PRINCIPLES OF MARKETING

LECTURE ONE: MARKETING OVERVIEW

1.1 Introduction
Welcome to the first lecture on the marketing overview. We shall begin the study of this
unit by highlighting meaning of Marketing and defining some core marketing concepts.
1.2 Specific objectives:

At the end of the lecture you should be able:

1) Define the term ‘Marketing’
2) Define other key marketing concepts.
3) Differentiate between marketing and selling
4) Describe elements of the marketing mix
5) Discuss the evolution of Marketing

1.3 Lecture Outline

1.3.1 Definition of ‘Marketing’ and other related terms. reflection questions, activity,
exercises/quizzes
1.3.2
1.3.3 The Marketing Mix; Conventional and Extended Marketing mix
reflection questions, activity, exercises/quizzes
1.3.4 The Evolution of Marketing, reflection questions, exercises/quizzes
1.3.5 Customer Relationship Marketing

1.4 Definition of Marketing

Probably, before we define Marketing, it is important to note that the term is commonly
used in today’s workplace. You may already have an inclination to its meaning from its
common usage.
Some people loosely define marketing as activities aimed at creating product awareness,
while others view it as activities aimed at persuading customers. Yet others will equate it
to selling. While all this describe some small aspect of marketing, they don’t quite get the
real scope of Marketing. Several authors have given a comprehensive definition of
Marketing.

The Chartered Institute of Marketing of the United Kingdom defines marketing as, “The
management process which identifies, anticipates, and supplies customer needs
efficiently and profitably.”

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Kibera (1996) defines marketing as “the performance of business and non-business
activities which attempt to satisfy a target individual or group needs and wants for mutual
benefit or benefits.”
Kotler (2006), the American marketing guru provides the definition of marketing as “A
social and managerial process whereby individuals and groups obtain what they need and
want through creating and exchanging products and value with others.”

From these definitions it is clear, that marketing is not just about creating awareness,
conviction or selling. Its about identifying needs and engaging in activities [exchanges] to
satisfy these needs in such that both everyone is better off.

DISTINCTIONS BETWEEN MARKETING AND SELLING

Some distinctions between marketing and selling are as below:

Selling Marketing
Emphasis is on the product Emphasis is on customer needs and wants
The company first the product and figures The company first determines the
how to sell it. customer wants and figures out how to
make and deliver a product to satisfy
those wants.
The management is sales volume oriented Management is customer oriented in
to make profit. making profit.
Planning is short run oriented in terms of Planning is long term oriented in terms of
today’s products and market. new products
The needs of the seller are stressed. Tomorrow’s market and future growth are
stressed.
The needs of the customer are emphasized

For you to appreciate marketing further there is need to understand the following
concepts.

Core Marketing Concepts

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 12 Needs – The basic concept underlying marketing is that of human needs. Needs
comprise of those things that human beings feel they cannot do without e.g. food,
clothing, shelter, safety, education etc.
13 Wants –Wants are the form of human needs take as they are shaped by culture
and individual personality for example urbanites want Television sets.
14 Demand –When a want is backed by buying power it becomes demand.
15 Product – Is anything that can be offered to satisfy needs or wants. It can be
tangible or intangible.
16 Market – A constituency of potential customers sharing particular needs or wants
and who might be willing and able to engage in exchange to satisfy that
need or want.
A market also refers to an institutional arrangement that brings together buyers
and sellers to transact.
17 Marketing offer – Is a combination of products or service presented to the
market to satisfy a need or a want.
18 Value and Satisfaction – Value is the ability of a commodity to satisfy human
wants. It also refereed to as quality or utility. Customers look for value in a
product before paying for it. The ability of a product to meet customer
expectations results in customer satisfaction.
19 Exchange – Is the act of obtaining a desired object from someone by offering
something in return.
20 Transaction – An exchange of values between two or more parties, where either
party gains.
21 Marketing Management – Is the art and science of choosing target markets and
building relationships with them.

1.5 THE MARKETING MIX

The marketing mix is a combination of controllable, tactical marketing tools that a firm
blend to produce the response it wants in the target market. The marketing mixes consist
of everything the firm can do to influence the demand for its product.

