Basics of Marketing - Kotler Philip

Chapter 7. Segmentation of the market, selection of target segments and positioning of goods

Objectives

After reading this chapter, you should be able to:

1. Define the concepts of "market segmentation", "selection of target market segments" and "product positioning in the market".

2. List the main principles of segmentation of consumer markets and industrial goods markets.

3. Explain how firms choose a strategy to reach the market.

4. Tell you how the company positions the product-novelty in the market.

"Coca-Cola" and "Pepsico" in the struggle for the market of non-alcoholic beverages that do not contain caffeine and sugar

It seems that nowadays manufacturers of soft drinks will have a drink for anyone. There are standard cola drinks, sugar-free beverages, sugar-free, but without caffeine, without sugar and without caffeine, not to mention beverages that are not of the cola type, which can also be with sugar and without it, and sometimes with Caffeine or without it. Firms Coca-Cola Company, PepsiCo and other manufacturers of soft drinks adhere to the market segmentation policy, developing new products specifically to meet the wishes of specific groups of consumers.

The first beverage without sugar was the success of the stake drink "Dayt Wright", which began to produce in 1962, the company "Royal Crown". Drawing attention to the success of the Royal Crown, Coca-Cola released its own diet coke called Tab next year. In 1964, the firm Pepsico with its Daiet Pepsi also entered the market of diet drinks. The novelties of Coca-Cola and PepsiCo almost immediately consolidated in the market as the most popular dietary drinks such as cola. And "Daiet Wright", and "Tab", and "Daiet Pepsi" - they were all intended for the day of the market segment, consisting of women watching their weight.

In the early 70's soft drinks gained a strong long-term popularity of a large market segment, which consisted of young people born during the "children's boom" after the Second World War. Sales of non-alcoholic beverages increased annually by 10%. However, with the aging of the people who made up this segment, their health and diet became the main objects of attention for them. Many refused from soft drinks with sugar and caffeine, such as Coca-Cola and Pepsi-Cola, considering them either harmful to health, either contributing to completeness, or harmful and conducive to fullness. And although the sale of soft drinks was still growing, the rate of its growth by 1982 slowed to 2%.

The Coca-Cola company has another problem. Coca-Cola has always been the number one non-alcoholic drink, but its championship began to challenge Pepsi-Cola. Despite the fact that the overall growth rate in the soft drinks industry was sluggish, the sale of dietary drinks increased by more than 10% between 1981 and 1982. "Coca-Cola" considered the market of diet drinks as a sphere with great growth potential. To strengthen its leadership, the company developed a novelty - "diet" Coca-Cola, - designed for men who care about their weight. According to one of the specialists of the non-alcoholic industry, the novelty for an unprecedentedly short time has turned into the most popular and popular non-alcoholic drink. The answer of the PepsiCo company was not long in coming. She changed the positioning of her lemon diet cola "Pepsi Light", targeting it to the same market, i. E. On men seeking to reduce the daily intake of calories consumed. At the same time, both firms continued to offer their first diet drinks "Tab" and "Daiet Pepsi" to women.

At the same time, the non-alcoholic industry has cultivated a decaffeinated beverage market. Health conscious consumers are increasingly worried by the idea that the presence of caffeine in soft drinks has a negative effect on the body. For this group of consumers the company Royal Crown released in 1980 the first bezofeyinovuyu cola. This idea was also picked up by Philip Morris, repositioning its most popular drink, Seven-Up, with a view to the market of coke-free coke. In addition, the firm "Philip Morris" has developed a completely new beskofeynovuyu cola called "Laik". Not wanting to miss the growing market, PepsiCo released two new cola in 1982: Pepsi-free, which did not contain caffeine, and Sugar Free, Pepsi-Fries, which had no caffeine, No sugar. Own cesspoolless drinks began to offer and other companies, say "Doctor Pepper". And today there are about twenty such drinks on the market.

The Coca-Cola company appeared on the market of besko-cafeteria beverages as one of the last. Reluctance to do this was explained earlier by the fact that the main success in the past was brought to her by coffee-containing drinks and the firm did not want to offer novelties that could damage its established products. However, the success of other manufacturers in the market of bezofeyinovyh beverages convinced Coca-Cola, and in 1983 the company produced beskofeynovye variants of all three of its drinks Cola - Coca Cola, Taba and Rait Coca Cola.

Both the management of Coca-Cola and the management of PepsiCo intend to continue the policy of segmenting the market when creating new products. Bryan Dyson, president of Coca-Cola USA, says that his firm is likely to target smaller market segments, perhaps offering juice-based drinks or non-carbonated beverages, or perhaps also producing nutritious Beverages. Roger Enrico of PepsiCo emphasizes the importance of demographic trends as a starting point for the creation of new products, "for as the population ages, its needs and needs will change, and this will give the keys to further segmentation."

Any company realizes that its products can not be liked by all customers at once. There are too many buyers of these, they are widely scattered and differ from each other in their needs and habits. Some firms are best placed to concentrate on servicing certain parts, or segments, of the market. Each company should identify the most attractive segments of the market, which it is able to effectively serve.

Sellers did not always adhere to this practice. Their views went through three stages:

MASS MARKETING . At mass marketing the seller is engaged in mass production, mass distribution and mass promotion of the same goods for all buyers at once. At one time, the Coca-Cola company produced only one drink for the whole market, in the hope that it would be enjoyed by everyone. The main argument in favor of mass marketing is that with such an approach, production costs and prices should decrease as much as possible and the largest potential market be formed.

COMMODITY-DIFFERENTIATED MARKETING . In this case, the seller produces two or more products with different properties, in different design, different quality, in different packaging, etc. Today, Coca-Cola produces several soft drinks in different packages of different capacities. These products are designed not so much to please different segments of the market, as to create a variety for buyers.

TARGETED MARKETING . In this case, the seller makes a distinction between market segments, chooses one or more of them and develops products and marketing complexes per each of the selected segments. For example, Coca-Cola has created its own "Tab" drink to meet the needs of consumers who care about the diet.

Today, firms are increasingly moving away from the methods of mass and commodity-differentiated marketing to targeted marketing techniques, which helps sellers better identify available marketing opportunities. For each target market, the seller can develop the product needed by this market. To ensure the effective coverage of each such market, it can vary prices, distribution channels, advertising efforts. Instead of spraying his marketing efforts ("shotgun shooting"), he will be able to focus them on the buyers most interested in purchasing the product ("shooting with a rifle").

Target marketing requires three main activities (see Figure 42).

The first is market segmentation - the breakdown of the market into distinct groups of customers, each of which may require separate products and / or marketing complexes. The firm determines different ways of segmenting the market, makes profiles of the segments obtained and assesses the degree of attractiveness of each of them.

The second - the choice of target segments of the market - evaluation and selection of one or more market segments to enter into them with their goods.

Third, the positioning of goods on the market is the provision of a competitive position in the market and the development of a detailed marketing mix.

Targeted marketing activities

Fig. 42. Targeted marketing activities

In this chapter we will consider the basic principles of market segmentation, selection of target segments and product positioning.