Post on 23-Oct-2014
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IDENTIFYING MARKET SEGMENTS AND TARGETS
Chapter 2By: Prof. Dipti
Purohit
Consumers Have Different Needs
Market: An aggregate of people who, as individuals or as organizations, have needs for products in a product class and who have the ability, willingness, and authority to purchase such products
Segment: A group of individuals, groups, or organizations that share one or more similar characteristics which make them have relatively similar products needs
Segmentation: The process of identifying smaller markets (groups of people or organizations) that exist within a larger market
Baby Boomers: A Lucrative Market
Segmentation The more you know about a customer –
age, gender, what he owns, what he spends and what his preferences are - the more likely it is that you can create and pitch a product or service that will hit a bull's-eye.
Identifying and interacting with your customers in ever-smaller groups is a tantalizing prospect - and now easier and more cost effective than ever,
Segmentation
Segmentation is done to ◦Provide distinct & unique value proposition (allocate its resources more efficiently)
◦Servicing, nurturing, developing as profitable customers (increase the returns)
Segmentation
Segmenting consumer market.Segmenting business market.Segmenting international markets
Identify and profile distinct groups of buyers who differ in their needs and preferences
Select one or more market segments to enter
Establish and communicate the distinctive benefits of the market offering
Effective Targeting Requires
Four levels of Micromarketing
Segments
Local areas Individuals
Niches
A market segment consists of a group of customers who share a similar set of needs ad wants.
What is a Market Segment?
No Market Segmentation
Segmented by Sex
Segmented by Age
Naked solution: Product and service elements that all segment members value
Discretionary options: Some segment members value options but not all
Flexible Marketing Offerings
Homogeneous preferences exist when consumers want the same things
Diffused preferences exist when consumers want very different things
Clustered preferences reveal natural segments from groups with shared preferences
Preference Segments
Preference Segments
Homogeneous preferences
Diffused preferences
Clustered preferences
Preference Segments
A niche market is a focused, targetable portion of a market.
By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. You can think of a niche market as a narrowly defined group of potential customers.
Niche market
Niche Marketers
Enterprise Rent-A-Cartargets the insurance-replacement market
Facebook: A Niche Social Networking Site
Focus on Ayurvedic medicines and health supplemen
ts
Local Marketing
local marketing approach is that it allows a business to connect with consumers on a more personal level. As part of the public outreach, the company creates an image that conveys understanding and appreciation for factors that impact that local community
Local Marketing
Individualized Marketing When the firm deals with each customer on
a one – to – one basis. When products are customized for the
customer. Wind and Rangaswamy gave the concept of-
customerisation.
What is Customerization?
Customerization combines operationally driven mass
customization with customized marketing in a way that empowers
consumers to design the product and service offering of their choice.
How to Segment Consumer Markets
How to Segment Consumer Markets
CommonBases for
SegmentingMarkets
Geographic
Psychographic
Dem
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Segmenting Consumer Markets
GeographicGeographic
DemographicDemographic
PsychographicPsychographic
BehavioralBehavioral
FIGURE 7.3
Segmentation Variables for Consumer Markets
Geographic Segmentation Dividing the market into different
geographic units
◦ Nations◦ States◦ Regions◦ Counties◦ Cities◦ Neighborhoods
Shop outlets: Locations for new shop outlets can be identified.
Advertising: Areas for advertisement can be identified. Segmentation can also reveal information for advertisement media.
Product selection: Different geographic segments have differing consumption patterns. Introducing different products for different geographic segment can bring more sales!
Catalog sales: In catalog sales direct marketing, generally demographic information of customers is not available. Census information derived from geographic data can be used to develop better customer segmentation and predictive models.
