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Sunday, June 23, 2024

Marketing Concepts for Trucking-By Dara Nagra

Trucking is one of the important segments of today’s economy. Most of the industries, including trucking, are facing challenges to operate in today’s tough economic time. One of the mean to improve the profit margins in any business is to target proper market segment and adapt the service levels to their expectations. Market segmentation is the process (in marketing) of grouping a market (i.e. customers) into smaller subgroups. This is not something that is arbitrarily done. It is derived from the fact that the total market is often made up of submarkets (called ‘segments’). These segments are homogeneous in their constitution (i.e. people in the segment have some similarities to be recognized as a group. Because of this intra-group similarity, they are likely to respond somewhat similarly to a given marketing strategy. That is, they are likely to have similar feeling and ideas about a marketing mix, comprised of a given product or service, sold at a given price, distributed in a certain way, and promoted in a certain way. Markets can be segmented or targeted using a variety of factors. The bases for segmenting consumers in the market include:
• Demography (age, family size, life cycle, occupation)
• Geographical bases (states, regions, countries)
• Behavior bases (product knowledge, usage, attitudes, responses)
• Psychographic bases (lifestyle, values, personality)
A business must analyze the needs and wants of different market segments before determining their own niche. To be effective in market segmentation the company needs to keep the following things in mind:
• Segments or target markets should be accessible to the business
• Each segmented group must be large enough to provide a solid customer base.
• Each segmented group requires a separate marketing plan.
Large companies segment their markets by conducting extensive market research projects/surveys. This research is often too expensive for small businesses to invest in, but there are alternative ways for a small business to segment their markets. A small business can do the following to gain knowledge and information on how to segment their markets:
• Use secondary data resources and qualitative research. They can use the following resources for external secondary data
• Trade Association publications and experts
• Basic research publications
• External measurement services
• Government Statistical data regarding trade, demography, regional imbalances, language, income distribution, land holdings etc.
• Conduct informal factor and cluster analysis by
o Watching key competitors marketing efforts and copying them.
o Talking to key trade buyers about new product introductions.
o Conducting needs analysis from qualitative research with individuals and groups.
There are many reasons for dividing markets into smaller segments. Any time there are significant, measurable differences in the market, the market can be segmented into identifiable groups. By doing so, the company will
• make marketing easier
• discover niche markets
• Become more efficient with their marketing resources
There are different approaches to tackle different market segments:
Mass Marketing or Undifferentiated Marketing: Go after the whole market with one offer and focus on common needs rather than differences
Product-variety Marketing or Differentiated Marketing: target several market segments and design separate offers for each according to segment specific needs.
Target Marketing or Concentrated Marketing: Target market is the group of potential customers selected for marketing. For new products, there is a theory that different groups of people have different risk tolerances.
Innovators First 5% – 10% that adopt the product
Early Adopters Next 10% – 15%
Early Majority Next 30%
Late Majority Next 30%
Laggards Remaining 20%
Innovators and Early Adopters: The innovators and early adopters are critical to launching a new product. If a company can target its initial efforts at these groups, its limited resources will be well spent. They will become its champions. It is not an easy task to find these groups. From some studies, the characteristics of the innovators and early adopters are:
Venturesome: the willingness and desire to be daring in trying something new and different
Social integration: frequent and extensive contact with others in one’s area
Cosmopolitan: extending point of view beyond the immediate neighborhood or community
Social mobility: upward movement on the social scale
Privileged: attitude and possession of money (less risky to try something new)
But be aware that it is not necessarily a smooth ride to go from one risk group to another. Most of the times, there is a time gap between moving from the innovators to the early adopters and then to the early majority and so on.
Target Market Influencers: In addition to targeting innovators and early adopters, efforts should be made to find the innovators and early adopters, who can influence the market. This is important for a marketing plan with a limited budget.
Rules to Market Segmentation:
If a company needs to gain a viable market segment within its overall target group then there are a few rules it needs to follow:
• It must be clear and specific in defining the segment.
• The identification of market segments must be as a result of well researched facts and figures.
• All its customers’ exhibit a multitude of traits and characteristics, but it must only segment ones which are relevant to what it hope to target. For example if the business is selling life assurance policies, then the company should not segment the market by height of person because the height of a person is unhelpful in helping it sell insurance policies. Age or income can be the viable trait to define a market segment.
• Don’t over segment as it will be impossible to successfully target all these groups. The company needs to aim for the largest most relevant segment.
• The company must also be able to reach its segment group realistically. If it has identified that a large segment has internet access and would like to reach them via the internet, it must also have the same technology and knowledge at its fingertips as it is available to the target groups.
• It must also ensure that it is cost effective to chase this market segment. If it costs too much to reach them or if it has to compromise its profitability to reach them, then the company needs to think whether the segment would be worth pursuing.
Always chase the largest segment first. Trim the smaller segments off the list as it may not be viable to pursue the smaller segments.