Download MARKETING STRAT EGY SOLUTIONS - Institute of Bankers in Malawi

INSTITUTE OF BANKERS IN MALAWI
Marketing Strategy IOBM-AD306
Advanced Diploma in Banking
MODEL ANSWERS
SECTION A
QUESTION 1
(a) The four key environmental factors in the Banking sector in Malawi
Macro forces are often classified through the use of basic analysis tools to cover the full range
of external factors that may affect marketing behaviour. A typical way of doing this is using a
STEP analysis – Socio-cultural, Technological, Economic and Political – or alternatively a
PESTEL analysis – Political, Economic, Socio-cultural, Technological, Ecological and Legal.
The PESTEL or macro-environmental analysis shows that a number of challenges are due to
political/legal, economic, social, technological, ethical and environmental/natural factors as
illustrated by the figure below.
The social, cultural, demographic, and environmental changes have a major impact on virtually
all products, services, markets, and customers. Small, large, for-profit, and non-profit
organisations in all industries are being staggered and challenged by the opportunities and
threats arising from changes in social, cultural, demographic, and environmental variables.
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The process of externally driven strategy is based on the view that wider macro forces affect the
marketplace in terms of their ability to drive changes in micro factors, including consumer
behaviour, the way that competitors are able to operate, and the influences on the market of
suppliers and intermediaries. Thus marketing planning that takes such an approach will
inevitably emphasise what is going on outside the organisation and is consistent with an
‘outside-in’ perspective.
Contemporary marketing planning has some major factors operating in the external environment
that have become key drivers of change. Marketers now need to incorporate these influences
into their strategic and operational decisions, as they have become very important in terms of
their impacts on the way that customers make buying decisions and how competition takes
place in markets.
Using a basic STEP analysis provides us with a useful starting point, and the following external
influences may be considered to drive change and hence marketing planning:
(a) Socio-cultural. This factor includes culture, fashions in thought, attitudes, social class
issues, and consumer behaviour, which is constantly evolving as a consequence of
wider influences. In addition there has been major demographic change throughout the
world, leading to an ageing population in many countries, and significant changes in
migration patterns. Social mobility resulting from mass education has also become an
important factor in affecting consumer attitudes, expectations and behaviour.
(b) Technological. This factor includes engineering breakthroughs, new technology,
availability of specific technologies (for example, some communications technologies are
unavailable in some parts of the world) and shifts in processes brought about by new
ways of doing things. Of major significance has been the growth in use of new
information, computing and communications technologies, by both consumers and
organisations. The subsequent effects on buying behaviour and the production and
supply of goods and services have been revolutionary.
Worldwide use of the Internet by business has increased dramatically in recent years. It
has been observed that in a growing number of organisations, much, if not all, marketing
appears to be Internet-enabled. Many commentators now claim that the Internet is
leading to a new period in marketing. The banking industry is one of the earliest
adopters of Internet technology that the Internet, as a new channel for the delivery of
financial services, has prompted the financial services industry to completely re-organise
its structure. Currently, an increasing number of banks are offering their services over
the Internet hence the Internet has become a channel in delivering banking services to
customers.
(c) Economic. This includes the general state of the national economy, the wealth and
income of the company’s customers, and economic barriers such as tariffs or availability
of foreign currency. Economies go into recession approximately every seven or eight
years, for example, which affects savings and availability of credit, which has a knock-on
effect for consumers’ capacity to purchase and businesses’ ability to invest. For
example, the Malawi economy faced several macroeconomic challenges during 2011.
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The persistent foreign exchange and fuel shortages created an unfavourable
environment for business and this, coupled with the reduction of the budget allocation for
the fertiliser subsidy programme and the devaluation of the Malawi Kwacha during the
year, dampened productivity. Consequently the national Gross Domestic Product (GDP)
declined by 21% to 5.3%, from 6.7% in 2010. There have been increased inflation, for
instance in 2011 inflation increased to an average of 8.9% from 7.4% in 2010, with urban
inflation peaking at 10.4%. Due to the persistent foreign exchange shortages occasioned
by a decrease in tobacco revenues, suspension of donor aid and balance of payment
support, and excess demand for imports; the Malawi Kwacha was depreciated against
the dollar and continues to depreciate.
