Download Market segmentation..

Design and Business..
What did we do again?!
What did we do last year..?
• We completed a Market Situation report which
involved examination of a Market sector including:
• Market sector overview
• Competitor Analysis
• User Analysis
• Consideration of Brand Values
• Considering market objectives and there effect on
New Product Design and Development.
• Making product commercially successful.
What was a strategy..?
• Design only works as part of an integrated
company strategy.
• A strategy is a business tool that helps to
give an overview of a companies activities
internally and externally
• It is the driving force behind a company’s
development in their market and could be
described as a master plan for success!
What does a strategy include?
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Business objectives
Market objectives and strategy
Design or product strategy
Plan for managing these objectives to
achieve goals
• Includes details of resources and financial
backup needed to achieve these goals.
Specifically we examined:
• Market Strategy
• Design Strategy
• The relationship between the two to allow
for commercially successful products.
• How these two diciplines work toward both
the internal and external factors that effect
successful business
What does it consider?
• Internal and external factors that effect
design development.
• How design can be used to give the
company competitive advantage by
differentiating product or creating a new
market niche.
• How this will be managed and
implemented.
Internal Factors..
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Management
Research and Development
Time Scales
People and Skills in-house
Culture for Design
Cash and Investment
Production Capabilities
Communication
External Factors..
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Competitors
Trends and Fashion
Market Research
Product Life Cycles
Sales
Target Market
Technology
Brand Identity
The Future
Examples of Strategic Development..
• IKEA
• Strategy for cost
effective, high quality
design - available to
the masses, competing
on price, trends and
creating a market
niche too!
• Strategy for developing
significant brand
identity that is coordinates business
effort.
Black and Decker..
• Developed a product
development scheme
that introduced
ergonomic considerations
to new ranges of product
and specific user trends.
• Responded to increased
consumer demand for
tools for DIY, that is still
booming.
• Have used strong position
in the market to diversify
product offering.
Apple Macintosh..
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The I-Pod.
Great design, simple
interface and lots of
accessories!
Massive Product
Diversification
High price point – latest
technology
High profile marketing
campaign
Now using strong
reputation from quality
of products to break
into new markets..
Summary..
• In the UK and Global market place,
company’s that use design successfully,
succeed.
• Companies Develop Strategies that help
them culminate information about their
market and specifically target consumers
and the market place.
• Integral to these ‘Master Plans’ is a design
development strategy.
• Internal and external factors must be
considered when planning company
strategy – it must be in-touch with the
market!
The Marketing Concept
• Concerned with determining the needs,
wants and values of a target market and
directs a company to delivering the desired
satisfactions more effectively and efficiently
than its competitors.
Core Marketing Aims
• Needs, wants and demands (what people
want)
• Products and Services (What you provide)
• Value, Satisfaction and Quality (How you
provide it)
• Exchange, Transactions and Relationships
(How you keep providing it)
• Markets (Where you provide it)!
Understanding Markets..
• The difference between marketing
and a market.
• Marketing is the activity and
comprehensive function of many
interrelated activities, aimed a
profitably fulfilling the needs of a
chosen customer group
• A market is simply a term for a set
of actual and potential buyers of a
product.
Specific Markets..
• A ‘Market’ consists of buyers that normally
share similarity; or common characteristics.
They can be simply described as follows:
• Geographic – The British Market, The
European Market.
• Product Based – The computer and video
games market, The car market.
• Need based – The home security market
• Or combinations – The European car
market.
Markets, Products and
Services.
• Classifications of Markets include both
consumer and industrial markets.
• Consumer Market: Households that buy and
use goods or services for themselves.
• Industrial Markets: Organisations who buy
and use goods or services for themselves,
commercial organisations and nationalised
industries.
Markets, products and
Services.
• Products and Services are the basis
of and organisations offering to a
chosen markets. The Service sector
dominates industry in the UK, as
with most developed countries.
• A product – an tangible item to the
consumer.
• A service – an intangible benefit
received by the purchaser. E.g.
insurance.
The big questions..
• What business are we in? Type, size, sectors,
competitors, geographic location, current
economic status, business potential etc.
• What needs are we going to serve? Customer
profiles, market strategy, segmentation,
product/service planning, NPD, market research,
etc.
• Where do we want to go? Business planning and
objectives, financial management, resources,
adequate staff, potential for expansion,
profiteering.
