Market segmentation

Market segmentation involves grouping your various customers into segments that
have common needs or will respond similarly to a marketing action. Each segment
will respond to a different marketing mix strategy, with each offering alternate
growth and profit opportunities.
Some different ways you can segment your market include the following;

Demographics which focuses on the characteristics of the customer. For

example age, gender, income bracket, education, job and cultural background.

Psychographics which refers to the customer group's lifestyle. For example,

their social class, lifestyle, personality, opinions, and attitudes.

Behaviour which is based on customer behaviour. For example, online

shoppers, shopping centre customers, brand preference and prior purchases.

Geographical location such as continent, country, state, province, city or rural

that the customer group resides.
Targeting
After segmenting the market based on the different groups and classes, you will
need to choose your targets. No one strategy will suit all consumer groups, so being
able to develop specific strategies for your target markets is very important.
There are three general strategies for selecting your target markets:

Undifferentiated Targeting: This approach views the market as one group

with no individual segments, therefore using a single marketing strategy. This
strategy may be useful for a business or product with little competition where you
may not need to tailor strategies for different preferences.

Concentrated Targeting: This approach focuses on selecting a particular

market niche on which marketing efforts are targeted. Your firm is focusing on a
single segment so you can concentrate on understanding the needs and wants of
that particular market intimately. Small firms often benefit from this strategy as
focusing on one segment enables them to compete effectively against larger firms.

Multi-Segment Targeting: This approach is used if you need to focus on two

or more well defined market segments and want to develop different strategies for
them. Multi segment targeting offers many benefits but can be costly as it involves
greater input from management, increased market research and increased
promotional strategies.
Prior to selecting a particular targeting strategy, you should perform a cost benefit
analysis between all available strategies and determine which will suit your situation
best.
Positioning
Positioning is developing a product and brand image in the minds of consumers. It
can also include improving a customer's perception about the experience they will
have if they choose to purchase your product or service. The business can
positively influence the perceptions of its chosen customer base through strategic
promotional activities and by carefully defining your business' marketing mix.
Effective positioning involves a good understanding of competing products and the
benefits that are sought by your target market. It also requires you to identify a
differential advantage with which it will deliver the required benefits to the market

effectively against the competition. Business should aim to define themselves in the
eyes of their customers in regards to their competition.

COMPETITOR ANALYSIS
Competitor analysis is an assessment of the strengths and weaknesses of current and
potential competitors. This analysis provides both an offensive and defensive strategic context to
identify opportunities and threats.
COMPETITOR ARRAY

Define your industry - scope and nature of the industry.

Determine who your competitors are.

Determine who your customers are and what benefits they expect.

Determine what the key success factors are in your industry.

Rank the key success factors by giving each one a weighting - The sum of all the weightings must
add up to one.

Rate each competitor on each of the key success factors.

Multiply each cell in the matrix by the factor weighting.

EXAMPLE

Key Industry

Competitor

Competitor

Competitor

Competitor

#1 rating

#1 weighted

#2 rating

#2 weighted

Weighting
Success Factors

1 - Extensive distribution

.4

2.4

1.2

2 - Customer focus

.3

1.2

1.5

3 - Economies of scale

.2

.6

.6

4 - Product innovation

.1

.7

.4

Totals

1.0

20

4.9

15

3.7

COMPETITOR PROFILING
1. Background
2. Financials
3. Products
4. Marketing
5. Facilities
6. Personnel
7. Corporate strategies
1. BACKGROUND
Location of offices and plants.
History - key personalities, dates, events, and trends.
Ownership, corporate governance, and organizational structure .
2. FINANCIALS
P-E ratios, dividend policy, and profitability.
Various financial ratios, liquidity, and cash flow.
Profit growth profile.
3. PRODUCTS
Products offered and product portfolio balance.
New products developed, new product success rate and R&D strengths.
Brands, brand loyalty and brand awareness.
Patents and licenses.
Quality control conformance.
4. MARKETING
Segments served, market shares, customer base and growth rate.
Promotional mix, promotional budgets, advertising themes, ad agency used, sales force success
rate and online promotional strategy.

 Distribution channels used and geographical coverage.

Pricing, discounts and allowances.
5. FACILITIES
Plant capacity, capacity utilization rate, age of plant, plant efficiency and capital investment.
Location and shipping logistics.
6. PERSONNEL
Number of employees and skill sets.
Strength of management and management style.
Compensation, benefits, employee morale and retention rates.
7. CORPORATE STRATEGIES
Objectives, mission statement, growth plans, acquisitions, and divestitures
ANALYSIS OF NEW COMPETITOR

Companies competing in a related product/market.