(d) Political/legal. The political climate of the country can change dramatically according to
which party is in power. Some political parties are more pro-business generally, and are
prepared to help organisations both through legislation and through direct help. Different
parties also have different policies on spending priorities – a government which is in
favour of increasing defence spending will obviously be a good thing as far as a
shipbuilder or aircraft manufacturer is concerned.
All in all, changes in the external environment have an enormous part to play in determining the
way that organisations go about planning their marketing effort; and the significance of some of
the key drivers in shaping strategy and plans cannot be understated. Alternatively, the
organisation can be viewed from an internal or ‘inside-out’ perspective that emphasises that
strategy and planning should be predicated on the distinctive or unique resources that it is able
to call upon to shape the way that it delivers value to customers in the market.
The internal factors include corporate culture, mission, resources and capabilities. The effects of
limited resources on the organisation’s objectives are widespread, since the organisation cannot
do everything it might want to do if the resources are not available. This has led to a rethink
among observers and the development of the resource-based view of the organisation.
Total (15 Marks)
QUESTION 2
MEMO
TO:
Bank Manager
FROM:
Mada Malata, Marketing Executive
DATE:
5th May, 2015
SUBJECT:
The role of the marketer in planning
Marketers have a crucial role to play in terms of the planning process, even in cases where the
entire company is market-oriented. This is because marketers have the task of coordinating the
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planning process, leading other members of the organisation through it and eliciting their
professional opinions.
In organisations which are not entirely market-oriented, marketers will usually have the task of
developing the entire marketing plan from scratch. They will therefore have the primary
responsibility for carrying out:
 A marketing audit,
 Developing marketing objectives,
 Working within the corporate objectives,
 Developing marketing strategies aimed at achieving overall objectives, and
 Formulating tactical approaches to achieving the objectives.
They will then have responsibility for determining whether objectives have been reached, i.e.
whether targets have been hit.
The marketing function therefore has a major task in undertaking planning, and this must not be
in isolation but rather should involve all other areas of the organisation that contribute to
success in the marketplace. Marketers’ contribution can be viewed at a number of levels:
planning (bringing the resources together to deliver value in the market), strategy (determining
the most appropriate ways of fulfilling the needs and wants of customers) and tactics
(implementing an effective mix of activities to meet these customer requirements).
Other key tasks falling under the marker’s responsibility in strategic marketing in today’s
organisations like banks are:
 Contributing to strategic initiatives being undertaken by the organisation, for example,
marketing input to a ‘due diligence’ evaluating of a prospective merger or acquisition. In
some cases, strategic marketers will be managing multi-disciplinary teams.
 Co-ordinating and managing customer information across the organisation within the
data protection and privacy legislation. This involves close relationships with the IT
function.
 Developing and driving the business case for investment in brands, new products and
services.
 Championing and developing innovation and entrepreneurship within the organisation.
 Ensuring that the marketing function is appropriately skilled and resourced.
 Providing input with finance on the valuation of brands for reporting and disclosure.
Based on the roles of the marketer given in this memo, it is therefore, recommended that our
bank should financially support the marketing function so that it is able to carry out its tasks
under the guidance of the marker, in the planning process in particular.
A good understanding of the role of the marketer in planning
(15 Marks)
Total (15 Marks)
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QUESTION 3
New Products and the Diffusion Process
An important issue in the context that affects marketing communication activity is the launch of
new products and the propensity of consumers to respond to communication about new
products.