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The many possibilities can be collected into four groups of variables also known as the
“four Ps” of marketing mix i.e. product, price, place and promotion.
The conventional 4 P’s of marketing
have since been expanded to 7 P’s as :

Marketing Mix Description

Product The goods and services on offer and their quality, feature, and
design.
Price That which consumers are willing to pay to get a unit of the
product or services
Place The distribution methodology of the products or service to the
market place or target market
Promotion The selling activity used to motivate the customers and entice
them to buy more of the product
People People are the human beings who drive product or service
delivery
Process The framework that is followed in the marketing and delivery of
products and services
Physical evidence The tangible elements of services, ideas or any other intangible
products put on offer

1.6 THE EVOLUTION OF MARKETING

The field of marketing has developed through 5 stages as shown in the diagram below:

Orientation Profit driver Time frame

1. Production Production and Until 1950s
Concept distribution methods
2. Product Concept Quality of product Until 1960s
3. Selling Concept Selling methods 1950s and
1960s
4. Marketing concept Needs and wants of the 1970s to date
customer
5. Societal Marketing Benefit to the society 1990s – to date
Concept

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This historical evolution of marketing is discussed in five competing concepts as follows.
The competing concepts are also referred to as marketing philosophies.

1. The Production Concept

- It is the idea that consumers will buy products which are highly available
and affordable.
- Therefore businesses managers should concentrate on achieving high
production efficiency, low costs, and mass distribution.
- They assume that consumers are primarily interested in product
availability and low prices.
- Though one of the oldest marketing concepts it is still widely adopted by
leading firms like e.g. Coca cola

2. The Product Concept

- This concept holds that consumers will favour products that offer the best
quality, performance and features.
- Therefore the organization should devote its energy in making continuous
improvements to the product e.g. Auto mobile industry
- However overemphasis on product development might also lead to
marketing myopia. Marketing myopia refers to a mistake of paying more
attention to specific product features a company offers than to the benefits
and experiences produced.

3. The Selling Concept

- The idea that consumers will not buy enough of the organizations products
unless the organization undertakes large scale selling and promotional
effort
- This concept is typically practiced by unsought goods providers e.g.
Insurance services.

4. Marketing Concept
- The marketing management philosophy holds that achieving
organizational goals depends on knowing the needs and wants of target
markets and delivering the desired satisfaction better than competitors do.
- Under this concept, customer satisfaction is the path to sales and profits.
Hence the slogan, “the customer is the king as is adopted by some
organisations.”

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 - Customer driven companies undertake massive marketing research on
customer needs and desires, gather new product and service ideas and test
product improvements.

The Selling and Marketing Concepts Contrasted

Starting Focus Means Ends

Point
The selling
Factory Existing Selling Profits
Concept Products and Through
Promoting sales volume

The marketingMarket Customer Intergrated Profits

Concept Needs marketing through
Customer
satisfaction

5. Societal Marketing Concept

Holds that customers will favour products and services that attempt to promote
the values of the society, hence the emergence of corporate social responsibility in
the recent past as a core marketing strategy e.g. Safaricom, Celtel, KCB.

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 1.7 CUSTOMER RELATIONSHIP MARKETING (CRM)

CRM is defined as the overall process of building and maintaining profitable ties between
organizations and customers by delivering superior customer values and satisfaction.
CRM therefore involves attracting, retaining and growing customers.

Overtime, relationship marketing has grown and replaced transactional marketing as

summarized in the table below.

Transactional marketing Relationship marketing

(One way communication) (Two way communication)

 Focus on a single sale  Focus on customer retention

 Product features oriented  Orientation on product benefits
 Short time scale  Long timescale
 Little customer service  High customer service
 Limited customer commitment  High customer commitment
 Moderate customer contact  High customer contact
 Quality is the concern of  Quality is the concern of all
production

Basic Tenets of CRM

To effectively manage customer relationship, marketers normally employ the following

three approaches:

1. Customer Value and Satisfaction

Customer perceived value is the customer’s evaluation of the difference between
the benefits and costs of a marketing offer relative to those of the competing
offers. Whereas the customer may not be accurate in judging the cost and values,
they would always want to maximize their benefits at minimum cost.

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 Customer satisfaction refers to a products perceived performance as compared to
the buyers’ expectation. If the products performance falls short of expectation the
customer is dissatisfied and vice versa. Smart companies aim at delighting
customers by exceeding their expectation.