• How are we going to get there? Overall strategy,
product range and service offerings in tune with
market needs and wants, coherent brand identity,
design strategy, set out into long term and sort
term objectives.
STP – Segmenting, targeting, positioning.
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The heart of the modern marketing is
based on the principles of Segmenting,
Targeting and Positioning.
Market Segmentation is the recognition
that customers in a market area or sector
are not homogenous. And follows these
basic premises:
Customers are different
Differences in customers relate to
differences in demand.
Segments of customers can be isolated
within the overall market and targeting
specifically.
Why segment markets?
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Better matching of customer needs
Enhanced profits
Better opportunity of growth
Retention and good relationship with
customers.
Targeted communications, good brand
associations.
Stimulation of innovation!
Market share is maintained.
Excellent target for gathering specific
market intelligence.
Market segmentation..
• We know that companies place high
emphasis on analysing market sectors and
dividing them up into areas of
specialisation.
• These segments can be focus on and
define the target market and its demands.
• Therefore its critical to get an accurate
appraisal of your market segment.
Market segmentation..
• Marketing uses research
and analysis techniques to
define ‘demand patterns’
of specific buyers.
• Basically – What product is
demanded, by what
people and why it will be
brought.
• Companies use this to
target sectors in different
ways..
• Mass Markets (undifferentiated)
• Multiple Niche (differentiated)
• Market Niche (concentrated)
Market research and
Analysis
• Techniques used to define market
segmentation.
• Geographic – region, climate
population density.
• Demographic – come back to this!
• Behavioural – Attitudes, knowledge,
loyalty, occasions.
• Psychographic – Personality,
lifestyle.
Demographics..
• Relates to specific data to do with
population.
1. Age
• Considers..
2. Sex
3. Education
4. Occupation
5. Family size
6. Lifestyle
7. Income
8. Religion
9. Nationality
Age.
• Different age groups want
different things and have different
needs.
• In recent years the
competitiveness of markets has
led to more specifically targeted
age groups.
• Age groups doesn’t just apply to
human demographics!
• So – lets have a look at some
demographic representation..
Family life cycle..
• Bachelor Stage: young, single, living at
home – Few financial commitments,
recreation and fashion orientated. Buy:
Cars, entertainment, holidays!
Full nest 1: youngest child
under 6 years old
• House buying is important, liquid assets are
low, dissatisfied with level of savings and
financial position generally. Buy: Medicines,
toys, baby food!
Empty Nest 1
• Home ownership at peak. Financial situation is good,
savings increased. Interests in travel, recreation and selfeducation. Buys: More expensive Holidays, luxuries and
home improvements!
Occupation:
• Class – though less relevant these
days!
• Manual, Skilled, Semi-Skilled,
Professional.
• Linked to income (obviously)
• Though not always in disposable
income! – family life cycle!
Targeting Markets..
• So we have used demographic study
methods to help define market segments
within a market sector.
• Now we need to target a particular
segments and assess them to see which will
be the most respondent to our product.
Marketing Intelligence
• This feeds into the strategic planning
processes companies use, that we
discussed last week.
• Market intelligence continuously reviews
market segments your company is
targeting, giving updates on changes that
affect your plans!
Targeting.. How?
• Once you have segmented your market into groups
of users, all with specific demands, you can split
them into those that will be most receptive to your
product or service and those which may be less
profitable to target. Using you most receptive
segments you can them tailor your strategies to
target effectively. If your research and strategies are
correct, that you stand a good chance of making
headway. Remember the battle scenario..
• Now you have researched and understood your
market, you can begin to formulate a strategy.
Analysis:
• By analysing how Apple have used market research,
product development and market strategy we can
begin to see how they have understood the market
they are in, and responded to it!
• Remember that marketing is:
“Marketing is a management process responsible for
identifying, anticipating and satisfying customer
requirements profitably”
(Chartered institute of marketing definition)
The Marketing Mix..
The ingredients of the marketing mix:
• Product
• Price
• Promotion
• Place
• The four P’s
Marketing Mix…
What is the marketing mix for?
• The way in which differential advantage
may be achieved – and sustained by
manipulating the four P’s
• There are more ‘P’s’ but we are focusing on
the main four.
Marketing Mix..
• Product = Product management,
New Product Development,
Branding and Packaging.