Diffusion can be described as the process by which an innovation is communicated over time
among the individuals within the society who comprise the target market. There are four key
elements, which are significant to the diffusion process: innovation itself; communication
process and channels used; time at which individuals decide to adopt the product; and social
systems involved.
At the heart of the diffusion process is the decision by the individual to adopt the innovative
product or service. The process of adoption focuses on the mental processes through which an
individual passes, from first hearing about the innovation to final adoption. Adoption is the
decision of an individual to become a regular user of a product. An important issue to planners
is how quickly a new product will be adopted by the market, in other words what sort of timescale is expected along the horizontal axis of the Product Life Cycle (PLC).
The following are factors influencing the speed at which new ideas and product innovations will
spread or be diffused through the market place.
 The complexity of the new product: If the product is very complex that it is difficult to
use or explain about, it may take long to be diffused, and vice versa.
 Relative advantages it offers: The extent to which the consumer perceives the product
to have an advantage over the product it supersedes. If it has more advantages, it will be
diffused quickly.
 Compatibility: The degree to which the innovation fits into existing patterns of
behaviour/needs. The product, which is consistent with existing values and past
experiences of the potential customer, will be diffused quickly than the one, which
doesn’t.
 Trialability: This is the ability to try the new product, samples, test drives or low-value
purchases entails little risk. New products are more likely to be adopted when customers
can try them out on an experimental basis.
 Observability: A measure of the degree to which adoption of the product or the results
of using the product is visible to friends, neighbours and colleagues. This process can be
enhanced if the product is seen to be used by celebrities or other role models. This
factor obviously lends itself more to some products than others.
 Communicability: The ease with which the product’s benefits can be communicated to
the potential customer.
The market segments’ attitude to change, accessibility to channels of communication and the
time frame involved in the adoption process are all critical factors in assessing the diffusion
process.
Mark Allocation
Giving at least five factors
(3 Marks each)
Total (15 Marks)
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QUESTION 4
BARRIERS AND WAYS TO OVERCOME BARRIERS TO INNOVATION
Innovation is essential for a number of reasons. When markets shift, technologies proliferate,
competitors multiply, and products become obsolete almost overnight, successful companies
are those that consistently create new knowledge, disseminate it widely throughout the
organisation and quickly embody it in new technologies and products. This is innovation which
should therefore, be a continuous thing. Where quality, technology and variety all are becoming
widely available at relatively low cost, the only sustainable competitive advantage that a
company can create, may be the ability to learn faster than its rivals and to anticipate changes
in the business environment.
Constant innovation requires a constant flow of ideas from innovators, and management and
anyone including employees. But the successful creation of ideas depends on a number of
organizational factors. No one individual or group of individuals can be the source of all
knowledge about a firm’s activities. There must be a way whereby all individuals can
communicate their insights to other members of the organisation, so that these insights flow into
a pool of knowledge from which the whole company can draw. Furthermore, there is the idea
that a company is a living organism. This means that it can learn.
In the organisation, there is need to combine ideas in creating knowledge to ensure continuous
innovation as a day-to-day activity. Therefore, it can be said that organisations have to learn.
Learning is a source of innovation. The learning organisation therefore encourages continuous
learning and knowledge generation at all levels; has the process to move knowledge around the
organisation; and can transform knowledge into actual behaviour.
(a) Advantages of Innovation
The chief objective of being innovative is to ensure organisational success in a changing world.
It also has the following advantages:
(a) Improvements in quality of products and services
(b) A leaner structure – layers of management or administration may be done away with
(c) Prompt and imaginative solutions to problems
(d) Less formality in structure and style, leading to better communication
(e) Greater confidence inside and outside the organisation in its ability to cope with change.
(b) Barriers to Innovation
(a) Resistance to change
Any new method of management thinking can experience some resistance from
established managers. This resistance may be due to concern to protect status quo, or
because managers are ignorant f the new thinking.
Integrating marketing
communications seems so obvious that it may be overlooked or seem as a superficial
approach.