2. Customer loyalty and retention

Satisfied customers produce several benefits to the company including
(a) They are less price sensitive.
(b) They spread a favourably word of mouth to others about the company
(c) They remain loyal for a longer time.
(d) They buy a wider range of products
(e) They cost less to service as they are familiar with the product and business
design
(f) They exhibit strong Lifetime Customer Value (LCV) as the customer
grows through the loyalty ladder from prospect, to customer, to client to a
supporter, and finally to an advocate as shown below

Advocate
Supporter
Client
Custome
r
Pr
os
pe
ct
Hence for companies to retain their customers for a longer period, they must aim
high in satisfying their needs and wants.

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3. Growing share of customers
Marketers are pre-occupied by the want to increase their share of customers i.e.
the share they get of the customers purchasing in their product categories.

To increase share of customers,

(a) Firms can offer greater variety to current customers

(b) Train employees to cross sell - Cross selling means getting more business
from current customers of one product by selling them additional offering
e.g. offering a customer who comes to buy a suit, a shirt, tie, a belt and
shoes.
Apa
thy

1.8 Activities
This assignment requires you to undertake the process of analyzing your own
company {a company of your choice if not employed} and its operating
environments from a Marketing perspective. You will provide an overview of
your organization, as well as detail the type of orientation towards marketing it
takes.

Here, you are not just reporting what your organization is doing now and what
‘orientation’
1.9 Summary it displays in its marketing strategies, but also assessing whether its
orientation towards marketing is likely to (or perhaps should) change in the future.
In this lecture you have learnt that:
You are also required to identify how your organizations blend the 7 elements of
the marketing
Marketing mixmanagement
is the for its Key Products. e.g How
process which does it price.
identifies, anticipates, and supplies
customer needs efficiently and profitably.”
Marketing has evolved through FIVE stages popularly referred to as marketing
orientations or philosophies
Traditional marketing mix had it 4ps, which was later extended to 7ps
Customer relationship marketing involves, attracting , retaining and growing the
share of customers.

1.7 Suggestion for further reading

Kotler, P. (2000): Marketing Management – Analysis, Planning,
Implementation and Control, 8th Edition, New Delhi, Prentice-Hall, India.
Stanton, W.J (1981): Fundamentals of Marketing, 5th Edition, New York,
McGraw-Hill, Inc. 9
 LECTURE TWO: MARKETING ENVIRONMENT

2.1 Introduction
Welcome to the Second lecture on the marketing environment. We shall begin the study
of this unit by defining the term ‘Marketing Environment’ and highlighting the two broad
classification of Marketing Environment. That is the Micro marketing Environment and
the Macro marketing Environment. We shall then analyze the forces and factors of both
the micro and macro marketing environment.

2.2 Specific objectives:

At the end of the lecture you should be able:

1) Define the term ‘ Marketing Environment’
2) Differentiate between the Micro Marketing Environment and the Macro
marketing Environment
3) Describe factors and forces of the Micro marketing Environment
4) Describe factors and forces of the Macro Marketing Environment.

2.3 Lecture Outline

2.3.1 Definition of ‘Marketing Environment’ reflection questions, activity,

exercises/quizzes

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2.3.2 Micro marketing Environment; Its factors and sub-factors. Reflection questions,
activity, exercises/quizzes.

2.3.3 Macro marketing Environment; Its factors and sub-factors. Reflection questions,
activity, exercises/quizzes.

2.4 Definition of Marketing Environment

A company’s marketing environment consists of factors and forces that may affect
marketing management’s ability to built and maintain successful relationship with
customers.

The marketing environment offers both opportunities and threats. Successful companies
are those that adapt to the environmental changes quickly and turn the threats to
opportunities of growth.

Marketers understand their environments by conducting environmental scanning.

Environmental scanning is the practice of keeping track of external changes that can
affect markets including the demand for goods and services of an organization.

The marketing environment has two broad dimensions:

(a) Micro environment

(b) Macro environment

2.4.1 THE MICRO MARKETING ENVIRONMENT

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These are factors very close to the company that affects its abilities to service its
customers. They include; the company, supplier, customer markets, publics and
marketing intermediaries.

1. The Company
The marketing manager is influenced by the other company departments; hence
he/she must work closely with them.

Top management for instance sets the company’s mission, objectives, broad
strategies and policies the marketing and finance department’s sources for funds
to carry out the marketing plan. The R&D department focuses on designing
products that are attractive and satisfy customer needs. Purchasing department
worries about getting quality material input, while production department
produces the desired product. All these departments interdependent on each other
and impact on the marketing departments plans and actions.

