Market Segmentation What is a market segment? Why is it important? What is a Market Segment? Set of potential customers Who have similar needs Who refer each other when buying Are alike in the way they: Perceive value View products and services Purchase products and services Why Define a Market Segment? Easier to understand customer needs Focus whole solution to a narrower set of customer needs Easier to become a leader in a smaller market (Big fish in small pond) More effective use of marketing Rupee Generally more profitable Levels and Patterns of Market Segmentation Levels of Market Segmentation Mass Micromarketing Niche Marketing Region City or metro size Climate Densit y Pacific, Mountain, West North Central, West South Central, East North Central, East South Central, South Atlantic, Middle Atlantic, New England Under 4,999; 5,000-19,999; 20,000-49, ,000,000-3,999,999; 4,000,000 and over Northern, southern, tropical Urban, rural, suburban HLL Lesancy (big soap), Philips introduced Bahadur in rural area Exporters segment the market as Western countries, African Countries. Geographic Segmentation Geographic segmentation Local Marketing : Target Marketing is leading to Marketing Programs tailored to the needs and wants of local customer groups. Tang Launches Eid campaign, Baskin Robbins Three Mile Marketing Wal-Mart opening Market side grocery stores McDonald's ties up with Chhota Bheem to lift desi image Demographic Variables Age Gender Family size Occupation Education Nationality Religion Income COLGATE DENTAL CREAM -DOUBLE PROTECTION ADULTS Packaging consist Red Color, Double Ring Double ring signifies Double Protection Helps to fight more germs. Unique super active foam Colgate regular mint flavor keeps you r breath fresh. COLGATE GEL (RED AND BLUE) YOUNGSTERS LAUNCHED IN TWO VARIABLE COLORS Red and Blue Same product line, same set of customers Highlights two aspects Super Transparency and Actrinse Featuring Fun Barbie Graphics Fun bubble fruit flavor Fights against bad breath and cavities. Target Kids ages 3 8 Behavioral Segmentation Occasions Benefits Usage rate User status Loyalty status Buyer- readiness stage Attitude toward product Regular occasion, special occasion Quality, service, economy, speed Light user, medium user, heavy user Nonuser, ex-user, potential, first-time, regular None, medium, strong, absolute Unaware, aware, informed, interested, intends to buy Enthusiastic, positive, indifferent, negative, hostile Lifestyle Psychographic Variables Club memberships Social activities TV viewing habits Hobbies Vacation preferences Compulsive Outgoing Authoritarian Ambitious Personality Requirements for Effective Segmentation Measurability the size, purchasing power and profiles Substantiality Large and Profitable one to serve Accessibility Effectively reached and served Actionability Effective programs can be designed for attracting and serving the segments. Differentiable Conceptually differentiable Segment Exercise Segment the Market for the following categories: Shampoo Soap Toothpaste Mobile phones Hair Oil Pen Hair colours Laptops Camera Chocolates Undifferentiated Targeting Mass market philosophy- 1 mix for entire market (commodity products or brand new products) Advantage: Saves Rupees in production/marketing expenses Usually a sort of lazy, unimaginative approach Problems: More exposed to competitive threats E.g Coca Cola ( Non- alcoholic beverage market, IBM ( computer market ), General Motors ( Vehicle Market) Concentrated Targeting (#2) Select a market niche (one segment of a market ) Be able to focus and specialize the marketing mix Concentrate resources rather than spread too thinly Better knowledge about segment Operating economies thru specializing its Production, Distribution, and Promotion If it captures segment leadership, a firm can earn higher profits Recycled paper producer Wizard India focus on marketing for Greeting And Wedding cards, Oshkosh Truck for Airport rescue trucks M&M on Tractors to Agriculture Markets Zodiac on formal shirts for executives and Professionals Multisegment Targeting (#3) Strategy that chooses two or more well-defined market segments and develops distinct marketing mix for each Product same, different promotional appeal, rather than completely different marketing mix, increases costs considerably. Costs of Multisegment Targeting $ Product design costs $ Production costs $ Promotion costs $ Inventory costs $ Marketing research costs $ Management costs $ Cannibalization One-to-One Marketing An individualized marketing method that utilizes customer information to build long- term, personalized, and profitable relationships with each customer. One-to-One Marketing Focuses on Share of Customer Develops Customers Finds Products for Customers Mass Marketing Focuses on Share of Market Develops Products Finds Customers for Products Ethical choice of Market Targets Socially responsible Marketing calls for targeting that serves not only the companys interests, but also the interests of those targeted Pizza hut reading programs and Nickelodeon magazines Did You Know To tackle Child Obesity in France, French Diet guru Pierre Dukan has recommended giving kids extra marks in their final year exams if they kept a body mass index between 18 and 25. Differentiation and Positioning Product position is the way the product is defined by consumers on important attributesthe place the product occupies in consumers minds relative to competing products Perceptions Impressions Feelings Toyotas Land Cruiser Differentiation and Positioning Differentiation and Positioning Positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions Differentiation and Positioning Identifying a set of possible competitive advantages to build a position Choosing the right competitive advantages Selecting an overall positioning strategy Developing a positioning statement Choosing a Differentiation and Positioning Strategy Differentiation and Positioning Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices Identifying Possible Value Differences and Competitive Advantages Differentiation and Positioning Identifying a set of possible competitive advantages to build a position by providing superior value from: Choosing a Differentiation and Positioning Strategy Product differentiationService differentiationChannel differentiationPeople differentiationImage differentiation Differentiation and Positioning Difference to promote should be: Choosing the Right Competitive Advantage: How many differences to promote, Which differences to promote. Important Distinctive Superior CommunicablePreemptiveAffordable Profitable Differentiation and Positioning Brands Value proposition is the full mix of benefits upon which a brand is positioned Selecting an Overall Positioning Strategy