(b) Old planning systems
Old planning systems have sometimes downgraded marketing decisions to the tactical
level. Advertising expenditure is decided on the basis of what the company can afford
rather than what is strategically required. Promotion is seen as a series of short-term
actions rather than as a long-term investment.
(c) Old structures/functional specialists
Complementing traditional planning systems are traditional organisation structures.
These structures freeze out new thinking on integrated marketing strategy. Individuals
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have limited specific responsibilities – just for advertising, say, or just for public relations
– and this inhibits new thinking on integration.
(d) Centralised control
If the chief executive keeps tight control of the organisation and of its planning and is
unconvinced of the benefits of innovation then it will not happen.
(e) Cost considerations
Innovation usually requires investment.
(c) Overcoming barriers to innovation
(a) Top management commitment. The most effective way of overcoming these barriers
to change is through the commitment of top management. The chief executive in
particular needs to be convinced of the appropriateness of the new thinking and be
enthusiastic about its implementation throughout the organisation.
(b) Marketing reorganisation. One way in which the chief executive can take advice is
through a reorganisation of the marketing function in the organisation.
(c) Training and development. It is one thing to change attitudes. It is another thing to be
in a position to know exactly what to do. It needs the services of the individuals trained
in strategic thinking. The individuals chosen to implement ant new programme must be
enthusiasts capable of overcoming resistance to change.
(d) Marketing as a competitive advantage. Those with responsibility for implementing an
integrated marketing programme must do with the objective of developing it as a
sustainable, long-term competitive advantage.
(e) Producing the results. Nothing succeeds like success. Producing the business results
as a consequence of effective marketing communications will boost confidence and gain
management converts to the new thinking on an integrated approach.
Mark Allocation
(a)
Advantages of innovation to banks
(b)
What are the five barriers to innovation?
(c)
Suggest ways to overcome barriers to innovation.
(5 Marks)
(5 Marks)
(5 Marks)
Total (15 Marks)
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SECTION B
QUESTION 5
-Idea generation
-Idea screening
-Business analysis
-Concept development and testing
-Product development
-Product testing
-Test marketing
-Commercialisation
QUESTION 6
REPORT
TO:
Michael Nkhata, Chief Executive Officer, FCB
FROM:
Willy Sata, Experiential Consultants
DATE:
5th May, 2015
SUBJECT:
The Need for Continuous Competitor Analysis Exercise
The report expresses issues about the need for the bank to keep on carrying out competitor
analysis. The information will be helpful for strategic marketing approaches in responding to the
current situation in the banking industry. Since beginning of democracy in 1994, the Malawian
banking industry has experienced significant changes: new bank legislation has been
introduced and foreign banks had entered the market; and the country’s banks has experienced
competition from non-bank entities and customers have become more demanding in terms of
the quality of the service they received and sophistication of the products they require.
Competitor Analysis can be defined as a set of activities which examines the comparative
position of competing enterprises within a given strategic sector. Once a good understanding is
established of how an industry functions, a specific competitor analysis should be done. Most
firms in a given industry do not follow the same strategic approach regardless of the similarity of
their understanding of the dynamics of the industry.
Evaluating competitors’ strategies allows a business entity to increase or reinforce its
understanding of buyer behavior and identify the type of targeted customer. It is also useful in
identifying strengths and weaknesses and, consequently, potential market opportunity.
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The analysis may assist the firm in evaluating whether to position itself as a leader competing
head on with other competitors, as a follower with a “me too” strategy, or as a niche performer
with a unique strategy tailored for specific strengths and weaknesses and specific market
segments. Each major competitor should be studied separately. If this is not possible then the
strategy of the closest competitors should be evaluated. Competitor analysis is important
because of the following reasons:
(a) Provides an understanding of your competitive advantage/disadvantage relative to your
competitors’ positions.
(b) Helps in generating insights into competitors’ strategies: past, present and potential.
