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Customer function
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Transport Steel frame Students Executives
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Aluminium/titanium frame
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Customer segments
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Figure [34] Technology, function and market segments de ne the business
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[48] Strategic Marketing
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The customer function dimension in Figure 34 refers to the question what need is being satis ed Sometimes products are multifunctional and serve clusters of related needs while in other situations the organization serves multiple customer functions with separate products or services The organization provides a mix of bene ts sought by customers to solve problems These bene ts include the product itself, supporting services and other enhancements The pattern of bene ts sought is dictated by the application contemplated by customers The technological dimension refers to the question How are customers being satis ed The technologies refer to the alternative ways a particular function can be performed Frequently the organization has a choice of several different technologies to satisfy the same desire In this case it might choose between a relatively inexpensive steel frame and a much more costly but lighter weight titanium frame Re ning the product market dimension in this manner recognizes the interaction of product technology with manufacturing and the need to coordinate marketing and product design issues (Abell 1980) Market segments are thus identi ed for which the organization might differentiate its products and services This approach to market segmentation also highlights potential problems A broad de nition of the business along the customer segment dimensions may achieve manufacturing cost advantages but it can fragment sales, distribution and service activities while a broad de nition along the customer function dimension, by serving myriad related functions, runs the risk of uneconomic dispersion of scarce technological and manufacturing resources (Day 1981) At the same time too narrow a business de nition may endanger the organization A relatively broad de nition may be necessary to allow change to occur and thereby the continued survival of the organization
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Process of market segmentation
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There are many techniques which may be used in segmenting markets Most depend on understanding underlying needs and wants and quantifying the buying responses of different customer groups Market segmentation is the process by which an organization divides its market into smaller sections in such a way that the response to marketing variables varies greatly among segments but little within segments Segmentation may also be thought of as a process of aggregation, starting with a segment of one customer In selecting market segments for separate marketing mixes, the organization considers factors such as: market size competition effective demand in the segment compatibility of products and services with the needs of the segment
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Market segmentation and positioning [49]
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Irrespective of the approach used, it must be possible to obtain information on the buyer characteristics used as a basis for segmentation Customers in each segment should be identi able in terms of measurable characteristics Measurability is, therefore, the rst criterion It must be possible for the organization to focus its marketing efforts on the segments identi ed Specialized advertising and promotions should be available so that the segments identi ed can be reached ef ciently If the segments identi ed are not accessible, they are of little practical value to the organization Segment accessibility is the second criterion Third, the segments identi ed must be large enough and suf ciently pro table to justify a separate marketing mix Finally, each segment identi ed should manifest a different type of response to the marketing effort In the example above it would be expected that the bicycle market could be effectively segmented into a student segment and a segment focused on wealthier executives with different needs
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Generic market segmentation
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Generic market segmentation strategies may be undifferentiated, differentiated or niche Organizations sometimes make no effort to segment the market; they do not recognize that the market is capable of being segmented An organization following an undifferentiated strategy does not recognize market segments but rather focuses on what is common to all customers in the market By following an undifferentiated segmentation strategy organizations design products and services to suit the broadest possible customer appeals Such a strategy minimizes certain costs and may help concentrate the attention of competitors in one or two areas of the market, assuming that competitors do not attack across a broad front but select points where they are strong and the organization is vulnerable In certain circumstances it is inappropriate to attempt to segment the market (Young et al 1978) Market segmentation is unlikely to provide any bene ts when: The market is so small that marketing to a portion of it is not pro table Heavy users constitute such a large proportion of sales volume that they are the only relevant target The brand is the dominant brand in the market In some product categories the frequency of use is so low that the market can only sustain one brand Because this brand must appeal to all market segments, decisions on product positioning, advertising, distribution and pricing must meet the requirements of the entire market When heavy users dominate the market for a product, conventional market segmentation is meaningless since most of the marketing effort will be directed at that group If the heavy user group itself is large, other segmentation criteria may,
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