2. The Suppliers
- Suppliers provide the resources needed by the company to produce its
goods and services.
- Marketing managers must watch supply availability to avoid deficiency of
the product in the market.
- Marketers should monitor price trends of their key inputs e.g. petroleum
products, rubber, etc. rising supply costs translates to increased production
cost which forces selling price to go up.

3. Customer Markets
A customer is one who buys a company’s final product in exchange for a
monetary value. Marketers must understand the types of customer markets and
where possible use price discrimination on these markets. Five types of markets
are explained below:

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 (a) Consumer markets – Consist of individuals and firms that buy goods and
services for final consumption.
(b) Industrial markets – Buys goods and services for further processing or for
use in their production process.
(c) Resellers markets – Buys goods and services to resell at a profit.
(d) Government markets – Made up of government agencies that buy goods
and services to produce public goods or services.
(e) International markets – Consist of buyers in other countries including
consumers, producers, resellers and governments.

4. Publics
Publics are groups that have an actual or potential interest in an organisation’s
ability to achieve its marketing objectives. They include:

(a) Financial Publics – They influence the ability of a firm to obtain funds for
conducting its marketing programs. They include banks, investment
houses and stockholders.
(b) Media publics – Include newspapers, magazines, radio and television
stations that carry news, features and editorial opinion. The marketer must
know how to interact with the media for regular coverage of the
organisation.
(c) Government publics – Marketers must always consult the company
lawyers on issues of product safety, advertisement etc.
(d) Citizen action publics – A company’s public relations sector must stay in
term with consumers and consumer action groups and attend to their
concerns.
(e) Internal publics – Includes workers, management, volunteers, board of
director etc. Companies must motivate their internal publics. It motivates
marketing force strive hard to attaining the set goals and this spills over to
external publics.

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5. Marketing Intermediaries
These are forces that can help the company promote, sell and distribute its
products to the final buyer. They include resellers, physical distribution firms and
marketing service agencies.

(a) Resellers – Are distribution channel firms that help the company find
customers e.g. wholesalers, distributors, retailers (Nakumatt, Uchumi,
Tuskys). These organizations often have enough monopsony power to
dictate terms or even shut the manufacturer out of large markets.
(b) Physical distribution firms (transporters) – Are firms that help the
company move its goods from the point of manufacturer to the final
consumers. The marketer must balance factors like costs, delivery time
and safety.
(c) Marketing service agencies – Are research firms (Steadman Group),
advertising agencies, (Adopt A Light, Eagles Outdoor, Monier Outdoor,
The Scann Group), media houses (Nation, Standard, Royal Media, KBC)
and marketing consultants. Such firm’s help the company promote and
target its products to the right markets. The marketer must consider price,
service quality, target market etc. before choosing a marketing agency.

2.4.2 MACRO MARKETING ENVIRONMENT

Macro marketing environmental are factors that are outside the company’s control and
often pose threats or provide opportunities to the company. The forces are often
discussed under the PLEST or PEST frame work as follows:

5 Political
6 Legal environment
7 Economic environment
8 Social environment (demographic environment)
9 Technological environment

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1. Political and Legal factors
- These comprises of laws, regulations, government agencies and social
pressure groups that include and limit various organizational marketing
effort.
- Every marketing activity is subject to a wide range of laws and
regulations.
- These legislations have been enacted for the following reasons:

(a) To protect companies from each other e.g. patent rights.

(b) To protect consumers from unfair business practices e.g. labels on
cigarettes “… smoking kills …”, “don’t drink and drive …”
(c) To protect consumers from overpricing e.g. laws requiring banks
to charge up to a given interest rate.

- Marketers need to know the major laws protecting consumers, society and
competition.
2. Economic Environment
- These are factors that affect consumer buying power and spending
pattern.
- Marketers must understand economic trends. During periods of boom
(prosperity), production and employment are high. Consumers demand
more goods and services. They spend freely on basic and luxury goods.
- During periods of inflation, prices rise faster than production of goods.
Consumer’s income is not sufficient to sustain them hence low demand for
goods/services
- During periods of recession, production and employment decreases, this is
followed by reduced consumption of luxury goods as people stick to the
basic needs only.
- During recovery, production starts to increase, unemployment decreases
and consumers start spending more money in their purchases.

