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Market Segmentationand Marketing Mixes BURTON F. B O W M AN AN D

FREDERICK E. McCORMICKThe total marketing concept acknowledges that the business of bness is the creating and fulfilling of product user needs and desires aprofit, and that every part of a business should be oriented to objective.Accurate problem definition is a requisite to any good business d

sion. Once the basic problems have been determined, we are wellthe way toward solving them. This article Illustrate^ how the AgricultDivision of the Am erican Cyanam id Com pany utilizes the tota l markeconcept and the principle of problem definition in operating a higdiversified business with widely varying market segmentation and mketing mix requirements.

THE DEVELOPMENT of Aureomycinchlortetracycline is an example of howa single compound can be tailored to fitthe needs of several market segments. Achemical and pharmaceutical company'snew product development opportunitiesare almost limitless. The only importantlimiting factors are: (1) the number ofproduct-user needs and desires that canbe identified or created, and (2) the num-ber of old or new compounds that can beapplied to fulfill these needs and desires.In some cases the need is identified, and A BO UT TH E AU TH OR S. Burton F. Bowman. Assist-ant General Manager of the Agricultural Division ofAmerican Cyanamid Company in New York, has beenin charge of the marketing of the many products ofthe Division as General Sales Manager and MarketingDirector. After receiving his B.A. and J.D. degreesfrom the University of Iowa, he was in the Sales De-partment of Pillsbury Mills, Inc., and became theirDirector of New Products Development. He also servedas Vice President of Huron M illing Co mpa ny in NewYork.

then a product is developed to fill need. In other cases scientists discovintentionally or accidentally, new copounds for which no known needs exThen it must be determined what thnew compounds can be adapted to do.Aureomycin was discovered by fidentifying a group of needs and tsynthesizing a chemical compound whfulfilled the se needs. Am erican CyanamCompany was one of the early producof penicillin, and in supplying this marial to the medical profession it becaapparent that, as wonderful as peniciwas, it left a lot to be desired.

AUREOMYCIN'S MARKET SEGMENTATIONAfter the initial development, Cyanahad a yellow crystalline substance was effective against a broad spectrumdisease, but next came the question of hmany practical applications could found for It. Market analysts and teof scientists, technicians, and many oth

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6 JOURNAL OF MARKETING January, 1961As a consequence, thirty ani-

for curing diseases inanimals rang-from cana ries to Texas stee rs. Th irteenare used as ingredients byto maintain health andin virtually all typesand poultry, and Aureomycinthe basis of five products whichto the food processing industry.are still working on

COMPLEXITY OFMARKETING AGRICULTURALSUPPLIESA recent survey at the retail level found200 different products orof animal health productsby

areas ingredientsall types of animal feeds; andandof fertilizer products, twenty-sevenand fumigant products, and

and a line of chemicals for the foodOur product user may be thein the Delaware Penin-the cotton farmer in the South, thehog producer, the specializedor Illinois corn grower, or any onea host of other types of agriculturalis really nota sin-but a collection of dozens of

a chemical companyOur major marketing problems cannotbyconstructing complex organi-or bymaking broad policyinanational frame of reference.

are broken up into segments by

CONSTRUCTING MARKETING MIXESIn building marketing mixes, the start-ing point Is the belief that the individual

in our organization who is nearest theproduct-user focal point is the salesman.Each salesman in the field is managing apart of our business, and, therefore, allelements in the marketing mixes aregeared tohelping each one carry out thismanagerial responsibility and to enablehim to deal effectively with his territory'sindividual problems. The marketing mixesinclude the usual major ingredients suchas personal selling, advertising and publicrelations, promotion and packaging; butwe place heavy emphasis on technicalservices and sales training.An Animal feed Supplement

Figure 1 illustrates how marketingmixes can vary between product classes.The first column represents themarketingmix of Aurofac animal feed supplements.These are various strengths and formula-tions of chlortetracycline, which is alsothe basic compound in our Aureomycinproducts. Aurofac is used by feed manu-facturers in their feed products for thepurpose of maintaining livestock healthand promoting growth. The Aurofac mar-keting mix primarily depends on a largetechnically trained sales force. Scientists,working in close relationship with thesales force, provide research and consul-tation on feeding problems. They conductfield trials and demonstrations, using ad-vanced methods of statistical control. Inconjunction with professional motion-pic-ture producers, these scientists have pre-pared and are continually enlarging anextensive library of films which documentthe benefits of Aurofac.

