Market Segmentation -Unit 2

7/27/2019 Market Segmentation -Unit 2

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Market segmentation

Unit 2 (part2)


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Market Segmentation

Market Segmentation is the sub-dividing ofcustomers into homogenous sub-set ofcustomers where any sub-set may conceivablyselected as market target to be reached with

distinct Marketing Mix

Philip Kotler


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Segmentation is essentially the identification ofsubsets of buyers within a market that share similarneeds and demonstrate similar buyer behaviour. Theworld is made up of billions of buyers with their own

sets of needs and behaviour. Segmentation aims tomatch groups of purchasers with the same set ofneeds and buyer behaviour. Such a group is knownas a 'segment'.


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SEGMENTATION

Segmentation is the process of dividing the market of a

product or service in smaller groups of customers. Segmentation is the process of grouping people or

organizations within a market according to similar needs,characteristics, or behaviors.

The customer in one group should

Buy the product for the same purpose.

Use the product in the same way.

Buy the product in same way's

Customers of one segment should be different from

customers of any other segment in one or more of theabove parameters.

Segmentation of a market makes sense only when thecompany has to design a separate value proposition for

each segment.


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Market segment is a portion of a larger market

whose needs differ somewhat from the larger

market.

Market segmentation involves four steps:

Identifyingproduct related

need sets

Groupingcustomers with

similar needs

Describing eachgroup

Selecting anattractive

segment to serve


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Benefits of segmentation

Helps in achievingbetter competitive

position

Effective positioning of

brands Minimize overlapping

Identify gaps in market

which represent new

product opportunities

Identify potential new

buyers for the product


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Ex :-

1. Sportspersons buy Nike shoes to enhance theirperformance, whereas the same shoes are used as

casual shoes by some other people.

2. People drive their cars in different ways. Some arerough" drivers, while others take it easy on the

road.

3. The same grocery items are bought both atneighborhood stores and at upscale stores.


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Criteria for Segmenting

It is possible to measure.

It has to be large enough to earn profit.

It has to be stable enough that it does not vanish aftersome time.

It is possible to reached to potential customer viaorganization's promotion and distribution channel.

It is internally homogeneous (potential customers in thesame segment prefer the same product qualities).

It is externally heterogeneous that is Heterogeneitybetween segments (potential customers from differentsegments have basically different quality preferences).

It responds similarly to a market stimulus.

It can be cost-efficiently reached by market intervention.

useful in deciding on marketing mix


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Why Segmentation?

To develop marketing activities

Increase marketing effectiveness

Generate greater customer satisfaction

Create savings

To identify strategic opportunities and niches Allocation of marketing budget

Adjustment of product to the market need

To estimate the level of sales in the market

To overcome competition effectively To develop effective marketing programmes

To contribute towards achieving company goals


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NON SEGMENTED MARKETS

Very few products or services can satisfy all

customers in a market.

Not all customers want to buy the same product.

Indian market fed it with one offering for decades

Ex :- Ambassador, Fiat and later Maruthi 800

Now a new car launched in the Indian market

once a month, sometimes even by the same

company.


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Customer Value Proposition

Segmentation refers to the process of

identifying clusters of customers who desirethe same value proposition.

Customer Value Proposition is a unique mix of

product and service attributes, customerrelations and corporate image that a company

offers.

Customer Value Proposition defines how theorganization will differentiate itself from

competitors to attract, retain and deepen

relationships with target customers.


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The value proposition helps an organization

connect its internal processes to improve

outcomes with its customers. An effective process of segmentation should

result in a different set of internal processes

for each segment, Because only a unique set of internal

processes will create a unique value

proposition for the customer. These unique set of internal processes will

necessitate creation of separate organizations

to serve each of the segments.


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Selecting Bases for Segmenting Consumer Markets

A company can segment a market in many

ways. Segmentation variables are the criteria that a

company uses to segment its market.

The criteria that a company chooses should begood predictors of differences in customer

needs and the way they buy.

Three important segmentation variables tosegment a consumer market are; Behavioural,

Psychographic, and Profile variables.


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Characteristics of an effective

segmentation

Measurability Accessibility

Substantiality

Defensibility

Durability

competitiveness


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Life-cycle stage: Dividing a market into different groups based on which stage in the life-cycle,

presented in the table below, reflects the fact that people change the goods and services they

want and need over their lifetime.

Life-cycle stages

Bachelor Stage young, single people not living at home

Newly Married Couples young, no childrenFull Nest I youngest child under six

Full Nest II youngest child six or over

Full Nest III older married couples with dependent children

Empty Nest Iolder married couples, no children living with

them

Empty Nest IIolder married couples, retired, no children living at

home

Solitary Survivor I in labour force

Solitary Survivor II retired


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Demographic segmentation examples


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Geographic segmentation


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Psychographic segmentation


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Behavioral segmentation examples


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SRI VALS - Life Style Segmentation


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SRI VALS - Life Style Segmentation

Innovator. These consumers are on the leading edge ofchange, have the highest incomes, and such high self-esteem and abundant resources that they can indulge inany or all self-orientations. They are located above therectangle. Image is important to them as an expression oftaste, independence, and character. Their consumerchoices are directed toward the "finer things in life."