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 - Hence marketers engage in aggressive marketing campaign, during
periods of recession and decline and in times of economic boom, some
firms adopt the Demarketing concept. Demarketing is an effort to reduce
demand for a product.
- An increase in government taxes automatically reduces consumers’
disposable income. Marketers must understand the implication of a VAT
tax increase from 16% to 18% for instance.
3. Demographic Environment/social environment
- Demography is the study of human population in terms of size, density,
location, age, gender, race, etc.
- The growing world population for instance has the following implications
to a marketer:
(a) A growing population means growing human needs to satisfy.
(b)
(c) Depending on the population’s purchasing power, it may mean
growing marketing opportunities.

- Marketers therefore have to keep close track of the demographic trends

because people make up markets both at home and abroad.
- Marketers have to track changes in age, family structures, geographic

population shifts, population diversity etc.

4. Technological Environment
- Refers to forces that create new technologies, new products and market
opportunities e.g. internet, mobile phones, computers, credit cards,
television, etc.

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 - New technologies create new markets and opportunities. Companies that
do not keep up with technological change soon find their products having
been rendered obsolete.

- Through research and development, companies are able to produce

practical and affordable versions of products.

5. The Competitive Environment

- A firm’s competitors are those organizations who produce and sell similar
or identical products/service to those of the firm.
- Successful firms are those that provide greater customer value and
satisfaction relative to competition.
- Marketers must gain strategic advantage by positioning their product
offerings strongly against competitor’s offerings.
- Economists describe three main types of competition:

(i) Pure competition

- Occurs when similar products are offered, there are many buyers and
sellers, the sellers can freely enter the market or exit it and both buyers
and sellers have free access to information.
- Marketers must understand firms under perfect competition take prices as
given by the market and that any marketing effort they engage only creates
awareness and might not affect the quantity demanded directly
- Example include the cooking oil industry in Kenya is made up of Bidco,
Unilever, Kapa, Pwani etc.

(ii) Monopolist

- A large single seller in the market.

- Produces products with no close substitute
- Has control over the prices that they charge in the market.

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 - Firms limit quantity supplied and charge high prices to maximize profits.

(ii) Monopolistic competition

- Occurs when there are a few large sellers in the market. No free entry or
exit from the market, information does not flow freely and each firm has
full control of its demand curve.
- Firms are price setters, but are weary of competitor’s moves.
- Example includes Celtel, Safaricom and Telcom.

(iii) Oligopoly
- Occurs where products are similar but differentiated.
- There are a few sellers and no free flow of information. Firms have full
control of their prices such that a price reduction by one firm is quickly
followed by competing firms to secure their market share but a price
increment by one oligopolist is not necessarily followed by the other
firms.
- Firms often enter a cartel arrangement to push prices upwards as they
operate like a monopolist

- For example; Shell, Kenol Kobil, Total, Caltex, in the oil business in
Kenya.

Competition largely poses the problem of pricing that the marketer must always
try to resolve. The other competitive forces are threat of new entrants, threat of
substitute products and bargaining power of suppliers.( See Porters Model).

2.5 ACTIVITY
You are also required to examine and analyze the context and environments in which
your organization operates. { Company of your choice if not employed} i.e its

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 industry and the macro-environmental forces impacting on the industry, as well as
how the micro-environmental forces impact its offering.

2.6 SUMMARY

Marketing environment refers to forces and factors that affect our efforts as
marketers.
The Marketing environment is divided into two major classes, i.e the Micro –
marketing environment, and the Macro- marketing environment.
Micro-marketing environment are the forces and factors so close to the company
that the company can influence considerably.
Macro-marketing environment consists of forces and factors that the company has
little or no influence over.

2.7 Suggestion for further reading

1. Kotler P. and Armstrong G.,(2008), Principles of Marketing, 12th Edition, Prentice Hall.

2. Kotler, P & Keller, K.L., (2006), Marketing Management. 12 th ed. Upper Saddle River, NJ:
Pearson – Prentice Hall
3. Etzel, M.J., Walker, B.J. and Stanton, W.J., (2007), Marketing, 14TH edn. McGraw-Hill,
Irwin.

LECTURE THREE: MARKET SEGMENTATION, TARGETING AND

POSITIONING

3.1Introduction
Welcome to the third lecture on the marketing segmentation, targeting and positioning.
These three activities sometimes referred to as the STP process are undertaken one after
the other beginning with Segmentation, then Targeting and Finally Positioning. We shall
begin the study of this unit by discussing Market segmentation and proceed on to Market
targeting then Product Positioning.