Geographical segmentation can be used for various purposes. The followings are geographic segmentation examples;
Climate conditions differs in north & south
South requires Voltas ac North requires Voltas coolers
Food habits
TATA for different habits
Demographic Segmentation
Age and Life CycleAge and Life Cycle
Life StageLife Stage
GenderGender
IncomeIncome
GenerationGeneration
Social ClassSocial Class
Family Life
Cycle
Bachelor stage
(Single men and women
living on their own- Newly married
couples (spend on vacations,
cars, and clothing)
Full Nest I (youngest child under 6 -- spend
on baby food, toys; buy home and furniture)
Full Nest II (youngest child is older than 6 -- spending money
on children)Full Nest III (older children, -- major
expense is college; may travel and
replace furniture)
Empty Nest I (children have left
home; family income at peak --
travel, cruises, vacation)
Empty Nest II (head of household has
retired -- may move to warmer climate
and purchase a condominium)
Solitary Survivor in Labor Force (travel, vacations, medical
expenses)
The Retired Solitary Survivor (medical
expenses)
Few Examples Age- sex-
Size and strc. of family-
Income-
Education level-
Dabur, ITC (cigrette), Gillete, Sahnaaz hussain
beauty parlours, kaya kalp
macdonalds, Automobile, companies(cars)
Hindustan uniliver Computer
manufacturers,
Toyota Scion Targets Gen Y Consumers
Dove Targets Women
PsychographicMarket SegmentationPsychographic:
◦Social class◦Lifestyle◦Personality
TITAN watches have wide range
The VALS Segmentation System
Decision Roles Initiator Influencer Decider Buyer User
Behavioral Variables
Occasions Benefits User Status Usage Rate Buyer-Readiness Loyalty Status Attitude
Behavioral Segmentation
Behavioral Variables1.Occasions
2.Benefits
3. User StatusNonusersEx-usersPotential users
First-time users
Regular users
4.LightMediumHeavyProduct users
Aware Ever tried Recent trial Occasional user Regular user Most often used
5.The Brand Funnel Illustrates Variations in the
Buyer-Readiness Stage
6.Loyalty Status
Switchers
Shifting loyals
Split loyals
Hard-core
Five attitude groupsI. EnthusiasticII. PositiveIII. IndifferentIV. NegativeV. Hostile
7. Attitude
Figure 8.3 Behavioral Segmentation Breakdown
Choose any one product and explain the market segmentations by the company to increase the sale.
Detail structure of Company strategy is required
Assignment for the Day
Segmenting for Business Markets
DemographicDemographic
Operating VariableOperating Variable
Purchasing ApproachesPurchasing Approaches
Situational FactorsSituational Factors
PersonalCharacteristics
PersonalCharacteristics
Bases for Segmenting Business MarketsBusiness markets can be segmented with some of the same variables used in consumer market segmentation, such as geography, benefits sought, and usage rate, but business marketers also use other variables.
Bonoma and Shapiro proposed segmenting the business market with the variables shown below. The demographic variables are the most important, followed by the operating variables —down to the personal characteristics of the buyer.
Demographic:1. Industry: Which industries should we serve?2. Company size: What size companies should we serve?3. Location: What geographical areas should we serve?
Operating Variables:4. Technology: What customer technologies should we focus on? 5. User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers? 6. Customer capabilities: Should we serve customers needing many or few services?
Purchasing Approaches:7. Purchasing-function organization: Should we serve companies with highly centralized or decentralized purchasing organizations? 8. Power structure: Should we serve companies that are engineering dominated, financially dominated, and soon?9. Nature of existing relationships: Should we serve companies with which we have strong relationships or simply go after the most desirable companies? 10. General purchase policies: Should we serve companies that prefer leasing? Service contracts? Systems purchases? Sealed bidding? 11. Purchasing criteria: Should we serve companies that are seeking quality? Service? Price?
Bases for Segmenting Business Markets
Situational Factors12. Urgency: Should we serve companies that need quick and sudden delivery or service?13. Specific application: Should we focus on certain applications of our product rather than all applications?14. Size of order: Should we focus on large or small orders?
Personal Characteristics15. Buyer-seller similarity: Should we serve companies whose people and values are similar to ours? 16. Attitudes toward risk: Should we serve risk-taking or risk- avoiding customers? 17. Loyalty: Should we serve companies that show high loyalty to their suppliers?
Bases for Segmenting Business Markets
Steps in Segmentation Process
Needs-based segmentation
Segment identification
Segment attractiveness
Segment profitability
Segment positioning
Segment acid test
Marketing-MixStrategy
Effective Segmentation Criteria
MeasurableMeasurable
SubstantialSubstantial
AccessibleAccessible
DifferentiableDifferentiable
ActionableActionable
Marketing Debate
Is mass marketing dead?
Take a position:1. Mass marketing is dead.
or
2. Mass marketing is still a viable way to build a profitable brand.
Marketing Discussion
Think of various product categories. How would you classify yourselfin terms of the various segmentationschemes? How would marketing be more or lesseffective for you depending upon the segment involved?
Thank you