimately refers to mans search for Truth. It indicates how
members of a culture fell uncomfortable or comfortable in unstructured situations
(novel, unknown, surprising, different from usual) (Hofstede, 1980).
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Individualism (IDV) on the one side versus its opposite, collectivism, that is the
degree to which individuals are integrated into groups. On the individualist side we
find societies in which the ties between individuals are loose: everyone is expected to
look after him/herself and his/her immediate family (Hofstede, 1980).
Masculinity (MAS) versus its opposite, femininity refers to the distribution of roles
between the genders (Hofstede, 1980).
Long-Term Orientation (LTO) versus Short Term Orientation: This cultural
dimension has been criticized by Fang (2003), it is argued that there is a
philosophical flaw inherent in this new dimension. Given this fatal flow and other
mythological weaknesses, the usefulness of Hofstedes fifth dimension is doubted. It
can be said to deal with Virtue regardless of Truth. Values associated with Long-
Term Orientation are thrift and perseverance; values associated with Short-term
Orientation are respect for tradition, fulfilling, social obligations, and protecting
ones face (Hofstede, 1980).
The study of Dwyer, Mesak, and Hsus (2005) outcomes provide additional tactical
implications with respect to the marketing mixthe how of product launch decisions
to facilitate the adoption of innovations by consumers. Marketing management efforts,
particularly with respect to promotion, should be focused on and should communicate to
the core cultural values that each target country possesses, whether it is individualism,
masculinity, power distance, long-term orientation, or some combination of these cultural
dimensions. By focusing on these core values, marketing efforts can be leveraged to achieve
more rapid consumer adoption of the newly introduced product. Each population of each
country is characterized by Hofstedes four plus one cultural dimensions. The study of
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these cultural dimensions can give very important information to marketers for the
standardization or the adaptation of the marketing mix. Indeed, the behaviour of the
customers change depending of this cultural dimensions and an adaptation of the
marketing mix is in this way needed or not (Dwyer, Mesak, & Hsu, 2005). In this regard,
Dwyer, Mesak, and Hsu (2005) conclude by providing global marketers specific marketing
examples linked to each of the cultural dimensions as you can see in the table 2.
Collectivism influences innovativeness, service performance and advertising appeals.
Uncertainty avoidance impacts information exchange behaviour, innovativeness and
advertising appeals. Power distance affects advertising appeals, information exchange
behaviour, innovativeness and service performance. Masculinity impacts sex role portrays,
innovation and service performance. Finally, long-term orientation influences
innovativeness
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Question 4
What is buying behaviour? Explain the major factors influencing buying behaviour
Answer

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Question 5
The segment refers to a homogenous group of buyers while segmentation is the art of
creating homogeneity in a heterogeneous market. Explain the statement indicating the
requirement of segmentation.
Answer

Requirements of Market Segments
Adding up to having diverse needs, for segments to be practical they should be evaluated against
the following criteria:
Identifiable: the differentiating attributes of the segments must be measurable so that they
can be identified.
Accessible: the segments must be accessible through communication and delivery
channels.
Substantial: the segments ought to be adequately large to justify the resources required to
target them.
Unique needs: to give good reason for separate offerings, the segments must respond
differently to the different marketing mixes.
Durable: the segments should be comparatively steady to reduce the cost of frequent
changes.
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A good market segmentation will result in segment members that are internally homogenous and
externally heterogeneous; that is, as similar as possible within the segment, and as different as
possible between segments.

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Question 6
In recent years discount sales have been on the rise and several discount stores have come
up in the country. Also, regular discount sales are organized by firms and retail stores
around the festivals time. Yet there are many large stores like Shoppers Stp. TRibhovan
Das Bhimji Zaveri, Big Kids Kemp, etc. who do not have these sales and yet record large
sales turnover. Why?
Answer

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Question 7
Discuss the distribution alternatives available to a firm. Where and how will you use each
of these alternatives?
Answer

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Question 8
State the characteristics of service marketing, develop marketing mix plan for upcoming
bank in private sector
Answer

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Question 9
What is meant by market orientation? In your view, why is it difficult for companies to be
market oriented?
Answer

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Question 10
Define and discuss the concept of relationship marketing. In what ways does a company
benefit from implementing relationship-based strategies?
Answer