9.1 Specific objectives:

At the end of the lecture you should be able:

1) Define the terms ‘ Market Segmentation’ Market Targeting’ and ‘Product
Positioning’
2) Describe the bases of segmenting Markets

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 3) Explain market targeting strategies
4) Describe bases for positioning a product.

9.2 Lecture Outline

9.2.1 Definition of ‘Market Segmentation’ and rationale of segmenting markets.

Reflection questions, activity, exercises/quizzes

9.2.2 Bases of segmenting markets, reflection questions, exercises/quizzes

9.2.3 Significance of Market segmentation

9.2.4 Definition of Market targeting
9.2.5 Market targeting Strategies
9.2.6 Definition of Product Positioning
9.2.7 Bases for Product Positioning
9.2.8

9.3
3.4.1 MARKET SEGMENTATION

Market segmentation means dividing a market into distinct groups with distinct needs,
characteristics or behavior who might require separate products or market mixes.
Market segmentation is the process of dividing the market into specific groups of
consumers who share common needs.

A market segment is a group of customers who respond in a similar way to a given set of
marketing effort. The main strategies used in segmenting consumer markets are;
Geographic, Demographic, behavioral and economic factors
(a) Geographic Factors

Geographic segmentation means dividing a market into different geographical units such
as nations, states, regions, cities, etc.

Many companies in Kenya segment the country into five regions, Nairobi, Mountain, Rift
Valley, Nyanza and Coastal.

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Companies do localize their products, advertising, promotion and sales efforts to fit the
needs of individual regions e.g. Daily National Nairobi edition.

(b) Demographic Segmentation

Divides the market into groups based on variables such as age, gender, family size,
family life cycle, income, occupation, education, religion, race, generation and
nationality.

Using these variables, the market could be segmented as follows:

Base Typical segmentation

a) Age Under 6; 6-11; 12-19; 20-34;p 35-49; 50-64;65 and above.
b) Gender Male and female
c) Family size 1-2; 3-4; 5+
d) Family life cycle: Young and single; young, married, youngest child six years and
above; older, married with children; older, married no child under
18 years; older, single; other.
e) Income Under $ 10000; $ 10000-15000; $15000-20000; $20000 – 30000; $30000-
50000; $50000-100000; $100000 and above.
f) Occupation Professional and technical: managers, officials and proprietors, clerical;
sales; craft people, foremen; farmers; retired; students; house wives; unemployed.
g) Education Grade school or less: High school or less: High school graduate; college
graduate etc.
h) Religion Catholic, Protestant, Jewish, Muslim, Hindu, etc
i) Race White, Black, Asian
j) Nationality American, British, French, Kenyan etc.

(c) Behavioral Segmentation

Divides buyers into groups based on their knowledge, attitudes, uses or response
to a product. The segments that emerge include:

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 (i) Occasion segmentation – Divides the market into groups according to
occasions when buyers get the idea to buy, actually buy or use the
purchased item e.g. coffee for cold season.

(ii) Benefit Segmentation – Divides the market into groups according to the
benefits that consumers seeks from the product e.g for a laundry detergent
like Omo, Sunlight, Jik, etc. customer are segmented on the basis of
benefits sought e.g. The product gives benefits like cleaning, fabric
softening, strengthening and fresh smell.

(iii) Loyalty Status – A market can be segmented by consumer loyalty.

Consumers can be loyal to brands (Nike), stores (Nakumatt, Wal-mart,
Bata) and companies (Toyota, Ford). Buyers can be divided according to
loyalty as; completely loyal, somewhat loyal or not loyal. A company can
target the less loyal customers and turn them to loyal customers.

( d ) Psychographics
Divides the market into groups based on variables such as Social Class, Lifestyle and
Personality. Using these variables market could be segmented as follows.

Base Typical segmentation

a) Social class Lower lower; upper-lower; working class, middle class,
upper-middle, lower upper; upper-upper.
b) Lifestyle Straights, swingers, longhairs.
c) Personality Compulsive, authoritarian, ambitious, high-achievers,
gregarious.

