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might give the product an old…fashioned image。
。 Open to profitable development： The customers must have money to
spend on the benefits that you propose to offer。
。 Size： A segment has to be large enough to be worth your exploiting it；
but perhaps not so large as to a。。ract larger petitors。
Marketing 91
One example of a market segment that has not been open to development
for hundreds of years is the sale of goods and services to retired people。
Several factors made this a particularly unappealing segment。 First； retired
people were perceived as ‘old’ and less adventurous； second； they had a
short life expectancy； and finally； the knockout blow was that they had no
money。 In the past decade or so that has all changed： people retire early； live
longer and many have relatively large pensions。 The result is that travel
firms； house builders； magazine publishers and insurance panies have
rushed out a stream of products and services aimed particularly at this
market segment。
Segmentation is an important marketing process； as it helps to bring
customers more sharply into focus； classifies them into manageable groups
and allows you to focus on one or more niches。 It has wide…ranging implications
for other marketing decisions。 For example； the same product can be
priced differently according to the intensity of customers’ needs。 The firstand
second…class post is one example； off…peak rail travel another。
It is also a continuous process that needs to be carried out periodically；
for example when strategies are being reviewed。
Methods of segmentation
These are some of the ways by which markets can be segmented：
。 Psychographic segmentation divides individual consumers into social
groups such as ‘yuppies’ （young； upwardly mobile professionals）；
‘bumps’ （borrowed…to…the…hilt； upwardly mobile； professional showoffs）
and ‘jollies’ （jet…se。。ing oldies with lots of loot）。 These categories
try to show how social behaviour influences buyer behaviour。 Forrester
Research； an internet research house； claims that when it es to
determining whether consumers will or will not go on the internet；
how much they’ll spend and what they’ll buy； demographic factors
such as age； race and gender don’t ma。。er anywhere near as much as
the consumers’ a。。itudes towards technology。 Forrester uses this concept；
together with its research； to produce Technographics。 market
segments as an aid to understanding people’s behaviour as digital
consumers。 Forrester has used two categories： technology optimists
and technology pessimists； and has used these alongside ine and
what it calls ‘primary motivation’ – career； family and entertainment
– to divide up the whole market。 Each segment is given a new name –
‘Techno…strivers’； ‘Digital Hopefuls’ and so forth – followed by a chapter
explaining how to identify them； how to tell whether they are likely to
be right for your product or service； and providing some pointers as to
what marketing strategies might get favourable responses from each
group。
92 The Thirty…Day MBA
。 Benefit segmentation recognizes that different people can get different
satisfaction from the same product or service。 Lastminute claims
two quite distinctive benefits for its users。 First； it aims to offer people
bargains that appeal because of price and value。 Second； the pany
has recently been laying more emphasis on the benefit of immediacy。
This idea is rather akin to the impulse…buy products placed at checkout
tills； which you never thought of buying until you bumped into them
on your way out。 Whether 10 days on a beach in Goa or a trip to Istanbul
are the type of things people ‘pop in their baskets’ before turning off
their puters； time will tell。
。 Geographic segmentation arises when different locations have different
needs。 For example； an inner…city location may be a heavy user of motorcycle
dispatch services； but a light user of gardening products。 Internet
panies have been slow to extend their reach beyond their own back
yard； which is surprising considering the supposed global reach of the
service。 Microso。。 exports only 20 per cent of its total sales beyond US
borders； and fewer than 16 per cent of AOL’s subscribers live outside
the United States。 However； the figure for AOL greatly overstates the
pany’s true export performance。 In reality； AOL does virtually no
business with overseas subscribers； but instead serves them through
affiliate relationships。 Few of the recent batch of internet IPOs have
registered much overseas activity in their filing details。 By way of
contrast； the Japanese liquid crystal display industry exports more than
70 per cent of its entire output。
。 Industrial segmentation groups together mercial customers according
to a bination of their geographic location； principal business
activity； relative size； frequency of product use； buying policies and a
range of other factors。 Logical Holdings is an e…business solutions and
service pany that floated for over ￡1 billion on the London Stock