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Question 11
What is market segmentation? Discuss the importance of market segmentation within the
marketing process.
Answer
Market segmentation
Marketing targets key people that help their business grow. Marketing segmentation is just one
of the steps a business must take when they are working to define their specific target markets.
Market segmentation is the identification of portions of the market that are different from one
another. It also means breaking down the total market into self contained and relatively uniform
subgroups of customers, each possessing its own particular requirements and exceptionality in
other words dividing a market into a group of key buyers that require different products instead
of using the same marketing strategy for all the consumers. This enables the company to modify
its output, advertising messages and promotional methods to correspond to the needs of
particular segments. Accurate segmentation allows the firm to pinpoint selling opportunities and
to tailors it's marketing activities to satisfy on consumer needs. Through the process of market
segmentation, there are certain variables to identify customer groups, such as needs, income
geographical, location, buying habits and other characteristics as well, we can focus on the parts
of the market that it can serve best and make great profit. Market segmentation is due to the fact
that resources are limited. Therefore, all business will minimize their resources and maximize
their profit to gain their benefit. A market is the aggregation of all the products or services which
customers regard as capable of satisfying the same need. Segmentation allows the firm to better
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satisfy the needs of its potential customers. A company that practices segment marketing
recognizes that buyers differ in their needs, perceptions, and buying behaviors.
Importance of market segmentation
The marketing conception calls for understanding customers and fulfilling their requirements
better than the competition. But different customers have different requirements, and it hardly
ever is possible to satisfy all customers by treating them the same. Mass marketing refers to
treatment of the market as a homogenous group and offering the same marketing mix to all
customers. Mass marketing allows economies of scale to be realized through mass production,
mass distribution, and mass communication. The disadvantage of mass marketing is that
customer wants and preferences differ and the same contribution is unlikely to be viewed as
optimal by all customers. If firms ignored the differing customer needs, another firm likely
would enter the market with a product that serves a specific group, and the current firms would
lose those customers. Target marketing on the other hand recognizes the diversity of customers
and does not try to please all of them with the same offering. The first step in target marketing is
to identify different market segments and their needs.
Segmentation bases
For a successful implementation of a market segmentation strategy, a business must employ
market research techniques to discover patterns of likeness among customer preferences in a
market. Ideally, customer preferences will fall into distinct clusters based upon identifiable
distinctiveness of the population. This means that if customer requirements were plotted on a
graph using certain characteristics, or segmentation bases, along the axes, the points would tend
to form clusters.
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The customer segments should be:
Identifiable and measurable;
Large enough to be profitable;
Reached effectively (for example, its members must tend to view the same television
programs, read the same publications, or shop in the same places);
Responsive to marketing; and
It should be stable and not expected to change quickly.
A company might elect to serve a single market segment or attempt to meet the needs of several
segments. Companies must work harder to ensure that their marketing has the greatest impact
possible.

Increasing competition makes it difficult for a mass marketing strategy to succeed. Customers
are becoming more diversified and firms are constantly differentiating their products relative to
competitors. When the focus is on segmented markets, the company's marketing can better match
the needs of that group. Market segmentation allows firms to focus their resources more
effectively, and with a greater chance of success.
Market segmentation improves the business market position by helping it to determine how well
its products and services meet target market members needs compared to how well its
competitors products and services meet those needs. Using market segmentation to access the
power of market characteristics enables the organisation to meet target market members needs,
speak their language and relate to them through events and activities. The more effective an
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establishment is at improving its marketing strategies and tactics with characteristics derived
from market segmentation, the more likely it will convert target market members into customers.
Requirements of Market Segments
Adding up to having diverse needs, for segments to be practical they should be evaluated against
the following criteria:
Identifiable: the differentiating attributes of the segments must be measurable so that they
can be identified.
Accessible: the segments must be accessible through communication and delivery
channels.
Substantial: the segments ought to be adequately large to justify the resources required to
target them.
Unique needs: to give good reason for separate offerings, the segments must respond
differently to the different marketing mixes.
Durable: the segments should be comparatively steady to reduce the cost of frequent
changes.
A good market segmentation will result in segment members that are internally homogenous and
externally heterogeneous; that is, as similar as possible within the segment, and as different as
possible between segments.
Fundamental characteristics of market segmentation
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There are three fundamental characteristics that define the "category of need", they include the
following:
Strategic - this category must define the product the company is offering and why it is
important to the mission, objectives, or operations of the consumer.
Operations - this category must fulfill the general operating procedures of a company
and align with its procedures.
Functional - the final approach is to define the function need a customer has for a
product. The product or service must deal with a specific process such as accounting,
maintenance, etc. There are several domains for the functional aspect of market
segmentation, but it must be defined with the prospective audience in min
Criteria for Market Segmentation includes
For the consumer market
Geographic segmentation: Geographical segmentation involves dividing a market into different
geographical units such as nations, states, land or regions, countries, cities, rural or
neighborhoods.
Demographic segmentation variables: Demographic segmentation divides the market into
groups based on variables such as age, gender, family size, marital status, family life cycle,
income, occupation, education, religion, race, ethnical group, social class and nationality.
Demographic factors are the most popular bases for segmenting customer groups, largely
because consumer needs, wants, and usage rates often vary closely with demographic variables.
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Psychographic segmentation: Social status, lifestyle-type, personal type, values. Psychographic
segmentation groups customers according to their lifestyle. Activities, interests, and opinions
(AIO) surveys are one tool for measuring lifestyle. Some psychographic variables include
Behavioral segmentation: Behavioral segmentation is based on actual customer behavior
toward products. Behavioral segmentation has the benefit of using variables that are strongly
related to the product itself. It is a fairly direct starting point for market segmentation. Some of
the variables includes intensity of product use, brand loyalty, user behaviors, benefits sought,
user status (potential, first-time, regular), readiness to buy, occasions (holidays and events that
stimulate purchases).

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Question 12
What is a brand? Discuss the strategic importance of brands to an organisation in terms of
brand equity.
Answer
34

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