Importance of Segmentation
(a) It’s an acknowledgement that people are different and special
(b) It helps marketers define customer needs more precisely
(c) Helps marketers in developing market mixes and products to meet need
(d) Helps in the allocation of resources because segments differ in sizes

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 (e) Provides better evaluation of marketing performance in segments

Requirements for effective segmentation

1. Measurable – The size, purchasing power and profiles of segments can be

measured.
2. Accessible – The market segment can be reached and served. E.g if your target
market is school going students, the best time to advertise is in the evenings.
3. Substantial – The market segments should be large and profitable enough to serve
e.g Toyota targets the African market with economical cars, because the larger
populations are medium income earners.
4. Differentiable – The segments are conceptually distinguishable and respond
differently to different market mix elements and programs e.g people in rural
areas are price sensitive and averse to highly price urnanites are less price
sensitive.
5. Actionable – Effective programs can be designed for attracting and serving the
segments.
6. Profitable- must be capable of achieving the desired objectives, this
may not be in financial terms, eg segments can be identified and used
as a means of entering a market even though they produce little or no
profit.
7. Reliable-the chosen segment must demonstrate a history and a future –
reason to get started.
8. Identifiable-display some common characteristics which sets it apart
from the overall market, eg distinctive needs, psychological traits.
9. Recognizable-members should recognize themselves as being
“different/recognizable by others.
NB. The main benefit of market segmentation is in the understanding
gained of customers. Greater understanding allows marketers to
appreciate why people buy-begins to know how to serve the customers
and how to position the company or its products.

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 REASONS FOR SEGEMENTATION.
-to focus activities
-to reduce risk
-to defeat the competitor
-to understand the customer
-to assist in planning.

MARKET TARGETING

Targeting refers to selection of the ultimate sectors which a marketer chooses as being the
most likely to be successful in achieving the corporate/marketing objective.

A target market is a set of buyers sharing common needs or characteristics that the
company decides to serve e.g. wholesalers who stock cooking oil products could be a
target market for a cooking oil manufacturer like Bidco.

TARGET SELECTION
Market attractiveness may be measured by such criteria as:
-price sensitivity of segment/pricing trends
-potential loyalty
-growth potential
-size of the market
-profitability of the market
-Intensity of competition
-distribution structure.

Market Targeting Strategies

After analyzing the various segments, the company must then decide on the method to
use in approaching the market. The strategies for selecting a target market include:
(i) Undifferentiated marketing
(ii) Differentiated marketing
(iii) Concentrated marketing

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 (iv) Micromarketing

Undifferentiated Marketing (Mass Marketing)

This is a situation in which a firm decides to ignore the various market segments and go
for the whole market with one type of product using one form of marketing mix e.g. mass
advertising of Equity Bank, mass distribution of Jogoo maize flour, mass promotional
campaigns of Coca-Cola.

The main advantage of this strategy is that it is a cost saving approach

The main undoing of this strategy includes:

 Makes a firm unimaginative
 Makes a firm vulnerable to competition

Differentiated Marketing (Segmented Marketing)

Using this strategy, a firm decides to target several market segments and designs
separated offers or market mix for each e.g. Toyota has differentiated markets as follows:

(i) Toyota Prado/Lexus – For consumers who care about size, strength, safety and
not price.
(ii) Toyota Corolla – For consumers who care about fuel consumption and are price
sensitive.

The main advantage of this strategy is that may yield financial success with economies of
scale in production and marketing.

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The main disadvantage of this strategy is that it is very costly strategy. The high cost
originates from; Product design cost, promotion costs for different markets, inventory
cost for various markets, research cost amongst others.

Concentrated Marketing (Niche Marketing)

This is a strategy where a firm selects a market niche and concentrates on it. It involves
offering one product to one specific group.

Is especially appealing when company resources are limited. Instead of going after small
share of large markets, the firm goes after a large share of one or a few segments or
niches e.g. KCB has branches all over the country, I & M Bank, has branches only in
cities i.e. Nairobi, Kisumu, Mombasa. I & M is applying niche marketing.

Micromarketing (One to One Marketing)

Micromarketing is the practice of tailoring products and marketing programmes to suit

the tastes of specific individuals and locations. It is broadly divided into local marketing
and individual marketing.

Local marketing is tailoring brands and promotions to the needs and wants of local
customer groups i.e. cities, neighborhoods or specific stores

Individual marketing is the tailoring of products and marketing programs to the needs and
preferences of individual, customers also called one to one marketing.