Exchange and TechMark index； making it one of the UK’s biggest IT
panies。 It was formed from about 30 acquisitions of small （ish）
businesses。 The pany was founded by Rikke Helms； formerly
head of IBM’s E…merce Solutions portfolio。 Her pany split the
market into three segments： Small； Medium…Sized and Big； tailoring its
services specifically for each。
。 Multivariant segmentation is where more than one variable is used。 This
can give a more precise picture of a market than using just one factor。
Specifiers； users and customers
When analysing market segments it is important to keep in mind that there
are at least three major categories of people who have a role to play in the
buying decisions and whose needs have to be considered in any analysis of
a market：
Marketing 93
。 The user； or end customer； will be the recipient of any final benefits
associated with the product。
。 The specifier will want to be sure that the end user’s needs are met in
terms of performance； delivery and any other important parameters。
Their ‘customer’ is both the end user and the budget holder of the cost
centre concerned。 There may even be conflict between the two （or more）
‘customer’ groups。 For example； in the case of； say； hotel toiletries； those
responsible for marketing the rooms will want high…quality products to
enhance their offer； while the hotel manager will have cost concerns
close to the top of their concerns and the people responsible for actually
pu。。ing the product in place will be interested only in any handling and
packaging issues。
。 The non…consuming buyer； who places the order； also has individual
needs。 Some of their needs are similar to those of a specifier； except
that they will have price at or near the top of their needs。 A particular
category here is those buying gi。。s。 Once again their needs and those
of the recipient may be dissimilar。 For example； those buying gi。。s are
as concerned with packaging as with content。 Watches； pens； perfumes
and fine wines are all gi。。s whose packaging is paramount at the point
of purchase。 Yet for the user they are o。。en things to be immediately
discarded。
In just 18 years； Dawn Gibbons MBE； co…founder of Flowcrete （
flowcrete）； took the pany from a 400…square…foot unit （the
size of a double garage） with ￡2；000 capital to a plc with a turnover of
�52 million in the field of floor…screeding technology and clients including
household names such as Cadbury； Sainsbury’s； Unilever； Marks &
Spencer； Barclays and Ford。 Part of Flowcrete’s success was down to a
continuing focus on technical superiority。 This attribute was engendered
by Dawn’s father； a well…respected industrial chemist with an interest in
resin technology。
But arguably Dawn’s skills contributed as much if not more to the
firm’s success。 ‘We want to be champions of change；’ Gibbons claims。
‘We have restructured a dozen times； focusing on new trends。’ Markets
and market segmentation are a vital part of any restructuring process
– indeed； the best panies restructure around their customers’
changing needs。
The first reappraisal came after seven years in business when Flowcrete
realized that its market was no longer those firms that laid floors；
it now had to bee an installer itself。 Changes in the market meant
that to maintain growth Flowcrete had to appoint proven specialist
contractors； train their staff； write specifications and carry out audits to
ensure quality。
94 The Thirty…Day MBA
THE MARKETING MIX
The term ‘marketing mix’ has a pedigree going back to the late 1940s when
marketing managers referred to mixing ingredients to create strategies。
The concept was formalized by E Jerome McCarthy； a marketing professor
at Michigan State University； in 1960。 The mix of ingredients with which
marketing strategy can be developed and implemented is price； product
（or/and service）； promotion and place。 A fi。。h ‘P’； people； is o。。en added。
Just as with cooking； taking the same or similar ingredients in different
proportions can result in very different ‘products’。 A change in the way
these elements are put together can produce an offering tailored to meet
the needs of a specific market segment。
The ingredients in the marketing mix represent only the elements that
are largely； though not entirely； within a firm’s control。 Uncontrollable
ingredients include the state of the economy； changes in legislation； new
and powerful market entrants and rapid changes in technology。 The effects
of these external elements are covered in the chapter on strategy； though
many of the concepts discussed there apply to marketing as well as to
wider aspects of a firm’s operations。
Product/service
When the term ‘marketing mix’ was first coined； the bulk of valuable trade
was concerned with physical goods。 Certainly services existed； but these
were mostly supplied by professions such as law； accountancy； insurance
and finance where the concept of marketing was in any event taboo； today；
a product is generally accepted as the whole bun
