- Market Segment

8/4/2019 - Market Segment

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MARKET SEGMENTATION


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What is a market??

Mass marketing approach:Approaching the entire set of customers with a uniform marketing

approach thereby creating the largest potential market (sale of staple

food items like rice and bread)

Differentiated approach:

Strategy of market segmentationMarketer selects one or more of the segments as the target market

and positions his outlet as per the profile of the targeted segment (Diet

Coke sold to market segment of health conscious adults)


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Re-seller Market

Market of the middlemen like wholesalersand retailers who buy goods for resale

Main focus of retailing is on consumer

productsConvenience products:Shopping products:Specialty items:

Unsought items:


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Market segmentation

Major characteristics

Is an aggregating process:clustering people with similar or homogenous needs and

respond to the marketing mix in the same way. Different kindof promotional activities are developed for serving differentmarket segments

Identifying niche segments

Customized products and services are provided to customergroups (Whirlpool automatic washing machines in urbanMumbai with large groups of working women can besegmented)


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Benefits of segmentation


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Benefits of segmentation

Development of marketing mix

-helps to identify target audience

customize marketing strategies in terms ofproduct, price and promotion for

customers

Store location decision

to concentrate stores where targetpopulation are found

Understanding customer behavior

-how and why the target group behavesand acts

determining the buying behavior aftersegmenting the market


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Merchandising decisions

-deciding on which items will occupy the store shelves fordisplay

understanding the preference of target groups

Promotional campaigns

effective and accurate promotional campaigns

Positioning

-major feature of segmentation . Sarvana stores arepositioned for lower middle class consumers where as theclientele of Lifestyle and Shoppers Stop are for the upperincome class and the elite


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Criteria for effective market

segmentation


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Homogeneous within:

similar needs, wants and buying behavioran effective marketing programmer can be developed

(Gillette Mach 3 for young male adults)

Heterogeneous within:customers between segments stay different for better

focus from retailers

Substantial :

should have sufficient discretionary income

(Ebony must ensure high income groups exist in their tradearea)


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Actionable

useful for identifying target groups and deciding on

marketing mix variables (Caf Coffee Day attracts collegegoers and young working executives to enjoy coffee in afashionable outlet)

Accessible

reachable target market and accessible to target consumer

groups (Crossroads is readily accessible with parking

facilities) Measurable

size, purchasing power and characteristics ofmarket segment should be measurable


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Bases for Segmentation in Consumer Markets

Consumer markets can be segmented on the following customercharacteristics.

Geographic

Demographic

Psychographic

Behavioralistic


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Geographic SegmentationThe following are some examples of geographic variables often used in

segmentation.

Region:

Size of metropolitan area:

Population density:

Climate:(Subhiksha Stores in Chennai)

Demographic SegmentationSome demographic segmentation variables include:

Age

Gender

Family size

Family lifecycle

Generation: baby-boomers, Generation X, etc.

Income

Occupation

Education

Ethnicity

Nationality

Religion

Social class

(Life Style may segment the market by income class)


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Many of these variables have standard categories for theirvalues. For example, family lifecycle often is expressed as

bachelor, married with no children (DINKS: Double Income,No Kids), full-nest, empty-nest, or solitary survivor. Some ofthese categories have several stages, for example, full-nest I,II, or III depending on :

-the age of the children.

-educational background, and professional background-Family decision-making

(a CTV or a 2-wheeler purchase)


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Psychographic Segmentation

Psychographic segmentation groups customers according to their lifestyle.Activities, interests, and opinions (AIO) surveys are one tool for measuring

lifestyle. Some psychographic variables include: Activities

Interests

Opinions

Attitudes

Values

Behavioralistic Segmentation

Behavioral segmentation is based on actual customer behavior toward products.Some behavioralistic variables include:

Benefits sought

Usage rate

Brand loyalty

User status

Readiness to buy

Occasions

Behavioral segmentation has the advantage of using variables that are closely

related to the product itself. It is a fairly direct starting point for marketsegmentation


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Bases for Segmentation in Industrial Markets

Fewer in number and purchase larger quantities.

Evaluate offerings in more detail, and the decisionprocess usually involves more than one person.

Apply to organizations such as manufacturers andservice providers, as well as resellers, governments,

and institutions.

Many of the consumer market segmentation variablescan be applied to industrial markets.


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Locationcustomer location may be important in some cases.

Shipping costs may be a purchase factor for vendor selectionfor products having a high bulk to value ratio, so distance fromthe vendor may be critical.

In some industries firms tend to cluster togethergeographically and therefore may have similar needs within a

region.

Company TypeBusiness customers can be classified according to type as

follows:

Company size

Industry

Decision making unit

Purchase Criteria


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Behavioral CharacteristicsIn industrial markets, patterns of purchase behavior can be

a basis for segmentation. Such behavioral characteristics mayinclude:

Usage rate

Buying status: potential, first-time, regular, etc.

Purchase procedure: sealed bids, negotiations, etc.


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Choice of segments to target the market

measure the attractiveness andcapacity of the segment

estimate its size, purchasingpower, growth rate, presence ofcompetition, etc.

opt for an untapped segment

choose to operate in a segmentwhere there are already existing

players

e.g. CROSSROADS

targets clientele from uppermiddle-class customers

devoted to each of the fourshopping categorieswomen,kids, men, and home furnishings


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Why does an organisation need to segment a

market?

No single product can satisfy the needs of all customers.

What would happen ifAdidas sold only a single product? Howwell would it compete in the marketplace? What would be the- Impact on - Profit / sales / market share?

Consumers all have different needs and wants

Companies must consider - Individual Features & Benefitssought, and the individual characteristics of consumers


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Market segmentation in India

Marketer uses segmentation models based ondemographics, geo-demographics, SEC data,and benefits and usage

Prominent examples are McDonalds Nescafe

Caf Coffee Day Benetton


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-Chrysolyte.S

IMBA-3rdyr

1234108129

Documents

- Market Segment