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Describe and discuss the marketing macro environmental factors Segmentation, Target Marketing, Positioning, SWOT and PESTEL analysis....

Describe and discuss the marketing macro environmental factors Segmentation, Target Marketing, Positioning, SWOT and PESTEL analysis. How do these analytical tools affect developing a marketing plan?

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1. Market segmentation is the activity of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers (known as segments) based on some type of shared characteristics. In dividing or segmenting markets, researchers typically look for common characteristics such as shared needs, common interests, similar lifestyles or even similar demographic profiles. The overall aim of segmentation is to identify high yield segments – that is, those segments that are likely to be the most profitable or that have growth potential – so that these can be selected for special attention (i.e. become target markets).

Many different ways to segment a market have been identified. Business-to-business (B2B) sellers might segment the market into different types of businesses or countries. While business to consumer (B2C) sellers might segment the market into demographic segments, lifestyle segments, behavioural segments or any other meaningful segment.

Market segmentation assumes that different market segments require different marketing programs – that is, different offers, prices, promotion, distribution or some combination of marketing variables. Market segmentation is not only designed to identify the most profitable segments, but also to develop profiles of key segments in order to better understand their needs and purchase motivations. Insights from segmentation analysis are subsequently used to support marketing strategy development and planning. Many marketers use the S-T-P approach; Segmentation→ Targeting → Positioning to provide the framework for marketing planning objectives. That is, a market is segmented, one or more segments are selected for targeting, and products or services are positioned in a way that resonates with the selected target market or markets.

2. A target market is a group of consumers or organizations most likely to buy a company’s products or services. Because those buyers are likely to want or need a company’s offerings, it makes the most sense for the company to focus its marketing efforts on reaching them. Marketing to these buyers is the most effective and efficient approach. The alternative - marketing to everyone - is inefficient and expensive.

Once you are clear about who is most likely to need or want your product or service, it’s time to get even more specific about this group, or groups, of people. There are several different ways to define your target market, based on different characteristics. You should decide which approach comes closest to exactly describing your perfect customer:

  • Consumer or business – Start by clarifying if you have a B2B (business-to-business) or a B2C (business-to-consumer) offering.
  • Geographic – Local brick-and-mortar stores may find that their most likely customers are within a two-mile radius of their store, or within a particular zip code. This target market is defined geographically, based on where they live or work or vacation or do business.
  • Demographic – Describing your best customer demographically means that you define your target market in terms of their gender, age, income level, education level, marital status, or other aspect of their life.
  • Psychographic – Sometimes customers don’t fit into a particular group based on outward characteristics, but more based on internal attitudes and values. These are psychographic characteristics.
  • Generation – Many companies today define their target market based on which generation they were born in, such as baby boomers or Gen Y.
  • Cohort – Other companies find that their target market is better defined by looking at cohorts, or groups of people who had similar experiences during childhood, such as being raised by a single mom or attending boarding school.

3. Positioning helps establish your product's or service's identity within the eyes of the purchaser. A company's positioning strategy is affected by a number of variables related to customers' motivations and requirements, as well as by its competitors' actions.

Before you position your product or service, you should answer the following strategic questions about your market and your products or services:

  • What's your customer really buying from you? Remember that McDonald's isn't just selling burgers and fries. It sells fast food that tastes the same, no matter when or where it's ordered, in an environment that's clean and friendly to families.
  • How's your product or service different from those of your competitors? A cheeseburger is a cheeseburger, you may think. But look how McDonald's, Burger King and Wendy's differentiate their fast food. They offer different side dishes (onion rings at Burger King, french-fried potatoes at McDonald's), different toys with kids' meals (a big incentive for the under-age-10 set), and different ways of cooking their burgers (Burger King's are broiled, McDonald's, grilled).
  • What makes your product or service unique? In New England, McDonald's is the only fast-food chain to offer lobster rolls (a lobster salad sandwich served in a grilled hot-dog roll) in the summer.