Thinkers. These consumers are the high-resource groupof those who are motivated by ideals. They are mature,responsible, well-educated professionals.

Theirleisure activities center on their homes, but they arewell informed about what goes on in the world and areopen to new ideas and social change. They have highincomes but are practical consumers and rationaldecision makers.
http://en.wikipedia.org/wiki/Independencehttp://en.wikipedia.org/wiki/Personahttp://en.wikipedia.org/wiki/Leisurehttp://en.wikipedia.org/wiki/Social_changehttp://en.wikipedia.org/wiki/Social_changehttp://en.wikipedia.org/wiki/Social_changehttp://en.wikipedia.org/wiki/Social_changehttp://en.wikipedia.org/wiki/Leisurehttp://en.wikipedia.org/wiki/Personahttp://en.wikipedia.org/wiki/Independence


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Bel ievers. These consumers are the low-resource groupof those who are motivated by ideals. Theyare conservative and predictable consumers who favor

American products and established brands. Their livesare centered on family, mosque, community, and thenation. They have modest incomes.

Achievers. These consumers are the high-resourcegroup of those who are motivated by achievement. They

are successful work-oriented people who get theirsatisfaction from their jobs and families. Theyare politically conservative and respect authority and thestatus quo. They favor established products and servicesthat show off their success to their peers.

Str ivers. These consumers are the low-resource groupof those who are motivated by achievements. They havevalues very similar to achievers but have fewereconomic, social, and psychological resources. Style is

extremely important to them as they strive to emulatepeople they admire.
http://en.wikipedia.org/wiki/Conservativehttp://en.wikipedia.org/wiki/Familyhttp://en.wikipedia.org/w/index.php?title=Mosque_body&action=edit&redlink=1http://en.wikipedia.org/wiki/Communityhttp://en.wikipedia.org/wiki/Politically_conservativehttp://en.wikipedia.org/wiki/Politically_conservativehttp://en.wikipedia.org/wiki/Communityhttp://en.wikipedia.org/w/index.php?title=Mosque_body&action=edit&redlink=1http://en.wikipedia.org/wiki/Familyhttp://en.wikipedia.org/wiki/Conservative


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Experiencers. These consumers are the high-resourcegroup of those who are motivated by self-expression. Theyare the youngest of all the segments, with a median age of

25. They have a lot of energy, which they pourinto physical exercise and social activities. They are avidconsumers, spending heavily on clothing, fast-foods,music, and other youthful favorites, with particularemphasis on new products and services.

Makers. These consumers are the low-resource group ofthose who are motivated by self-expression. They arepractical people who value self-sufficiency. They arefocused on the familiar-family, work, and physicalrecreation-and have little interest in the broader world. As

consumers, they appreciate practical and functionalproducts.

Surv ivors. These consumers have the lowest incomes.They have too few resources to be included in any

consumer self-orientation and are thus located below therectangle. They are the oldest of all the segments, with a
http://en.wikipedia.org/wiki/Physical_exercisehttp://en.wikipedia.org/wiki/Employmenthttp://en.wikipedia.org/wiki/Employmenthttp://en.wikipedia.org/wiki/Physical_exercisehttp://en.wikipedia.org/wiki/Physical_exercisehttp://en.wikipedia.org/wiki/Physical_exercise


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Thinkers

Theyre mature,satisfied, and

reflective people

motivated by

ideals and who

value order,

knowledge, andresponsibility.

They seek

durability,

functionality,

and value in

products. Herewere

considering

Mont-Blanc


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Experiencers

Theyre theyoung

enthusiastic,

impulsive

people who

seek varietyand

excitement.

They spend a

comparatively

high proportion

of income on

fashion,

entertainment,

and socializing.
http://d/IMT%20DUBAI/PPT/Ray%20Ban%20Wayfarer%20Commercial.avihttp://d/IMT%20DUBAI/PPT/Ray%20Ban%20Wayfarer%20Commercial.avi


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Achievers

Theyre successful,

goal oriented people

who focus on career

and family. They

favour premium

products that

demonstrate success

to their peers. In thissegment we can

consider most of the

premium timeless

luxury watches, such

as Rolex, TAG Heuer,

and Omega. NeilArmstrong gave

Omega speed master

the ultimate

endorsement when he

wore it on his historic

moon walk in 1969.


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Believers

Theyre conservative,

conventional, andtraditional people with

concrete beliefs. They

prefer familiar, Indian

made products and are

loyal to established

brands. Here we

consider Bisleri. As one

of the worlds most

trusted brands. Bisleri

is leading the way in

bringing about positivechange in our daily

lives. They believe in

being a part of a

meaningful movement

called the Aqua Green

Revolution


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Strivers

Theyre trendy fun

loving people who are

resource constrained.

They favour stylish

products that emulatethe purchases of those

with greater material

wealth. They favour

stylish products that

emulate the purchases

of those with greatermaterial wealth


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MakersTheyrepractical, down

to earth, self

sufficient

people who

like to work

with theirhands. They

seek Indian

made products

with a practicalor functional

purpose.


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Survivors

Theyreelderly,

passive

people

concerned

about change

and loyal to

their favourite

brands.

While to the

consumers it's

a beacon offaith and trust,

competitors

look upon

them as an

example of

marketing

Documents

Market Segmentation -Unit 2