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Market Segmentation

Market Segmentation. Objectives:. Describe the characteristics of markets and market segments. Discuss criteria for successful market segmentation. Discuss alternative strategies for selecting target markets. Market.

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Market Segmentation

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  1. Market Segmentation

  2. Objectives: • Describe the characteristics of markets and market segments. • Discuss criteria for successful market segmentation. • Discuss alternative strategies for selecting target markets.

  3. Market People or organizations with needs or wants and the ability and willingness to buy Market Segment A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. Market Segmentation The process of dividing a market into meaningful, relatively similar, identifiable segments or groups. Market Segmentation

  4. Reasons behind Segmentation- • Segmentation enables the identification of groups of customers with similar needs, and the analysis of the buying behavior of these groups. • Segmentation provides information for the specific matching of the design of marketing mixes with the characteristics of the segment. • Segmentation helps marketers satisfy customers wants and needs while meeting the organization’s objectives.

  5. Criteria for Segmentation • Substantiality • Segment must be large enough to warrant a special marketing mix. • Identifiability & Measurability • Segments must be identifiable and their size measurable. • Accessibility • Members of targeted segments must be reachable with marketing mix. • Responsiveness • Unless segment responds to a marketing mix differently, no separate treatment is needed. • Actionable • Effective programs can be formulated for attracting and serving segments

  6. Steps in Segmentation, Targeting, and Positioning 6. Develop Marketing Mix for Each Target Segment Market Positioning 5. Develop Positioning for Each Target Segment 4. Select Target Segment(s) Market Targeting 3. Develop Measures of Segment Attractiveness 2. Develop Profiles of Resulting Segments Market Segmentation 1. Identify Bases for Segmenting the Market

  7. Mass Marketing Same product to all consumers (no segmentation) Segment Marketing Different products to one or more segments (some segmentation) Niche Marketing MahindraCorporate Different products to subgroups within segments (more segmentation) Levels of Market Segmentation Micro marketing Products to suit the tastes of individuals and locations (complete segmentation) Local Marketing Tailoring brands/ promotions to local customer groups Individual Marketing Tailoring products/ programs to individual customers

  8. Market Segmentation Categories and Selected Variables SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Geographic Segmentation ..ad clip\23309_201083_Print_inside_529x529.jpg Region North, East, West, South City Size Major metropolitan areas, small cities, towns Density of area Urban, suburban, exurban, rural Climate Temperate, hot, humid, rainy Demographic Segmentation ..\ad clip\idbi_bank_03012007.jpg Age Under 11, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+ Sex Male, female Marital status Single, married, divorced, living together, widowed Income Under Rs. 25,000, Rs.25,000-Rs. 34,999, Rs. 35,000-Rs.49,999, Rs.50,000-Rs.74,999, Rs.75,000-Rs.99,000 etc Education Some high school, high school graduate, some college, college graduate, postgraduate Occupation Professional, blue-collar, white-collar, agricultural,

  9. continued SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Psychological Segmentation ..\ad clip\psychographic seg.jpg Needs-motivation Shelter, safety, security, affection, sense of self-worth Personality Extroverts, novelty seeker, aggressive, low dogmatic Perception Low-risk, moderate-risk, high-risk Learning-involvement Low-involvement, high-involvement Attitudes Positive attitude, negative attitude (Lifestyle) Segmentation ..\ad clip\woodland.jpg Economy-minded, couch potatoes, outdoors enthusiasts, status seekers ad clip\ZOYA.jpg ..\ad clip\ALLEN SOLLY.jpg Sociocultural Segmentation ad clip\incredible_india_28032006.jpg ad clip\TIMES OF INDIA.jpg Cultures Indian, Anglo-Indian Religion Hindu, Shikh, Jewish, Moslem, other Subcultures (Race/ethnic) Punjabi, South-Indian, Bengali, Marathi Social class Lower, middle, upper Family life cycle Bachelors, young married, full nesters, empty nesters

  10. continued SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Use-Related Segmentation Usage rate Heavy users, medium users, light users, non users Awareness status Unaware, aware interested, enthusiastic Brand loyalty None, some, strong Use-Situation Segmentation Time Leisure, work, rush, morning, night ..\ad clip\kurkure.jpg Objective Personal, gift, fun, achievement ..\ad clip\naukri.jpg Location Home, work, friend’s home, in-store Person Self, family members, friends, boss, peer Benefit Segmentation Convenience, social acceptance, long lasting, economy, value-for-the-money

  11. Bases for Segmenting Business Markets Buyer Characteristics Geographic Bases for Segmenting Business Markets Situational Factors Operating Characteristics Purchasing Approaches

  12. Developing Segment Profiles • Need to develop a profile or description of the “typical” customer in a segment. • Segment profile might include demographics, location, lifestyle, and product-usage frequency.

  13. Target Market • Marketers evaluate the attractiveness of each potential segment and decide in which they will invest resources to try to turn them into customers • A group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges.

  14. Targeting • To determine which, if any, of the segments uncovered should be targeted • Evaluation of Market Segments - DAMP • Distinct – is each segment clearly different from other segments? • Accessible – can buyers be reached through appropriate promotional programmes and distribution channels? • Measurable – is the segment easy to identify and measure? • Profitable – is the segment sufficiently large to provide a stream of constant future revenues and profits?

  15. Market TargetingEvaluating Market Segments • Segment Size and Growth • Analyze sales, growth rates and expected profitability for various segments. • Segment Structural Attractiveness • Consider effects of: Competitors, Availability of Substitute Products and, the Power of Buyers & Suppliers. • Company Objectives and Resources • Company skills & resources relative to the segment(s). • Look for Competitive Advantages.

  16. POSITIONING

  17. Positioning: Al Ries & Jack Trout • Positioning is owning a piece of consumer’s mind • Positioning is not what you do to a product; it’s what you do to the mind of the prospect • You position the product in the prospect’s mind • You concentrate on the perceptions of the prospect, not the reality of the product

  18. Positioning Developing a specific marketing mix to influence potential customers’ overall perception of a brand, product line, or organization in general.

  19. G H C A D E B F Positioning for Competitive Advantage: Strategies Product Attributes ..\ad clip\i10.jpg Product Class ad clip\polo.jpg Away from Competitors ..\ad clip\outlander.jpg Benefits Offered ..\ad clip\spark.jpg Usage Occasions ..\ad clip\scorpio.jpg Against a Competitor ..\ad clip\xylo.jpg User Class ..\ad clip\Mahindra Quanto.jpg

  20. Positioning in B2B Market • Product differentiation • Feature, Conformance, Performance, Durability, Reliability, Style, Design ad clip\Ozone Safe.jpg • Service differentiation • Delivery, Installation, Customer Training, Consulting services, Repair, Replacement ..\ad clip\HCL.jpg • Personnel differentiation • Empathy, Competency, Credibility, Reliability, Responsiveness, Communication ..\ad clip\MINT.jpg • Image differentiation • Symbol, People, Events, Media, Community ..\ad clip\dell.jpg

  21. Point of Parity (POP) & Point of Difference (POD)

  22. POP & POD Points-of-Parity-Shared brand values Necessary Competitive

  23. Identifying & Choosing POD Desirable ( Customer Perspectives) Personality Relevant Distinctive & Superior Believable & Credible Deliverable ( Firm Perspectives) Feasible Profitable Pre-emptive, defensive & Difficult to attack Differentiating ( Competitive Perspectives) Unique

  24. Positioning Guidelines • Get the key consumer Insight: Find the GAP to occupy • Main unique proposition/promise that the brand is going to offer/fulfill • Make it specific, short and tangible • Keep the positioning up-to-date

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