Next in importance areadvertising andpublic relations. Aurofac trade advertis-ing is for the purpose of supporting the

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MARKET SEGMENTATION AND MARKETING MIXES 2 7

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28 JOURNAL Of MARKETING January, 1961primary importance. Aurofac promotionis not extensive, and its purpose is to makeit easier for the feed manufacturer to sellhis products containing Aureomycin.An Antmal Haalth PharmateutUal

The next example is Aureomycin Mas-titis Suspension which cures mastitis, ahigh-incidence disease among dairy cows.Although this product's basic ingredientis chlortetracycline, which is also the ba-sis of Aurofac, the two marketing mixesare sub stantially different. In this case,primary emphasis goes to a large salesforce trained in merchandising. Aureomy-cin Mastitis is sold through many typesof 'wholesalers and distributors and toabout 25,000 farm-supply outlets. Gettingand holding distribution, controlling in-ventories, displaying the merchandise, andeducating the trade are the salesman'sprimary tasks.Sharing top position in its marketingmix are advertising, promotion, and pack-aging. Here the advertising sells our spe-cific product. Special promotions are util-ized at three distinct links in the market-ing chain, namely, the wholesale, retail,and ultimate user levels. Packaging mustinclude identification, imagery, and im-pulse appeals not too unlike those of aconvenience goods manufacturer, but itmust also educate the user and make iteasier for him to utilize the product in ahighly specialized use situation. Technicalservice by scientists occupies a subordi-nate position in the marketing mix.fertlHxer Precfuefs

Our phosphate and nitrogen productsfall roughly into two" groups. One groupconsis t s of ingredient concent rates ,which are sold to fertilizer manufacturerswho formulate them into finished ferti-lizer produc ts. The second group comprises

gredient in the fertilizer marketing mixis an item which ordinarily would not beconsidered part of a marketing mix; but,because fertilizers are heavy tonnage,relatively low-priced products, the loca-tion of production facilities is very im-portant. Strategic advertising, public re-lations, and promotion are used, but notnearly to the extent that they are in themajority of products in our other lines.A Defoliant

The fourth example is Gyanamid SpecialGrade Defoliant, a product based on anoriginal Gyanamid compound developedover fifty years ago. This product defoli-ates cotton prior to mechanical picking.It is a packaged item and is sold throughfarm-supply channels. Defoliants are usedby cotton farmers only when there hasbeen rainfall just before picking time.This rainfall causes fresh new gi-owth,and the resulting green leaves stain thecotton when it is mechanically picked ifthey are not removed prior to picking.Since the product is useful only whenthere is fresh new growth, the most im-portant ingredient in Gyanamid SpecialGrade Defoliant's marketing mix is avail-ability when and if needed. It must be onhand at the right time, the right place,and in the right quantity. Adv ertising,public relations , promotion, and packagingare relatively unimportant for this prod-uct. The advertising is highly localizedand conveys the message that the defo-liants are available in the locality.There is not a distinctive marketing mixfor every product in the line, but thereare several dozen product subgroups withsignificantly different marketing mix re-quirements. Each of these marketingmixes is subject to modification becauseof geographical differences, seasonal in-fiuences, and special area problems.

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MARKET SEGMENTATION AND MARKETING MIXES 2analyses of changes in animal populations,studies of changes in the economic statusof various farm groups, analyses of ourmarketing programs and those of competi-tors, blind-product tests, and opinion sur-veys. From the sales force continuingreports are obtained on changing condi-tions and needs, and the salesman's recom-mended action. His recommendations arescreened and improved upon by districtmanagers and the managers of five virtu-ally autonomous regions.All information is co-ordinated by tenproduct managers and product supervis-ors, each of whom functions as an opera-tor of an individual business, drawingupon the total services of the divisionand paying for his own particular shareof the costs. The strongest clue the prod-uct manager gets is one of hindsightthrough marketing research and area-by-area sales statistics and expense controlanalyses.

If market share remains satisfactory oincreases, if marketing opportunities arbeing successfully turned into sales, ifixed expenses stay in balance or go dowand if profit is adequate, he can then determine the adequacy of his particulamarketing mixes. He identifies those factors which have been productive and trieto make them more effective. Gonverselhe identifies where we are being inefficienand takes corrective action. The producmanager is thus continually being furnished with a feedback on his variouproduct classes and geographic areas, anthis information permits him continuallto define and review h is problem s. .The main objective is to base our entiroperation on analyzing problems anworking from facts. The guiding infiuences are problem definition, and the concept that the business of business is thcreating and fulfilling of product useneeds at a profit.

-MARKETING MEMOMechanization . . . Good or Bad?Trends in advanced mechanization are likely to have an impacton managem ent as a whole. What are the most significant effectsto come?

First, most of the trends will probably increase capital invest-ment in equipment.Second, in one way or another all present trends will reduceoperating costs, including every kind of labor cost per unit ofoutput (except possibly maintenance costs).

Third, there will be a faster response to any demand placed onthe production system, as demonstrated recently by an automatedball bearing plant that cut lead time from 19 days to 2 days.Fourth, there is a certainty of less flexibility in some manu-facturing systems. No integrated line to make V-8 engines can

be converted to making 6-cylinder engines for compact cars inanything less than weeks . . . if at all.

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