(c) Gives an informed basis for developing future strategies to sustain/establish advantages
over your competitors.
(d) Competitors represent a major determinant of an organisation’s success and any failure
to take detailed account of competitors’ strengths, weaknesses, strategies and areas of
vulnerability is likely to lead not just to sub-optimal performance, but also to an
unnecessary greater exposure to aggressive and unexpected competitive moves.
(e) Competitor analysis is necessary because of the following important reasons: to survive,
handle slow growth, cope with change, exploit opportunities, uncover key factors,
reinforce intuition, improve the quality of decisions, stay competitive, respond to
competitive actions, and to avoid surprise.
(f) It should be the a central element of the marketing planning process, with detailed
attention being paid to each competitor’s apparent objectives, resources and competitive
stance as well as to their marketing plans and the individual elements of marketing mix.
Areas of competitive strengths and weaknesses have to be more readily identified, and
the results fed into the process of developing an effective marketing strategy.
(g) Better and precise attacks can therefore be made aimed at competitors and more
effective defenses erected to fight off competitors’ moves.
(h) An additional benefit of competitor analysis is that it can help to understand buying
behaviour by identifying the particular groups or classes of customer to whom each
competitor’s strategy is designed to appeal. This can then be the basis for determining
the most effective probable positioning strategy for the organisation.
Some companies are unable to understand their competitors because of some barriers which
lead to failure to monitor competitors. Such barriers include complacency and preconceived
assumptions. Other probable consequences of failing to monitor competition include an
increasing likelihood of the enterprise being taken by surprise, its relegation to being a follower
rather than a leader and to focus on the short term rather than on more fundamental long-term
issues.
One fundamental question must be asked when undertaking competitive analysis: Which
competitors are going after which market segments with what marketing strategies? The focus
is on specific market segments that have been isolated through consumer analysis. At this
point, managers should already know the size (potential) and the characteristics of each
segment.
The analysis begins to deal with competition on a segment-by-segment basis. Managers must
uncover segments that are not currently being served, or segments that are not being served
well by competition. In markets where competitors do not have clearly identifiable strategies and
each seems to be using a strategy similar to the others, there are usually several segments that
can be better served through strategies aimed directly at their needs.
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As pointed out, the banking sector’s competition is intense that FCB should consider and put in
place an intelligence system so as to keep strategic managers updated with competitive moves
taken by players in the banking sector.
Mark Allocation
Showing an understanding of competitor analysis
Giving at least three key reasons for competitor analysis
(5 Marks)
(15 Marks)
Total (20 Marks)
QUESTION 7
MARKETING STRATEGIES
One way of generating marketing strategies is through the contextual application of Ansoff’s
product-market matrix. Igor Ansoff identified four basic strategies for achieving growth as
illustrated in the figure below. The Ansoff Growth matrix is another marketing planning tool that
helps a business determine its product and market growth strategy. Ansoff’s product/market
growth matrix suggests that a business’ attempts to grow depend on whether it markets new or
existing products in new or existing markets.
The output from the Ansoff product/market matrix is a series of suggested growth strategies
which set the direction for the business strategy. These are described below:
(a) Market penetration: Market penetration is the easiest way to grow in an expanding
market. However, it becomes more difficult as the market matures and competition
increases. The obvious step is to increase advertising or add more sales people to
increase sales. Alternatively, business owners can win business from competitors
through competitive pricing, discounting, vouchers or other offers. Business owners can
also boost sales by providing additional incentives to sales staff through commissions,
bonuses or other reward schemes or by introducing customer loyalty schemes. But
market penetration can also be increased by initiatives that increase usage. For
example, at how toothpaste manufacturers increased usage by introducing pump-action
toothpaste dispensers that dispense a fixed quantity of toothpaste.
Research has also shown that the size of the toothbrush head influences the amount of
toothpaste used, so the bigger the toothbrush head, the more toothpaste we use.