3.4.3 POSITIONING

Product positioning means the way the product is defined by consumers on important
attributes i.e. the place the product occupies in the mind of the consumers relative to

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competitors products. One positioning expert once commented that “products are created
in the factory, but brands are created in the mind”

Positioning refers to the place that a product or service holds in the mind of the target
audience(s).
-how a customer “sees” or “perceives” an offering and marketers must make every effort
to ensure that what they are offering is what the customer wants. Eg high price and high
quality.
-positioning is the act of designing the company’s offer and image so that the target
market understands and appreciates what the company stands for in relation to its
competitors.

Toyota 110 is positioned as an economical car, Volvo positions on sa Mercedes is a

luxuriuorise car, Hummer positioned on a very high performance with a price tag to
match.

Examples of positioning slogans:

(a) Safaricom: The better option
(b) Nakumatt: You need it we’ve got it
(c) Nation newspaper: The Truth
(d) Mash : We lead the leaders
(e) Kenya Airways: The pride of Africa
(f) Lexus: The passionate pursuit of excellence
(g) Mercedes: In a perfect world, everyone would drive a Mercedes

The Nature of Positioning

 Positioning assumes that consumers compare products along important features.

To simplify the buying process, consumers organize companies, products and
services into categories and position them in their minds

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  Positioning must clearly indicate these features lest it fails. The marketer must
position the market offer so that it gives them the greatest possible advantage
 Marketers must come up with excellent positioning maps. A positioning map is an
effort of the marketer to show consumer perception of their brands versus
competing products on important dimensions.
 Positioning must be built around a differentiation gimmick
 Marketing mix is used to facilitate positioning

Poor Positioning May Lead to:

1. Undesirable positioning: head on with stronger competition

2. Undesirable position: Position without demand from customers
3. Fuzzy positioning: Nobody knows what the distinctive feature really is.
4. No positioning: Nobody has heard of the positioning

Bases for Positioning a Product

1. Benefits
2. Price and quality combination
3. Uses and application
4. Product user position
5. Product class position
6. Positioning against Competitor (comparative)
7. Origin positioning

Choosing a Differentiation and Positioning Strategy

Positioning task takes four steps:

(1) Identifying a set of possible competitive advantages
(2) Choosing the right competitive advantages
(3) Selecting an overall positioning strategy
(4) Developing a Position Statement

Example of a Position Statement

- A positioning statement summarizes company or brand positioning.

- A good positioning statement should follow this form:

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 To (target segment and need) our (customers), our (brand) is (concept) the
best in the market (point of difference).
e.g to all trendy men, Sir Henrys Suits offers the latest designer suits,
specially tailored to fit the modern fashion and a look of elegance. Non
compares with us in men’s wear.
“Sir Henrys, the best a man can get.”

Challenges of Positioning
(a) Over positioning
(b) Under positioning
(c) Confused positioning
(d) Doubtful positioning: Buyers cannot believe

Tools to Facilitate Positioning

1. Advertising
2. Pricing
3. Personnel
4. Product features
5. Branding
6. Slogan
7. Service environment

9.4 ACTIVITY

Describe the Segmentation, Targeting and Positioning strategy that your organization
adopts with respect to its products. In other words, identify the target segments, as well as
how the organization wants its product(s) to be viewed by the targeted segments.

Note: If your organization produces many goods and/or services, you may want to pick a
particular one and provide more depth on that particular one, rather than being very
general about the entire organization.

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 9.5 SUMMARY

Marketing Segmentation refers to divided the target market into smaller sub-
markets [segments], each that has similar response to your offering.

Four main bases used in segmenting markets include the Geographical,

Demographic, Behavioral, and Psychographic.
The process of determining how many and which particular segments to serve is
known as Market targeting. It comes after market segmentation
Four commonly used market targeting strategies are; Undifferentiated Marketing,
Differentiated Marketing, Focus/Niche Marketing & Micro marketing.
Product positioning refers to the place the product takes in the mind of the target
customer, on certain attributes relative to competing products.

3.7 Suggestion for further reading

4. Kotler P. and Armstrong G.,(2008), Principles of Marketing, 12th Edition, Prentice Hall.

5. Kotler, P & Keller, K.L., (2006), Marketing Management. 12 th ed. Upper Saddle River, NJ:
Pearson – Prentice Hall
6. Etzel, M.J., Walker, B.J. and Stanton, W.J., (2007), Marketing, 14TH edn. McGraw-Hill,
Irwin.

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