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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 Segmentation
MarketMarket
MarketSegmentMarket
Segment
MarketSegmentation
MarketSegmentation
People or organizations with needs or wants and the ability and
willingness to buy
People or organizations with needs or wants and the ability and
willingness to buy
A subgroup of people or organizations sharing one or more characteristics that cause them to
have similar product needs.
A subgroup of people or organizations sharing one or more characteristics that cause them to
have similar product needs.
The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.
The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.
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.
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
Steps in Segmentation, Targeting, and PositioningSteps in Segmentation,
Targeting, and Positioning
1. Identify Basesfor Segmenting the Market
2. Develop Profilesof Resulting Segments
3. Develop Measuresof Segment Attractiveness
4. Select TargetSegment(s)
5. Develop Positioningfor Each Target Segment
6. Develop MarketingMix for Each Target Segment Market
Positioning
MarketTargeting
Market Segmentation
Levels of Market SegmentationLevels of Market Segmentation
Mass MarketingSame product to all consumers
(no segmentation)
Mass MarketingSame product to all consumers
(no segmentation)
Segment MarketingDifferent products to one or more segments
(some segmentation)
Segment MarketingDifferent products to one or more segments
(some segmentation)
Micro marketingProducts to suit the tastes of individuals and locations
(complete segmentation)
Micro marketingProducts to suit the tastes of individuals and locations
(complete segmentation)
Niche Marketing Mahindra Corporate
Different products to subgroups within segments(more segmentation)
Niche Marketing Mahindra Corporate
Different products to subgroups within segments(more segmentation)
Local Marketing
Tailoring brands/ promotions to local customer groups
Individual Marketing
Tailoring products/ programs to individual customers
Market Segmentation Categories and Selected Variables
SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESGeographic Segmentation ..ad clip\23309_201083_Print_inside_529x529.jpg
Climate
Density of area
City Size
Region North, East, West, SouthMajor metropolitan areas, small cities, towns
Urban, suburban, exurban, rural
Temperate, hot, humid, rainy
Demographic Segmentation ..\ad clip\idbi_bank_03012007.jpg
Income
Marital statusSexAge Under 11, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+
Male, femaleSingle, married, divorced, living together, widowed
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
Occupation
Education Some high school, high school graduate, some college, college graduate, postgraduate
Professional, blue-collar, white-collar, agricultural,
continued
SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESPsychological Segmentation ..\ad clip\psychographic seg.jpg
Learning-involvement
Perception
Personality
Needs-motivation Shelter, safety, security, affection, sense of self-worth
Extroverts, novelty seeker, aggressive, low dogmatic
Low-risk, moderate-risk, high-risk
Low-involvement, high-involvement
Subcultures (Race/ethnic)
Religion
Cultures
(Lifestyle) Segmentation..\ad clip\woodland.jpg
Economy-minded, couch potatoes, outdoors enthusiasts, status seekers ad clip\ZOYA.jpg ..\ad clip\ALLEN SOLLY.jpg
Indian, Anglo-Indian
Hindu, Shikh, Jewish, Moslem, other
Punjabi, South-Indian, Bengali, Marathi
Family life cycle
Social class Lower, middle, upper
Bachelors, young married, full nesters, empty nesters
Attitudes Positive attitude, negative attitude
Sociocultural Segmentation ad clip\incredible_india_28032006.jpg ad clip\TIMES OF INDIA.jpg
continued
SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESUse-Related Segmentation
Brand loyalty
Awareness status
Usage rate Heavy users, medium users, light users, non users
Unaware, aware interested, enthusiastic
None, some, strong
Use-Situation Segmentation
Location
Objective
Time Leisure, work, rush, morning, night ..\ad clip\kurkure.jpg
Personal, gift, fun, achievement ..\ad clip\naukri.jpg
Home, work, friend’s home, in-store
Person Self, family members, friends, boss, peerBenefit Segmentation Convenience, social acceptance, long lasting, economy,
value-for-the-money
Bases for Segmenting Business MarketsBases for Segmenting Business Markets
Basesfor Segmenting
BusinessMarkets
Basesfor Segmenting
BusinessMarkets
GeographicBuyer
Characteristics
SituationalFactors
OperatingCharacteristics
PurchasingApproaches
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.
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.
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?
Market TargetingEvaluating Market Segments
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.
POSITIONING
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
Positioning
Developing a specific
marketing mix to
influence potential
customers’ overall
perception of a brand,
product line, or
organization in
general.
Positioning for Competitive Advantage: Strategies
Positioning for Competitive Advantage: Strategies
Against aCompetitor
..\ad clip\xylo.jpg
Against aCompetitor
..\ad clip\xylo.jpg
UsageOccasions
..\ad clip\scorpio.jpg
UsageOccasions
..\ad clip\scorpio.jpg
Away fromCompetitors
..\ad clip\outlander.jpg
Away fromCompetitors
..\ad clip\outlander.jpg
ProductAttributes..\ad clip\i10.jpg
ProductAttributes..\ad clip\i10.jpg
ProductClass ad clip\polo.jpg
ProductClass ad clip\polo.jpg
BenefitsOffered
..\ad clip\spark.jpg
BenefitsOffered
..\ad clip\spark.jpg
User Class..\ad clip\Mahindra Quanto.jpg
User Class..\ad clip\Mahindra Quanto.jpg
BB
AA
EEDD
CCHHGG
FF
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
Point of Parity (POP) &
Point of Difference (POD)
POP & POD
• Points-of-Parity-Shared brand values–Necessary–Competitive
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
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