Market Segmentation

1. Market Segmentation

2. Market Segmentation What is a market segment? Why is it important?

3. What is a “Market Segment”? • Set of potential customers • Who have similar needs • Who refer each other when buying • Are alike in the way they: • Perceive value • View products and services • Purchase products and services

4. Why Define a Market Segment? • Easier to understand customer needs • Focus “whole solution” to a narrower set of customer needs • Easier to become a leader in a smaller market (Big fish in small pond) • More effective use of marketing Rupee • Generally more profitable

5. Levels and Patterns of Market Segmentation • Levels of Market Segmentation Mass Micromarketing Niche Marketing

6. Geographic Segmentation Pacific, Mountain, West North Central, West South Central, East North Central, East South Central, South Atlantic, Middle Atlantic, New England Region Under 4,999; 5,000-19,999; 20,000-49,999 . . . 1,000,000-3,999,999; 4,000,000 and over City ormetro size • Urban, rural, suburban • HLL – Lesancy (big soap), Philips introduced ‘Bahadur’ • in rural area Density Northern, southern, tropical Climate • Exporters segment the market as Western countries, African Countries.

7. Geographic segmentation • Local Marketing : Target Marketing is leading to Marketing Programs tailored to the needs and wants of local customer groups. • Tang Launches Eid campaign , Baskin Robbins “Three Mile Marketing” • Wal-Mart opening Market side grocery stores McDonald's ties up with Chhota Bheem to lift desi image

8. Demographic Variables Income Age Gender Occupation Family size Education Nationality Religion

9. COLGATE DENTAL CREAM -DOUBLE PROTECTION • ADULTS • Packaging consist – Red Color, Double Ring • Double ring signifies Double Protection • Helps to fight more germs. • Unique super active foam • Colgate regular mint flavor keeps your breath fresh.

10. COLGATE GEL (RED AND BLUE) • YOUNGSTERS • LAUNCHED IN TWO VARIABLE COLORS – Red and Blue • Same product line, same set of customers • Highlights two aspects – Super Transparency and Actrinse

11. Target – Kids ages 3 – 8 • Featuring Fun Barbie Graphics • Fun bubble fruit flavor • Fights against bad breath and cavities.

12. Behavioral Segmentation Occasions Regular occasion, special occasion Quality, service, economy, speed Benefits Nonuser, ex-user, potential, first-time, regular User status Light user, medium user, heavy user Usage rate Loyalty status None, medium, strong, absolute Buyer-readiness stage Unaware, aware, informed, interested, intends to buy Attitude toward product Enthusiastic, positive, indifferent, negative, hostile

15. Psychographic Variables Lifestyle Personality Hobbies Compulsive TV viewing habits Outgoing Social activities Authoritarian Club memberships Ambitious Vacation preferences

25. Requirements for Effective Segmentation • Measurability – the size , purchasing power and profiles • Substantiality – Large and Profitable one to serve • Accessibility – Effectively reached and served • Actionability – Effective programs can be designed for attracting and serving the segments. • Differentiable – Conceptually differentiable

26. Segment Exercise Segment the Market for the following categories: • Shampoo • Soap • Toothpaste • Mobile phones • Hair Oil • Pen • Hair colours • Laptops • Camera • Chocolates

27. Undifferentiated Targeting • Mass market philosophy- 1 mix for entire market (commodity products or brand new products) • Advantage: Saves Rupees in production/marketing expenses • Usually a sort of lazy, unimaginative approach • Problems: More exposed to competitive threats • E.g Coca Cola ( Non- alcoholic beverage market , IBM ( computer market ) , General Motors ( Vehicle Market)

28. Concentrated Targeting (#2) • Select a market niche (one segment of a market) • Be able to focus and specialize the marketing mix • Concentrate resources rather than spread too thinly • Better knowledge about segment • Operating economies thru specializing its Production, Distribution , and Promotion • If it captures segment leadership , a firm can earn higher profits • Recycled paper producer Wizard India focus on marketing for Greeting And Wedding cards, • Oshkosh Truck for Airport rescue trucks • M&M on Tractors to Agriculture Markets • Zodiac on formal shirts for executives and Professionals

29. Multisegment Targeting (#3) • Strategy that chooses two or more well-defined market segments and develops distinct marketing mix for each • Product same, different promotional appeal, rather than completely different marketing mix , increases costs considerably.

30. Costs of Multisegment Targeting • Product design costs • Production costs • Promotion costs • Inventory costs • Marketing research costs • Management costs • Cannibalization

31. One-to-One Marketing One-to-One Marketing An individualized marketing method that utilizes customer information to build long-term, personalized, and profitable relationships with each customer.

32. One-to-One Marketing Focuses on Share of Customer Focuses on Share of Market One-to-One Marketing Mass Marketing Develops Customers Develops Products Finds Products for Customers Finds Customers for Products

33. Ethical choice of Market Targets Socially responsible Marketing calls for targeting that serves not only the company’s interests , but also the interests of those targeted Pizza hut reading programs and Nickelodeon magazines Did You Know “To tackle Child Obesity in France , French Diet guru Pierre Dukan has recommended giving kids extra marks in their final year exams if they kept a body mass index between 18 and 25.

34. Differentiation and Positioning Product position is the way the product is defined by consumers on important attributes—the place the product occupies in consumers’ minds relative to competing products • Perceptions • Impressions • Feelings Toyota’s Land Cruiser

35. Differentiation and Positioning Positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions

36. Differentiation and Positioning Identifying a set of possible competitive advantages to build a position Choosing the right competitive advantages Selecting an overall positioning strategy Developing a positioning statement Choosing a Differentiation and Positioning Strategy

37. Differentiation and Positioning Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices Identifying Possible Value Differences and Competitive Advantages

38. Differentiation and Positioning Identifying a set of possible competitive advantages to build a position by providing superior value from: Choosing a Differentiation and Positioning Strategy

39. Differentiation and Positioning Difference to promote should be: Choosing the Right Competitive Advantage: How many differences to promote , Which differences to promote .

40. Differentiation and Positioning Brand’s Value proposition is the full mix of benefits upon which a brand is positioned Selecting an Overall Positioning Strategy