Manufacturers of health yogurts emphasise the importance of daily consumption.
Manufacturers of snack foods that are considered “bad for you” have introduced fat free
or low fat versions to counter a trend towards reduced consumption.
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Finally, market penetration can be increased by developing new applications. Look at
how banks also promote their products as bill payment services. The company can try to
grow by increasing its share of the existing market. This can be achieved either by
attracting customers away from competitors or by encouraging existing customers to use
more of the product. But taking share from competitors invites retaliation – the
competitors are unlikely to stand still while their customers are lured away, and will
inevitably try to retain customers, or (better still) try to lure customers away from other
organisations. This type of competition usually benefits consumers, at least in the short
run, but can be very damaging for companies. Encouraging customers to use more of
the product invites copying on the part of competitors – if we have a way of persuading
our customers to buy more and use more, competitors will quickly join in. For example, if
we discover a new use for a product, our competitors can publicise it in the same way.
This strategy often involves price cutting, promotion, or finding new distribution outlets.
(b) Market Development: Market development is most appropriate where the core
competence of the business is the product or service. A good example is a business
providing IT support to small office/home office users. The business growth strategy may
be to target larger offices, small and medium enterprises and eventually large
multinational companies.
One way to develop the market is to introduce new sales and distribution channels. The
most obvious example is to move online and use the Internet to promote and sell
products as has been the case with banks in Malawi where they have introduced Online
Banking services. But markets can also be developed through more traditional means
such as developing a strategic partnership with a business that already operates in the
target market. New geographical markets can be developed by setting up bank service
centres/branches, agencies, manufacturing companies can set shops, warehouses or
offices in the target areas. Many businesses have adopted the franchise model to
access new geographical markets.
An interesting alternative is to develop new markets by finding alternative uses for
existing products. Johnson and Johnson repositioned baby shampoo to appeal to the
female market by emphasising its gentle, sensitive properties. Manufacturers have
repositioned concentrated drinks such as Malambe juice to appeal to the healthconscious adult market in Malawi by promoting it as a flavour to add to the
recommended daily water consumption.
(c) Product Development: Developing new products for an existing market is often most
appropriate where the strength of the business lies in its relationship with customers. A
good example is an accountancy practice. Client retention is high and clients are unlikely
to be attracted away from other practices, so the most effective means to grow the
business is to develop new products for the existing client base. The more progressive
accountancy practices now offer business advice, tax consultancy, wealth management
advice, succession planning and many other services in addition to traditional
accounting and audit activities. In a similar way, many traditional printers have expanded
to offer office stationery and office furniture.
Many product based businesses can add complementary services, for example
equipment suppliers can add maintenance and repair services, and service based
businesses can add products to increase sales. An alternative growth strategy is to start
to carry out activities further back up the supply chain, so distributors may add
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warehousing, wholesaling or even importing activities that increase the scale of the
business while maintaining the same customer base.
(d) Diversification: Diversification is the most risky strategy since it involves two unknowns:
new products with unknown development problems and new markets with unknown
characteristics. But it can offer the best potential for growth. It can be very effective,
especially if the organisation contracts an alliance with another organisation in order to
enter the new market. Obviously this approach can work only if the organisation’s core
competencies can be used to good effect in the new market.
The most common way for a business to diversify is to develop new products that take
advantage of the core competencies of the organisation. Examples include how EasyJet
have diversified into hotels, offices, car rental, gyms, fastfood and a wide range of other
goods and services. In Malawi NICO diversified into banking by acquiring New Building
Society now NBS Bank and entering the IT sector since alternatively, a business can
diversify by acquiring another business that operates in a separate market.
The advantage of Ansoff’s Matrix is that it helps business owners to analyse the potential for
each of the growth strategies. A business that operates in an expanding market can grow
through market penetration. However, a business in a mature, stable market may choose to
grow either through market development or product development depending on its internal
strengths. If neither of these offers sufficient potential, a business may consider diversification to
achieve further growth.
