In the first step, which is market segmenting, it involves dividing the market into several distinct groups of buyers according to their needs, characteristics and behaviour (Kotlet et al. , 2010). Kotler et al. (2010) divided the bases for segmentation into four categories (as shown in Figure 2). A profile of the resulting segments will need to be developed. In addition, Dibb and Simkin (1991) claimed that effective segments will have to be identifiable, viable, marketable and stable (refer to Figure 3 in appendix).
In the context of Apple, the users of iPad can be categorized into 5 groups (as shown in Figure 4 in appendix). Each of the consumers groups will have different profiles of the segmenting bases because of the unique wants of each group of buyers (as shown in Figure 5). Figure 2: Bases for market segmentation Bases| Definition| Examples| Advantages/Disadvantages| Geographic| Dividing market into different geographical units| Nations, egions, states, cities, neighbourhood| Simplest to understand| Demographic| Dividing market into groups based on demographical variables| Age, sex, education level, income level, race, nationality| Most prevalent form of market segmentGood description of segments if segments clearly exist| Psychographic| Dividing market into groups based on psychological traits| Lifestyle, social status, personality| More difficult to explain as further investigation on buyer’s psychological characteristics need to be done| Behavioural| Dividing market into groups based on consumers’ knowledge & attitude towards a product| Purchase occasion, benefits sought, user status & rate, loyalty status| Best starting point for building market segments| Sources: Adapted from Kotler, Brown, Burton, Deans & Armstrong (2010) & Beane & Ennis (1987) Figure 5: The iPad segmentation profile GroupsBases| Students| Non-working adults| White collar workers| Gamers| Multimedia Users| Description| -Use iPad mainly for school homework or assignments purposes-Sometimes seek entertainment, chatting, and socializing online| -Use iPad to socialize online, search for information and news, watch movies| -Use iPad mainly for work purposes, eg. Searching information online, preparing reports, communicating with clients| -Use iPad for playing downloaded or online games-Sometimes socializing online| -Use iPad for various purposes in a balanced manner, eg.
Work purposes, playing games, watching movie, searching information, online socializing| Age(Demographical)| 13-25 years| 26-50 years| 30-55 years| 18-30 years| 18-40 years| Gender (Demographical)| Males/females| Females| Males| Males| Males/females| Education level (Demographical)| Educated| Educated| Well educated| Lower educated| Better Educated| Income per month (Demographical)| $0-500| $0| $8000-15000| $1000-5000| $3000-7000| Psychographical| Sociable, young & dynamic| Stay-at home wives, less sociable| Busy & exclusive lifestyle, outgoing| Introvert, aggressive| Healthy & balanced lifestyle| Benefits sought (Behavioural)| Light weight & can be carried conveniently, simple design| WiFi connection, easy to be used & functioned| Designed professionally, long battery life, excellent build-in software| High speed, good screen resolution, stylish design| High capacity, able to multitask without affecting quality| Usage rate (Behavioural)| Average| Light| Heavy| Heavy| Heavy| Market Targeting After identifying the market segments, marketers will decide the segment(s) they would like to target (Dibb & Simkin, 1991). Before selecting the segment(s) to enter, the sales potential, attractiveness and stability of each market segments needs to be evaluated (Sarabia, 1996).
Companies must take into consideration factors such as segment size and growth, structural attractiveness and company objective and resources when evaluating (Kotler et al. , 2010). Figure 6: Evaluation of market segments Factors| Description| Application to Apple| Segment size & growth| Collect & analyze current sales, estimated growth rate & profits| Apple could assign researchers & accountants to do market research on the potential unit sales of iPads from each segment and project the estimated sales, growth rate & profits| Segment structural attractiveness| Examine structural factors that influence long-run segment attractiveness, eg.