Companies using related technologies.

Companies already targeting your prime market segment but with unrelated products.

Companies from other geographical areas and with similar products.

New start-up companies organized by former employees and/or managers of existing companies.

Client Agency Relationship In Advertising

The client-agency relationship starts when a client appoints an advertising agency for making
his ad. It continues till the ad agency provides satisfactory services to him. Such a relation should
always be cordial. There should be a mutual trust, confidence and understanding between the two
parties. It is so, since, the primary objective of both sides is same, i.e. to make a successful
advertising campaign.
Lack of mutual trust will be harmful to both parties. It is, therefore, necessary to maintain good
relations between the client and ad agency as follows:
Meaningful two-way communication is required to maintain a friendly client-agency relationship.

Both parties should take special efforts to maintain a cordial relationship.

The approach of give-and-take is required to keep relations over a longer period.
Mentioned below are some significant guidelines (grouped under three categories) to maintain a
cordial client-agency relationship in advertising

1. Suggestions for both parties (Client and Ad Agency).

2. Guidelines for the Client (Advertiser), and
3. Advice to the Advertising Agency.
Suggestions for a client and advertising agency to maintain their relations:

1. There should be a mutual understanding between client and agency. Misunderstanding or

confusion, if any, between the two parties, should be resolved quickly through direct talks.
2. The agency should work sincerely and honestly to bring a success to the client's ad campaign.
3. Both parties should properly follow the terms and conditions of the contract.
4. Good communication must be there between client and agency. Hence, regular meetings between
them shall be arranged.
5. Both should take necessary efforts to maintain their relations friendly
Guidelines for the client to preserve relationship with advertising agency:

1. Treat the ad agency with courtesy at all times and never hurt its ego.
2. Provide all possible information about the product to be advertised and the organization. A wellinformed ad agency will make better ads.
3. Don't unnecessarily bargain for the fees charged by the ad agency as this may affect the quality of
work.
4. Motivate the agency to do a good impactful work. Its charges such as media bills, fees and other
costs must be paid well in time. The client should not wait for the ad agency to remind him about
the payment dues.
5. Don't change the ad agency without a proper reason. If not satisfied, always first communicate
your expectations and then wait for necessary changes to reflect.
6. The client should approve the proposals submitted by the ad agency. He must avoid making petty
arguments and only highlight those crucial relevant matters that need attention.
7. Give sufficient time to the agency to work on and develop an ad campaign. The client should not
pressurize it to work quickly. He should avoid giving deadlines.
8. Reduce disputes to a minimum.

Finalize in advance the charges for a particular ad campaign.

The advertising agency should do a smart and hard work to bring success to the client's ad
campaign.
1. It should make a good advertising plan and must implement it efficiently and effectively.
However, first it must get the approval from the client.
2. It is the duty of the account executive of the agency to keep his customer happy and satisfied.
3. It should not charge client unreasonably high rates.

4. It should not make ads for client's competitor.

5. It should get all the information from the market that will help to create better ads.
6. Discuss the ad fees with the client in advance to avoid disputes.
7. Disclose to the client the names of the team members (employees) that are working on his ad
campaign.
8. Inform the client about changes, if any, happening within the agency.
9. Never hurt client's ego. Agency should always provide timely services to him and try its best to
satisfy him.
10. So keeping a good client-agency relationship in advertising is crucial to the success of both
parties.

In the above chart,

Board of Directors is a top administrative body of the XYZ advertising agency.
The President or General Manager is its head.
The Vice President of Marketing Services looks after its Media, Research and Sales Promotions.
The Vice-President of Management and Finance manages its Finance Department and Office
Management (Personal, Records, and Public Relations.)

The Vice-President of Creative Services takes care of its Copy Art, Production (TV and Radio,
Press, etc.) and Traffic.
The Vice-President of Accounting Services handles its Account Supervisors and Account
Executives.
With expansion and growth, the organizational structure of advertising agency becomes
complicated. Small Agencies usually have a simple structure compared to giant ones who have ample
funds and resources to carry out their large and growing operations in the field of advertising.
Departments of Advertising Agency
The different departments of advertising agency:

1. Contact Department,
2. Media Department,
3. Copy Department,
4. Art Department,
5. Production Department,

6. Research Department,
7. Accounting and Finance Department,
8. Public Relations (PR) Department, and
9. Office Management.
Now let's discuss main departments of advertising agency along with specialized functions
assigned to each of them.