• Price = Cost, Discount Structure,
Terms of Business.
• Promotion = Advertising, Sales
Promotion, Public Relations,
Merchandising.
• Place = Customer Service, Physical
Distribution, Channel
Management.
The Product: I-Pod (2001)
• Simple to use – excellent
interface
• Stylish design that purveys the
simplicity of use.
• Neutral colour scheme, but
noticeable!
• Expensive price point
• Cutting edge technology
• Based on established lifestyle
brand from I-Mac range.
Is it enough just to have an excellent
product…? no!!
• So the I-Pod has excellent design, quality,
enhanced and new technology, and
excellent interface and its an innovation.
• But is this enough to make a product sell as
successfully as it has?
• No! You have to get it noticed. Enter
promotional strategy as one of the four ‘P’s’
Integrated marketing communications!
• A concept of marketing communications planning
that recognises the added value of a
comprehensive plan that evaluates the strategic
roles of a variety of communication disciplines – e.g..
General advertising, sales promotion and PR and
combines them to provide clarity, consistency and
maximum communications impact.. The strongest
worldwide brands use this method.
How have Apple done it?
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Advertising
Packaging
Personal selling
Sponsorship
Public Relations
Exhibitions
Sales promotion
Very effective!
• Targeting multiple markets simultaneously..
The Apple Brand..
• Apple logo has become synonymous with quality by
design, innovative use of technology, and aesthetic
beauty inspired by a highly successful range of
technology products since 1997 that have led the
shift in technology being easy to use, efficient and
not an ‘black box’ hidden in the corner of a home,
but a lifestyle object.
• The companies internal design strategy is led by the
use of state of the art technology – converted for
simple use, Steve jobs explanation of apples customs
being “people who don’t want to read instruction
manuals, people who lead very busy lives”
• The brand has been build on design led products, in
touch with customer’s needs.
Product Diversification..
Accessorise!
Consumer is temped to give their I-Pod unique
features etc. You have brought into the Brand!
PRICE strategy!
• The initial price strategy was set as a new, innovative, high
tech product of exceptional quality. So you paid for it!
• This gives the product a desirable reputation, expensive,
well made.
• Product Diversification as the technology becomes
accepted is great, the product still maintains the quality
aspect, but becomes affordable and is still with the
associated as a status symbol or lifestyle – ‘I have an i-pod,
it’s the best, and I had the money for it!’
• Accessories add to continuous sales by providing a staple
income from existing users whom have brought into the
brand and the product – Mass customisation!
• By monitoring prices and correctly pitching the cost to
consumers, a company can elongate the life of a product.
Rejuvenating sales as they fall with add-ons etc.
• This is particularly relevant in high tech markets where
product lives are short! Remember product life cycle!
Competing products..
• Product integration is a double-edged
sword for the audio player market, on the
one hand non-audio electronic goods such
as mobile phones, PDAs, video games and
digital cameras are increasingly being
developed to include digital audio
capabilities, so reducing the need for a
standalone player.
So what happened?
• The new I-Phone, fully integrated mobile communication
device with all the excellent features of a simple PDA, the
original MP3 player itself and one of the most powerful
associations, a recognised and popular interface. It even
browses full web pages. It has an integrated camera, the
list is endless…
Summary..
• Quite simply, you can now see how the four
P’s in Market Strategy contribute to making
a product successful on the market, how
the evidence from how a product
progresses on a market is integral to how
design reacts to consumer needs at a
strategic level.
The new project..
• For this project we are going to examine more closely the
bigger picture for designers and the commercial world..
• We are going to examine the prospective possibilities in
the next decade and think about the future for the design
industry.
• What issues will effect customers and commerce that is
going to affect the way we work as designers? What will
be the shape of the UK design industry in 2020?
• Design is top of the agenda for the UK economy at the
moment and you need to understand why!
What are your ideas?
• For me this will be about
Sustainability and Social
Responsibility.
• Poverty, HIV/AIDS has created more than 14 million
orphans — 92 percent of them live in Africa
• China/India economic growth
financially and in the development
of knowledge economy to support
rapid industrial and technological
development.
• Role of the government supporting
creative industries.
• Globalisation – The creation of a
world community? Products from
around the world on every doorstep!
• Key Environmental problems and
solving them
• Energy Technology.. Can we solve
the carbon crisis?
• Urbanisation
• Inclusive Design