Market Segmentation by Tahira Umair
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Transcript of Market Segmentation by Tahira Umair
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MARKET SEGMENTATI
ON & TARGET MARKET
STRATEGIES
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UNDERSTANDING SEGMENTATION
What is Market?
PEOPLE
BUT - not just ANYANY people, they have to have
• Willingness to buy
• Purchasing power (money)
• Authority to buy
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CUSTOMER / CONSUMER: Different people with different characteristics
• Brand Preferences• Product – use behavior• Attitude & Perception
We need different marketing mix for different group of customers .
LEVEL OF DIFFERENCES
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– 11 brands of Laundry Detergent– 8 brands of Hand Soap– 6 brands of Shampoos– 4 brands of liquid washing detergents,
toothpaste & coffee– 3 brands of floor cleaner & toilet tissue– 2 brands of disposable diapers &
cooking oil
PROCTER & GAMBLE (MULTINATIONAL COMPANY)
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• TARGET MARKET - When the seller/marketer design particular marketing mix & market segment for specific group of people
• Two (2) ALTERNATIVE TARGET MARKET STRATEGIES:– Shotgun Approach (one program, broad
target – treat the total market as a single unit)
– Rifle Approach (Separate programs, pinpointed targets)
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STEPS IN TARGET MARKET
• Market Segmentation• Market Targeting• Market Positioning
MARKET SEGMENTATION
Dividing a market in to distinct groups of buyers with different needs, characteristics, or behavior who might require separate product or marketing mixes.
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MARKET SEGMENTATION
• With a large country• Many different types of people- it is too difficult to create a product that
will satisfy everybody, that is why we focus on a segment of the total market
- Success of the company depends upon the ability of the firm to segment its market effectively
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• MARKET TARGETINGThe process of evaluating each market segment’s attractiveness & selecting one or more segments to enter.
• MARKET POSITIONINGFormulating competitive positioning for a product & detailed marketing mix.
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BENEFITS OF MARKET SEGMENTATION
– Build strong position in specialized market segments.
– Allows firm to focus on specific needs.– Improves marketing mix for each
segment.– Allows small firm to exist & compete the
giants in the industry– Recognize the diversity of customers
E.g: Nokia: 7320, N70, 3210 Sony Erickson: K500i, T610
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MARKET SEGMENTATION
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LIMITATION OF MARKET SEGMENTATION
• Segmentation can be expensive in terms of production and marketing of products to only those specific groups of the market.
• Mass production offers economies of scale.• Standardisation of service offers:
increased delivery speed and efficiency.• Increase in promotion, administrative and
inventory Costs.
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LEVELS OF MARKET SEGMENTATION
MASS MARKETING
SEGMENT MARKETING
NICHE MARKETING
MICRO MARKETING
No Segmentation
Complete Segmentation
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MASS MARKETING
• Mass producing, Mass distributing, Mass promoting.
• Very difficult to create single product/program that appeal to diverse group of customers.
• Mass Marketing is dying.• “one size fits all”
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SEGMENT MARKETING
• It recognizes that buyers differ in their needs, perceptions & buying behavior
• It helps the company to serve the market more effectively.
• Company face fewer competitors in the market if few competitors are focusing in this market.
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FOR EXAMPLE:
PLASTIC MONEY: • Debit card• Credit CardHOTELING PACKAGES:• Business traveler• Family traveler• Tourist PackagesTV CHANNELS:• Geo Entertainment• Geo News
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NICHE MARKETING
• It focuses on sub segments with distinctive traits that may seek a special combination of benefits.
• Niches are smaller & normally attract only one or a few competitors.
• Niching offer smaller companies an opportunity to compete with larger competitors by focusing on small markets.
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• FOR EXAMPLE:
Bank Al-falah Credit Card
Blue Silver Gold(not match (less than (greater
thanSalary criteria) Rs. 60,000/-) Rs. 60,000/-)
House Wife Children Chauffer Butler
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MICRO MARKETING
• Local Marketing• Individual Marketing (one-to-one
marketing, Customized Marketing)• MASS CUSTOMIZATION
It is the ability to prepare on a mass scale individually designed products to meet each customer’s requirements.E.g.: Personalized BMW“A broadcast medium to a Dialog
medium”
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MARKET SEGMENTATION PROCESS
• Identify the needs & wants of customers. (Objective is to identify needs not currently being satisfied)
• Identify the different characteristics between market segments. (Identifying the characteristics that distinguish particular segments from others)
• Estimate the market potential. (Marketers need to know if a market is viable before segmentation occurs)
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CONDITIONS FOR EFFECTIVE SEGMENTATION
• The characteristics used to categorise customers must be measurable and the data obtainable & actionable.
• The segment itself must be accessible with a minimum cost and waste.
• A segment must be large enough to be profitable.
