TARGET MARKET1 Target Marketing. TARGET MARKET2 MARKET SEGMENTATION AND SELECTING TARGET MARKETS At...

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Target Marketing

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

At the end of this module the learning outcomes are.

1. Why there is a need to segment markets?

2. What are the various levels of market segmentation?

3. What are bases for segmenting consumer markets?

4. How the markets are targeted?

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

SUGGESTED READINGS

1. Marketing Management by Philip Kotler, chapter 9 &10th edition.

2. Marketing Management by Ramaswami and Namkumari, Chapter 6.

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

MARKET SEGMENTATION The need

Cannot serve all customers of this universe.No company has that kind of resources.Customers

Too numerous Diverse in their buying requirement

Need to identify the market segments that it can serve more effectively

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

MARKET SEGMENTATION.- The universe is heterogeneous.- Divide the universe into market

segments, where buying or need requirements is same i.e. homogenous.

- Attack one or few market segments.- This is target marketing.

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Target Marketing

Steps in the Targeting Process:

Market Positioning

Market Targeting

Market Segmentation

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Target MarketingTarget marketing requires marketers to take three major steps:

Identify and profile distinct groups of buyers who differ in their needs and preferences (market segmentation).Select one or more market segments to enter (market targeting).For each target segment, establish and communicate the key distinctive benefit(s) of the company’s market offering (market positioning).

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

Mass Marketing

Seller engages in mass production.

Mass distribution.

Mass promotion of one product for all buyers.

Example

Coke in 60 & 70s,

Sold in India

One size 200 ml.

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

Arguments for mass market.Creates largest potential market Leads to lower cost Lead to lower prices. Higher margins

Why criticised Market fragmentation Splintering of the market Mass media proliferation.Distribution channel proliferation

Difficult to practice “one size fits all’’ marketing.

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Using Market Segmentation

Segment MarketingSegment Marketing

Niche MarketingNiche Marketing

Local MarketingLocal Marketing

Individual MarketingIndividual Marketing

Levels of Micromarketing

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

MARKET SEGMENTATION LEVELS 1. Segment Marketing

Consists of a large identifiable group within a market with similar wants, purchasing power, attitudes or buying habitsEach segment’s buyers are assumed to be quite similar in needs /wants No two buyers all alikeFlexible market offerings

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

Flexible market offering consists of two parts

1. Naked solution - Consists of products and service

elements that all segment members value

2. Options - That some segment members value- Each option carries additional prices.

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

Example – Segment Marketing Delta Airlines

    Economy Class passenger - Seat - Food - Soft Drink

All of them – naked solution Charges extra

- Alcoholic beverages - Earphones

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

Segment marketing – benefits- More fine tuned product- Price it appropriately for the target

audience - Fewer competitors - Easier choice of

• Distribution channels • Communication channels

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

Niche marketing - Narrowly defined group- Needs are not well serviced - Seeking a distinctive mix of benefits - Fairly small market size - Normally attract one or two players - Customers willing to pay a premium

price.

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

1. High end designer wear like Gucci, Chanel, Tarun Tahiliani etc.

2. Automobiles like Ferrari, Maserati, Lamborghini etc.

WHAT IS A NICHE TODAY MAY BECOME A SEGMENT TOMORROW AND VICE VERSA!!

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2. Ostrichesonline.com - Selling Ostrich derived products - On line - 2 million $ sales in 1998- Visitors can buy

Ostrich meat Feathers Leather jackets Videos Eggshells Skin care products derived from ostrich Body oil

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

3. Local marketing - Needs of local customer groups

Example Kraft Cheese Helps supermarket chains Identify cheese assortment and shelf layout Optimise cheese sales in

- Low- Middle- High income stores - Different ethnic groups

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

4. Individual marketing - Ultimate level of segmentation - Segment of one.- One-to-one marketing.- Customised to individuals - Tailor made- Cobbler designed shoes.- Customised industrial products

Use of new technologies - Computers.- Databases

Customised offering.

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

Example

1.     Dilip Chhabria -Designer cars - Customised cars - Small market - About 500 a year - Each car is unique, high prices

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

Turning to Mass customisationIt is the ability to prepare on a mass basis

individually designed products and communication to meet each customer’s requirements.

Example.Levi’s Jeans

- Customer measurements.- Jeans ready in 8 hrs.

Mattel Barbie com Design your own Barbie doll.

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

- Choose Doll’s • Skin tone • Eye colour • Haircolor.• Clothes • Accessories • Her likes and dislikes.

- When Barbie delivered.• Doll’s name on the package• Computer generated paragraph about her

personality

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Using Market Segmentation

Basic Market-Preference Patterns

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Using Market Segmentation

Needs-based segmentationSegment identificationSegment attractiveness

Segment profitability

Segment positioning

Marketing-mix strategy

Needs-based Segmentation Process

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Segmentation

Measurable Actionable

Substantial Accessible

Differentiable

Characteristics of Effective Segments

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Segmenting Consumer Markets

Bases for Segmentation

GeographicDemographicPsychographicBehavioral

Nation or countryState or regionCity or metro sizeDensityClimate

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

Example Geographic

Ford Ikon in India 1. World car 2. Changes for India

1. Higher suspension 2. Larger size air conditioner, higher ambient

temperature 3. Lower average speeds 4. Handle adulterated fuel5. Petrol / diesel adulterated with kerosene

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Segmenting Consumer Markets

Bases for Segmentation

GeographicDemographicPsychographicBehavioral

Age, race, gender

Income, education

Family size

Family life cycle

Occupation

Religion, nationality

Generation

Social class

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Segmenting Consumer Markets

Bases for Segmentation

GeographicDemographicPsychographicBehavioral

LifestyleActivities

Interests

Opinions

Personality

Core values

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

a. Lifestyle Nestle Classic

- Pleasure of making coffee Adding milk, sugar, coffee in hot milk

Nestle “3 in 1 - Office goers- Paucity of time - Espresso feeling - Milk sugar coffee premixed

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b. Personality

- Targeting consumer personality - Customer of Ford

Independent Impulsive Masculine Alert to changeSelf confident

- Customers of ChevroletConservative. Thrifty Prestige.Conscious.Avoid extremes

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MARKET SEGMENTATION AND SELECTING TARGET MARKETS

C. VALUES

Tourists to Disneyland • Fun seekers • Families visit

Tourists to Udayan child welfare unit at Kolkatta • Stay and meet poor children • Share thoughts• Donate

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Segmenting Consumer Markets

Bases for Segmentation

GeographicDemographicPsychographicBehavioral

Occasions

Benefits

User status

Usage rate

Loyalty status

Buyer-readiness

Attitude

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Segmenting Consumer Markets

Multi-attribute segmentation via geoclustering combines multiple variables to identify smaller, better-defined target groups

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Market Targeting Strategies

Evaluating and selecting market segments requires assessing the segment’s overall attractiveness in light of company’s objectives and resources.

Five patterns of target market selection can then be considered.

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Market Targeting Strategies

Five Patterns of Target Market Selection

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Market Targeting Strategies

Targeting multiple segments may result in cost economies

Higher costs using differentiated marketing include:

Product modification cost

Manufacturing cost

Administrative cost

Inventory cost

Promotion cost