Competitors, substitutions, power of buyers and suppliers| Apple could create a competitors profile with their substitution products | Company objectives & resources| Targeted segment(s) should be in line with the company’s long-run objectives and could be achieved by the skills & resources possessed by the company| Apple could possibly go for more than one target segment as the manpower and resources available in Apple is huge and could handle them| Source: Adapted from Kotler, Brown, Burton, Deans & Armstrong (2010) After evaluation, decision on which and how many segments to enter will be made. This is known as target market selection, which can be divided into three market-coverage strategies (as shown in Figure 7) ( Kotler et al. , 2010). Apple will be adopting the differentiated marketing strategy for the reasons discussed in Figure 7. Figure 7: Market coverage strategies
Market coverage strategy| Description| Advantages| Challenges| | Undifferentiated marketing| – ignore market segment differences- treat the whole market with one market offer-focus on common needs of customers| – lower costs| – aimed at largest segment in the market – leads to heavy competitions| | Differentiated marketing| – target at several market segments – create different offers for each segment| – creates more sales| – higher costs for R&D, advertising, production| *Chosen by Apple*Reasons:- Apple has great amount of resources (capital, human, technological, manufacture)- iPad has varied memory size – iPad is currently in its growth / maturity stage- buyers in the market do not have the same taste – different marketing strategies needed| Concentrated marketing| – large share of one or few submarkets| – achieve stronger market position in the segment(s)- could earn high rate of return| – risky| | Source: Adapted from Kotler, Brown, Burton, Deans & Armstrong (2010) Market Positioning After selecting target segments, companies then decide the positions to occupy in the segments (Kotler et al. , 2010). Various concepts of positioning will be illustrated in Figure 8. In addition, Vukasovic (2009) pictures the scenario where consumers are overloaded with products information and a complex set of perception, sensation and impression will arise when consumers compare among brands.
Hence, product positioning is important in developing favourable perception of the brand in consumers’ minds, which is also a starting point for brand communication (Upshaw, 1995, as cited in Vukasovic, 2009). The process of positioning can be seen in Figure 9 (refer to appendix). Figure 8: The concept of positioning * Positioning is how customers think about a proposed brand in the market * Critically important when competitors appear to be similar Sources: Adapted from Kotler, Brown, Burton, Deans & Armstrong (2010); Dibb & Simkin (1991); Trout (1989); Perreault, Cannon & McCarthy (2008) Value Demanded by Target Segment The discussion on positioning will be focused on only one target segment, which is the multimedia users segment, whilst differentiated marketing has been chosen.
The value demanded of a tablet computer by a while collar worker can be evaluated based on two main factors, namely the performances and brand image, which are detailed in Figure 10. It was suggested that it is important to understand what customers value the most when making purchase decisions and focus on targets and positions to achieve the market’s needs (Dibb & Simkin, 1991; Woodruft, 1997, as cited in Sweeney & Soutar, 2001). Figure 10: Value demanded of a tablet computer by the white collar workers Factors| Value demanded by white collar workers| Performances| | -Weight| Must be light so that it will be convenient to carry around places| -Speed| Fast and smooth| Battery life| Must be long to be able to use for various purposes| -Storage capacity| Must be large to store great number of files| -Connectivity| WiFi is needed to be able to connect to the Internet most of the time for information search, online gaming and online social activities| Brand image| The brand image of the table computer must be of high value | The perceptual map After understanding the value demanded of a tablet computer by the white collar workers, Apple will need to identity the position of iPad in consumers’ minds. By creating a perceptual map, Apple could clearly visual the position of iPad against its competitors and identify the determinants that influence customers purchase decision (Kohli & Leuthesser, 2003). In developing the perceptual map for iPad, a brief profile of its competitors needs to be done (as shown in Figure 11).
After that, a perceptual map for iPad is developed with product performance and brand image as the dimensions (as shown in Figure 12). From the perceptual map drawn, it is clear that Apple’s iPad is reflected in the dimensions of high performances and popular brand name. This may also reflect perceptions of high price and exclusivity. Therefore, Apple would need to target on improving the iPad on its quality and performance wise so that consumers are willing to pay a high price on iPad for the excellent performance and quality. Figure 11: Apple’s iPad competitors’ brief profile Sources: Adapted from Apple, Blackberry, Asus and Tablets. com websites Figure 12: Perceptual map for Apple’s iPad Popular brand name/image Apple iPad Blackberry Blackpad gap HP slate Acer tablet
High performance Low performance Asus Eee tablet Quanta tablet Compal tablet Unpopular brand name/image Competitive advantages Ma (1999) claimed that competitive advantage is the basis for excellent firm’s performance. Firms are able to create and gain advantages compared to other competitors if the causes of the competitive advantages are studied and analyzed. Ma (2000) has also suggested that competitive advantage helps firms to create better value for customers. Kotler et al. (2010) had proposed for ways a company can differentiate their offers from the competitors, namely product, services, personnel and image differentiation (detailed in Figure 13).
Apple would need to select the best competitive advantage over its competitors to differentiate the iPad from other tablet PCs. Several criteria on selecting the right competitive advantage must be fulfilled (refer Figure 14 in Appendix). After evaluating the competitive advantages (refer Figure 19 in Appendix), Apple would choose to deliver a product with good quality and performances along with its well known and “emotional” brand name (further explained in Figure 15 in appendix). Locating offer in the market space Once the company has built its competitive advantages, it will choose and implement a positioning strategy to locate its offer, which is the product, in the market space (Kotler et al. , 2010).