Mark Allocation
Description of Four strategies (3 marks each)
How the strategy can be implemented
(12 Marks)
(8 Marks)
Total (20 Marks)
Question 8
REPORT
TO:
FROM:
DATE:
SUBJECT:
Dr. Mumba, Bank Manager.
Fyson Mwenda, Marketing Assistant.
5th May, 2015.
The importance of market segmentation and factors to consider for effective
market segmentation.
Market Segmentation is the process of sub-dividing of a market into distinct and increasingly
homogeneous subgroups of customers, where any group can be selected as a target to be met
with a distinct marketing mix. Segmentation approach recognises that people have different
wants and needs and that some are willing to pay more or go to greater lengths to satisfy these.
Where a sufficient number of people have affordable wants, if one manufacturer fails to satisfy
then another will.
Segmentation approach is used for some reasons of serving costs as marketers are dealing
with the marketing mix elements that satisfy the total identified market. Marketing is more
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effective if groups can be identified and targeted according to the marketing objectives of the
company. This is why it is necessary to segment the market of the bank as when disbursing
loans to customers. The process of market segmentation groups potential customers according
to their identifiable characteristics in their purchase behaviour.
Segmentation allows marketers to target people with research to discover their needs and
preferences so that all the elements of the marketing mix can be directed towards the potential
market. Customer segmentation systems are used by marketers, and this is a vital area in
marketing because it allows the marketer to understand customers by attempting to get as close
as possible to them. Customers differ in terms of age, sex, income, geographical area,
occupation, social class, buying attitudes and habits, etc. These can be used as segmentation
bases, and effective segmentation is only done under the following considerations:
(a) Measurability: This refers to the degree to which information exists or is cost effectively
obtainable on the particular buyer characteristics of interest.
(b) Accessibility: This refers to the degree to which the company can focus effectively on
the chosen segments using marketing methods. While we may be able to select what
seems like the most appropriate target segment very clearly, we may not be able to
identify the individual or households involved, or communicate with them cost effectively.
(c) Substantiality: This refers to the degree to which the segments are large enough to be
worth cultivating or considering as a separate market. The target segment must be large
enough to offer profitable returns, over and above the cost of investment in marketing
activities directed specifically at them.
(d) Homogeneity: This means that the group should be able to be taken as one, i.e. all the
customers in the segment should be similar in terms of their characteristics to establish a
single buying behaviour/habit.
Market segmentation has to bring some benefits to consumers apart from company benefits,
these may include:
 It provides product and service benefits more closely meeting their ideal specifications.
 Across the industry, segmentation will provide greater customer choice.
 Customers are able to present their grievances and heard as there may be a good
relationship between an organisation and the customers.
Besides the overall aim of improved profitability, benefits of successful market segmentation
include the following:
 The company can be able to spot new marketing opportunities because of the better
understanding of consumer needs in each of the segments.
 Specialists can be used for each segment.
 The total marketing budget can be allocated to take into account the needs of each
segment and its likely return from each segment.
 The company can make finer adjustments to the product and service offerings and to the
marketing appeals used for each segment.
 The company can try to dominate particular segments thus gaining competitive
advantage.
 The product range can more closely reflect customer need differences.
 Improved segmentation allows for more highly targeted marketing activity and allows the
team to develop an in-depth knowledge of the needs of a particular group of customers.
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Market segmentation is carried out by the following segmentation bases: demographic
segmentation; geographic segmentation; geo-demographic segmentation; psychographic
segmentation; benefit segmentation; sociological segmentation; and industrial segmentation. It
is therefore recommended that our bank should embark on an effective segmentation
programme in order to achieve maximum benefits from customers as we are implementing
marketing functions.
Mark Allocation
The importance of market segmentation approach
Factors to consider for effective market segmentation
(10 Marks)
(10 Marks)
Total (20 Marks)
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