A USEFUL SEGMENTATION PROCESS MUST MEET ABOVE
CONDITIONS:
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BASES FOR CUSTOMER SEGMENTATION
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BASIS FOR CUSTOMER SEGMENTATION:
DEMOGRAPHIC FACTORS
GEOGRAPHIC FACTORS
PSYCHOGRAPHIC FACTORS
BEHAVIORAL FACTORS:
• OCCASION
• BENEFIT ETC
ConsumerMarkets
Demographic
Geographic
Behavioral• Benefit
• Occasion
Psychographic
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BASIS FOR CUSTOMER SEGMENTATION
1 Demographic factors (age, income, Gender etc.)
2 Geographic factors (cultural, regional, and national differences, Climate)
3 Psychographic factors (lifestyle, personality, Social class)
4 Behavioral factors:
• benefit segmentation
• Occasion segmentation
• Usage rate etc
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BASES FOR CUSTOMER SEGMENTATION
CONT.• GEOGRAPHIC LOCATION - based upon
where people live (historically a popular way of dividing markets)
• DEMOGRAPHIC - based upon age, gender and income level (very often used)
• PSYCHOGRAPHIC / LIFESTYLES - based on people’s personality, interest, lifestylesE.g. people who like hard rock & pop music probably prefer soft drinks rather than juices
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BEHAVIORAL SEGMENTATION• OCCASION – Based on different occasion
when buyers get the idea to buy, actually make their purchase, or use the purchased itemE.g. Mother’s day, Valentine day, Eid days
• BENEFIT - based on the different benefits that consumers seek from the productE.g. people buy something because it causes a benefiti.e. Diet coke - less sugar, lose weighti.e. Extra white toothpaste - whiter teeth, better smile
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GEOGRAHPIC SEGMENTATION
• The reason why we study geographic segmentation is because WHERE people live has a big effect on their consumption patterns.
• Additionally, WHERE people live in a city is also a reflection of their income level and we can make certain assumptions about their ABILITY TO SPEND based upon their address.
• This helps marketer plan store locations and the location of other services.
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• CLIMATE:
winter equipment and recreation are effected by geographic location
you can sell more Air Conditioner in Hot climate areas than Northern areas of Pakistan
clothing purchases are also effected by climate/geography
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DEMOGRAPHIC SEGMENTATION
• Demographic Segmentation is the most common approach to Market Segmentation
Variables are:• age• gender (male/female)• income• occupation• education• household (family - style) size
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• AGE
Age is another obvious way to divide the market into segments since so many products are based upon “time of life”
• diapers for babies• toys for children• entertainment for “over 19”
• Also, people have different consumption patterns at different ages
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e.g. Milk products• children and teens drink a lot of milk• adults don’t• older adults need calcium, but don’t
drink milk (they take pills)
• GENDER (MALE/FEMALE)GENDER (MALE/FEMALE)• gender is an obvious way to divide
the market into segments since so many products are gender-specific.
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• clothing• medical products• sports products/services• entertainment• INCOME• Segmenting markets on the basis of
income and expenditure patternse.g. High Income class ….. Afford Lexus, BMW, 5 star hotels, Bungalow in some Posh area
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• HOUSEHOLD (FAMILY - STYLE) SIZE
• Segmenting by the “stages in the family life cycle”
• There are different buying characteristics of people in each stage of the family life cyclee.g. 0-5 young children, 6-19 school children, 20-34 young adults, 35-49 younger middle-aged, 50-64 older middle-aged, 65+ seniors, 80+ SUPER seniors
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MARKET COVERAGE STRATEGIES
• TARGET MARKET
A set of buyers sharing common needs or characteristics that the company decides to serve
• Target market should be compatible with organisation’s goals and images.
• Marketing opportunity presented by the segment must match the company’s resources.
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MARKET COVERAGE STRATEGIES
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
CompanyMarketing
Mix
CompanyMarketing
Mix
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
CompanyMarketing
Mix
CompanyMarketing
Mix
Company Mix 1Company Mix 1
Company Mix 2Company Mix 2
Company Mix 3Company Mix 3
MarketMarket
A. (Aggregation) Undifferentiated Marketing
B. (Single segment) Differentiated Marketing
C. (Multiple segments) Concentrated Marketing
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• UNDIFFERENTIATED MARKETING
A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer.
• DIFFERENTIATED MARKETINGA market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each.
• CONCENTRATED MARKETING A market-coverage strategy in which a firm goes after a large share of one or a a few submarkets.
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POSITIONING• Definition: the perception of a product or
organisation in the consumer’s mind relative to their perception of other offerings in the same category about attributes, benefits & image of brand.E.g. Mehran – economy
Honda City – Comfort Mercedes – Luxury BMW – Performance Volvo – safety
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POSITIONING STRATEGIES
Against aCompetitor
Against aCompetitor
UsageOccasions
UsageOccasions
Away fromCompetitors
Away fromCompetitors
ProductAttributes
ProductAttributes
ProductClass
ProductClass
BenefitsOffered
BenefitsOffered
UsersUsers
BB
AA
EEDD
CCHHGG
FF
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SELECTING A POSITION
• Positioning is the final step in the segmentation/targeting process.
• Marketers must consider various factors in deciding what position they should seek.
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FACTORS OF CONSIDERATION
• Competition—look for niche marketing.
• Customers—seek product attributes.
• The company—status of current image.
• Repositioning—needs of target market changed?
• The marketing mix—must support the selected position.
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COMPETITIVE ADVANTAGE
• An advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices– Not copyable– Give value to the company– Find in any part of the company– Buyers perceive as valuable
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• Company can differentiate its offering in following ways:
• PRODUCT DIFFERENTIATION– Features– Performance– Style and design
• SERVICES DIFFERENTIATION– Installation– Repair service– customer training service
Which hat is
unique?
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•IMAGE DIFFERENTIATION– Nokia means Reliability– Motorola means quality– Sony Erickson means style & design
Image differentiation can be done by strong symbols.•PEOPLE DIFFERNETIATION
– PIA – Graceful attendants– TCS – Courteous staff– GEO – competent & knowledgeable team – Mcdonald – Professional & friendly
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FEEL FREE TO ASK QUESTIONS?