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Understanding customers... Marketing and Design Today.. • Examine core concepts of Marketing • Understand the role of marketing in industry.. • Why segment markets? • Methods for gathering more detailed information and segmenting markets. 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. Marketing developed.. • Because there was a preoccupation in companies that focused far to heavily on production as the overriding business activity. • A large communication gap opened up between customers, business and suppliers. 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. • New product development is seen as part of this work. • 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. Products and services. • Obviously some companies offer both a product and a service, or package of services that goes with it. • Purchasing a computer with a on-site warranty.. • Purchasing a car with an AA membership etc. Identifying opportunities. • Marketing seeks to obtain competitive advantage over rivals in different Markets. Companies are interested in sustained competitive advantage! • Marketing isn’t rocket science – to ensure competitive advantage and long-term profits and company needs to ask a set of simple questions.. Sustainable competitive advantage. • • • • What business are we in? What needs are we going to serve? Where do we want to go? How are we going to get there? • These are simple questions but the connotations of them are very large and involve much strategic planning and careful implementation. 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. Details, details.. • How to satisfy the needs of the market.. questions to ask to begin planning and research.. • What are the needs to satisfy? • What is a realistic market aim for.. • The products to make.. Services to offer. • Identify the exact needs of customers • Conduct planning, research and service/product development. Identifying needs.. • So how can we just ‘find out’ what customers needs are? • Well to start with – you’re a customer, what do you want? This is always a good starting place to begin research, and a good starting place as a designer too. • Market segmentation, targeting and positioning. STP – Segmenting, targeting, positioning. • • 1. 2. 3. 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? • • • • • • • • 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. Targeting.. • 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. Factors to consider in segmenting and targeting. • Your looking for the most receptive segment – the best target for your marketing weapons (products) • Size of the market – is it big enough to sustain profits? • Growth potential – is the market likely to increase as your product is popularised, where can it grow to? • Profitability – is the segment likely to buy your product at the price you must sell it for, will demand increase, what will you have to invest to maintain the market? • Economies of scale – Will you be able to meet demand and maintain profits whilst still investing in product development and manufacture and making reasonable turnover. • Risk – What are the potential risks with the market sector and how can they be planned for? Lloyds of London.. Market positioning.. • Once the segment(s) are selected, the company must seek to differentiate itself from competitors by building effective strategy. • What's the effective strategy? – The Four P’s of course – remember Apple in Lecture one? • Getting this right is problematic, markets are highly competitive, but if your careful, detailed and design-led you can be highly successful. Market Strategy.. “The right product, in the right place, at the right time and at the right price”. (Adcock et al) • The marketing mix is the way in which companies pursue their market objectives, the action part of the plan! • It is the set of strategies by which the company can influence buyers (for better or for worse)! Overall.. • • • Successful marketing requires; Segmentation: Consider variables for segmenting the market Look at profiles of emerging segments Check the validity of emerging segments Targeting Decide on target markets, or segments, focusing upon which are going to be the most respondent to your product. • Positioning In each of the segments, understand your customers wants and need and position yourself to respond to them more effectively then your rivals. Successful Marketing Requires.. • POISE! • Profitable • Offensive (rather then defensive) • Integrated • Strategic (is future orientated) • Effective (gets results) • Lets have a break – 10mins! Cuppa!!! Remember Segmentation? • Methods of segmenting markets and creating customer profiles. 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. • Considers.. 1. Age 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 self-education. 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! Sources of Market Intel.. • Companies can take many different routes to obtain information for product planning. This information may increase or decrease production or be the stimuli for new product design. Sources of Market Intel.. 1. 2. 3. 4. Feedback from customers Undertake formal market surveys Monitor sales from existing product. Monitor competitor’s products and activities. 5. Combination of all these! 6. Market analysis techniques. (next lesson) Stimuli for New Product Development. • Market Pull – Fashions and trends driving the market – consumer demand. • Technology push – new technology pushing new product on to the market… hopefully successfully. • Change in company circumstances or change in objectives and resources. • The present – a combination of above, human factors and development of personalised products – design is no longer new, its expected! Market stimuli • • • • • • Move-up market Expand exports Gap in the market Change in market demand Moving to a new market sector. Legislation/Standards. Technology Stimuli • • • • Improved specification Technical developments Spin-off of another development Development potential of existing product range nearing end of life cycle. • Example? • Legislation and Standards. Company Stimuli • Gap in company range • Rationalise company range • Suggestion from marketing – development of new strategy. • Cut costs! • Improve identity. Customer focus in design.. • Direct involvement of customers or enduser in the product development process can: • Result in a flow of user-initiated improvements to original designs. • Provides invaluable market know how to convert an idea to commercially viable product. • Lead to endorsement in the market place.. E.g. predator football boot! Why? • The idea about being in-touch with your customers needs is that it allows you to anticipate market changes in demand, before your rivals! Customer Profiles • See hand out with today’s notes. Summary.. • How to define a market segments using demographic study.. There is lots in this area, all straight forward so have a look into it! • Targeting market sectors – more on analysing and defining them next week. • Market Intel – Technology Push and Market Pull • Customer Focus in Design – consumer analysis, human factors. So what have we learned? • We have reviewed how you can analyse strategy by assessing a current product – looking at the apple I-Pod • We have seen how the 4 P’s including Brands and promotion strongly influence the customer. • Today we have looked at Understanding Markets and segmentation and analysis. Project planning.. • With your experience from the first year – you should now be able to begin to determine – • The scope of your market area • Who your potential customers are • Who your potential rivals are • You can begin to analyse products and assess their development. • You can begin to define the market sector and find information about it. • You can begin to think about how you design concepts respond to the market in the context of your studio project. • Next Week • Market Analysis Thanks!