Unit 2: Segmentation & the marketing mix
Marketing Management notes · PTU syllabus (BBA 302-18)
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Unit summary
No company can serve everyone well. Segmentation divides the market into groups; the marketing mix is the set of tools used to serve the chosen groups. This unit covers the need, concept and bases of segmentation, mass marketing versus segmentation, and the 4Ps of products and 7Ps of services.
After this unit you can
- Explain the need and concept of market segmentation
- Apply the bases of segmentation for consumer markets
- Compare mass marketing and segmentation
- Explain the 4Ps, the 7Ps and factors affecting the marketing mix
PTU syllabus topics
- Need
- concept
- nature and basis of market segmentation
- mass marketing vs. segmentation
- the 4Ps of products and 7Ps of services
- components and factors affecting the marketing mix
Product
What you offer
Price
What customers pay
Place
How it reaches customers
Promotion
How you communicate
People
Staff who deliver the service
Process
How the service is delivered
Physical evidence
Tangible cues: store, uniform
Topic 1
Market segmentation
Market segmentation is dividing a market into distinct groups of buyers with different needs, characteristics or behaviour who might require separate products or marketing programmes. Need: better understanding of customers, efficient use of resources, competitive advantage and tailored offers.
Geographic
Region, city size, climate, urban or rural
Demographic
Age, gender, income, occupation, education, family size
Psychographic
Lifestyle, personality, social class, values
Behavioural
Benefits sought, usage rate, loyalty, occasion
Requirements for effective segments: measurable, accessible, substantial, differentiable and actionable.
Topic 2
Mass marketing vs segmentation
Approach
One product and message for all
Different offers for different groups
Cost
Lower per unit
Higher
Customer fit
Low
High
Example
Early salt and sugar marketing
Maruti's range from Alto to Grand Vitara
After segmentation come targeting (choosing segments) and positioning (creating a distinct place in customers' minds) — together called STP.
Topic 3
The marketing mix: 4Ps and 7Ps
The marketing mix is the set of controllable tools a firm blends to produce the response it wants in the target market (Neil Borden; 4Ps by E. Jerome McCarthy).
| P | Decisions |
|---|---|
| Product | Variety, quality, design, features, brand, packaging, services |
| Price | List price, discounts, allowances, payment terms |
| Place | Channels, coverage, locations, inventory, transport |
| Promotion | Advertising, personal selling, sales promotion, public relations |
| People (services) | Staff who deliver the service |
| Process (services) | How the service is delivered |
| Physical evidence (services) | Tangible cues: store design, uniforms, website |
Topic 4
Factors affecting the marketing mix
- Market factors: customer needs, competition, size and growth of the market.
- Company factors: objectives, resources, image and product line.
- Environmental factors: economy, technology, laws and culture.
- Product life cycle stage: e.g. heavy promotion at introduction, price competition at maturity.
Key terms
- Market segmentation
- Dividing a market into distinct buyer groups
- Targeting
- Choosing segments to serve
- Positioning
- Creating a distinct place in customers' minds
- Marketing mix
- Controllable tools — product, price, place, promotion
- 7Ps
- The service marketing mix adding people, process and physical evidence
Quick revision
- Bases: geographic, demographic, psychographic, behavioural.
- Segments: measurable, accessible, substantial, differentiable, actionable.
- STP: segmentation → targeting → positioning.
- 4Ps + people, process, physical evidence = 7Ps.
Important exam questions
Practice questions written to the PTU exam pattern for this unit's syllabus: short answers (Section A style) and long answers (Sections B and C style).
Short-answer questions
- Q1.Define market segmentation.
- Q2.List the bases of consumer market segmentation.
- Q3.Differentiate between mass marketing and segmentation.
- Q4.What are the 7Ps of services marketing?
- Q5.What is positioning?
Long-answer questions
- Q1.Explain the need and bases of market segmentation.
- Q2.Explain the marketing mix and its components.
- Q3.Discuss the factors affecting the marketing mix.
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