Once you've answered these strategic questions based on your market research, you can then begin to develop a positioning strategy for your business plan. A positioning statement for a business plan doesn't have to be long or elaborate, but it does need to point out who your target market is, how you'll reach them, what they're really buying from you, who your competitors are, and what your USP (unique selling proposition) is.

Remember, the right image packs a powerful marketing punch. To make it work for you, follow these steps:

  • Create a positioning statement for your company. In one or two sentences, describe what distinguishes you from your competition.
  • Test your positioning statement. Does it appeal to your target audience? Refine it until it speaks directly to their wants and needs.
  • Use the positioning statement in every written communication to customers.
  • Create image-marketing materials that communicate your positioning. Don't skimp.
  • Include your team in the image-marketing plan. Help employees understand how to communicate your positioning to customers.

5. A SWOT analysis is an incredibly simple, yet powerful tool to help you develop your business strategy, whether you’re building a startup or guiding an existing company.

  • SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
  • Strengths and weaknesses are internal to your company—things that you have some control over and can change. Examples include who is on your team, your patents and intellectual property, and your location.
  • Opportunities and threats are external—things that are going on outside your company, in the larger market. You can take advantage of opportunities and protect against threats, but you can’t change them. Examples include competitors, prices of raw materials, and customer shopping trends.
  • A SWOT analysis organizes your top strengths, weaknesses, opportunities, and threats into an organized list and is usually presented in a simple two-by-two grid.
  • For a SWOT analysis to be effective, company founders and leaders need to be deeply involved. This isn’t a task that can be delegated to others.
  • But, company leadership shouldn’t do the work on their own, either. For best results, you’ll want to gather a group of people who have different perspectives on the company. Select people who can represent different aspects of your company, from sales and customer service to marketing and product development. Everyone should have a seat at the table.
  • Innovative companies even look outside their own internal ranks when they perform a SWOT analysis and get input from customers to add their unique voice to the mix.
  • If you’re starting or running a business on your own, you can still do a SWOT analysis. Recruit additional points of view from friends who know a little about your business, your accountant, or even vendors and suppliers. The key is to have different points of view.
  • Existing businesses can use a SWOT analysis to assess their current situation and determine a strategy to move forward. But, remember that things are constantly changing and you’ll want to reassess your strategy, starting with a new SWOT analysis every six to 12 months.
  • For startups, a SWOT analysis is part of the business planning process. It’ll help codify a strategy so that you start off on the right foot and know the direction that you plan on going.

6. A PESTEL analysis or PESTLE analysis (formerly known as PEST analysis) is a framework or tool used to analyse and monitor the macro-environmental factors that may have a profound impact on an organisation’s performance. This tool is especially useful when starting a new business or entering a foreign market. It is often used in collaboration with other analytical business tools such as the SWOT analysis and Porter’s Five Forces to give a clear understanding of a situation and related internal and external factors. PESTEL is an acronym that stand for Political, Economic, Social, Technological, Environmental and Legal factors. However, throughout the years people have expanded the framework with factors such as Demographics, Intercultural, Ethical and Ecological resulting in variants such as STEEPLED, DESTEP and SLEPIT. In this article, we will stick simply to PESTEL since it encompasses the most relevant factors in general business.

Social Factors:

This dimension of the general environment represents the demographic characteristics, norms, customs and values of the population within which the organization operates. This inlcudes population trends such as the population growth rate, age distribution, income distribution, career attitudes, safety emphasis, health consciousness, lifestyle attitudes and cultural barriers. These factors are especially important for marketers when targeting certain customers. In addition, it also says something about the local workforce and its willingness to work under certain conditions.

Technological Factors:

These factors pertain to innovations in technology that may affect the operations of the industry and the market favorably or unfavorably. This refers to technology incentives, the level of innovation, automation, research and development (R&D) activity, technological change and the amount of technological awareness that a market possesses. These factors may influence decisions to enter or not enter certain industries, to launch or not launch certain products or to outsource production activities abroad. By knowing what is going on technology-wise, you may be able to prevent your company from spending a lot of money on developing a technology that would become obsolete very soon due to disruptive technological changes elsewhere.


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