Topic 4

MGMT Topic 4 – Introduction to Marketing

Learning Outcomes

By the end of this topic you should understand:

  • What marketing is

  • The functions of marketing

  • Segmentation

  • Targeting

  • Positioning (STP)

What is Marketing?

Definition

Marketing is the process of:

  • Creating value

  • Communicating value

  • Delivering products/services

  • Exchanging offerings that benefit customers and society

Marketing is more than advertising or selling. It also includes:

  • Market research

  • Understanding consumer behaviour

  • Product development

  • Pricing

  • Distribution

  • Digital marketing

  • Ethical and sustainable practices

Functions of Marketing

Marketing helps businesses:

  • Identify customer needs

  • Develop products/services

  • Set prices

  • Create promotional campaigns

  • Choose distribution channels

  • Build customer relationships

  • Increase profit and growth

Marketing also helps consumers make informed purchasing decisions.

STP Marketing Model

STP = Segmentation → Targeting → Positioning

Businesses:

  1. Divide the market into groups.

  2. Choose which groups to target.

  3. Position their product to appeal to those groups.

Goal:

  • Create customer value.

  • Build profitable customer relationships.

Market Segmentation

Definition

Market segmentation divides the market into groups with similar characteristics or needs.

This allows businesses to market more effectively.

The Four Types of Segmentation (Remember: GDPB)

1. Geographic

Based on:

  • Country

  • State

  • Region

  • Climate

  • Population

  • Urban/rural location

Example:
Kathmandu sells more winter gear in Tasmania than Western Australia.

2. Demographic

Based on:

  • Age

  • Gender

  • Income

  • Education

  • Occupation

  • Religion

  • Family size

  • Social class

Examples:

  • Cotton On → 18–30 year olds

  • Cue → Older working professionals

3. Psychographic

Based on:

  • Lifestyle

  • Interests

  • Values

  • Personality

  • Attitudes

Examples:

  • Jeep → Adventure lovers

  • Volvo → People who value safety

4. Behavioural

Based on:

  • Buying habits

  • Brand loyalty

  • Product usage

  • Benefits sought

  • Price sensitivity

Example:
Boost Juice targets health-conscious consumers and rewards loyal customers through its app.

Market Targeting

Definition

Targeting is choosing which market segment(s) to focus on.

Businesses consider:

  • Market growth

  • Profitability

  • Available resources

  • Competition

Three Targeting Strategies

1. Undifferentiated (Mass) Marketing

One marketing campaign for everyone.

Characteristics

  • Broad audience

  • One message

  • Universal products

Examples:

  • Grocery stores

  • Fuel

  • Household products

2. Differentiated (Segmented) Marketing

Different campaigns for different customer groups.

Advantages

  • Better customer satisfaction

  • Stronger brand loyalty

  • Larger customer base

Disadvantages

  • More expensive

  • Requires multiple marketing campaigns

Examples

  • Adidas (different sports)

  • Kellogg's (different cereals for different consumers)

3. Concentrated (Niche) Marketing

Focuses on one specific market segment.

Characteristics

  • Small target market

  • Highly specialised

  • Strong customer relationships

Example

  • Lefty's (products for left-handed people)

Market Positioning

Definition

Positioning is how consumers perceive a brand compared to competitors.

It depends on customer perception, not what the company thinks.

Examples

  • Jetstar = Budget airline

  • Emirates = Premium airline

Positioning Map

A positioning map compares brands using two variables.

Common axes include:

  • Price

  • Quality

  • Taste

  • Healthiness

  • Friendliness

  • Distance

Purpose:

  • Compare competitors

  • Identify market gaps

  • Check if consumers view the brand as intended

Key Terms to Know

Term

Meaning

Marketing

Creating, communicating and delivering value

Segmentation

Dividing the market into groups

Targeting

Selecting which groups to sell to

Positioning

Creating a desired image in customers' minds

Mass Marketing

One campaign for everyone

Segmented Marketing

Different campaigns for different groups

Niche Marketing

Focus on one specialised market

Key Examples

Type

Example

Geographic

Kathmandu markets winter clothing differently by state

Demographic

Cotton On → Young adults

Psychographic

Jeep → Adventurous people

Behavioural

Boost Juice → Loyal, health-conscious customers

Mass Marketing

Groceries, fuel

Segmented Marketing

Adidas, Kellogg's

Niche Marketing

Lefty's

Positioning

Jetstar = Budget, Emirates = Premium

Exam Summary

Remember:

Marketing

  • Creates value for customers.

  • Builds long-term relationships.

  • Includes research, pricing, promotion, distribution, and product development.

STP Process

  1. Segment the market.

  2. Target the best customers.

  3. Position the product against competitors.

Four Segmentation Types (GDPB)

  • Geographic

  • Demographic

  • Psychographic

  • Behavioural

Three Targeting Strategies

  • Mass (everyone)

  • Segmented (multiple groups)

  • Niche (one specialised group)

Positioning

  • Based on consumer perception.

  • Often displayed using a positioning map.

Quick Revision Questions

  1. Define marketing.

  2. List four functions of marketing.

  3. What does STP stand for?

  4. What are the four types of market segmentation?

  5. Give one example of each segmentation type.

  6. What factors are considered when selecting a target market?

  7. Explain the difference between mass, segmented, and niche marketing.

  8. What is market positioning?

  9. What is the purpose of a positioning map?

  10. Why is customer perception important in positioning?