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Segmentation Strategies
Using our limited resources wisely
• Mass market approach• Large segment approach• Adjacent segment approach• Multisegment approach• Small segment approach• Niche approach•Mass customization approach
Segmentation Strategies
Mass Market Approach: a genericvalue proposition built around the corecustomer need and the business’sgeneric positioning strategy
Use when:
•differences in customer needs are small
Segmentation Strategies
“Large Segment” Approach: addressone set of core customer needs
Use when:
•resources are limited•advantage: benefits of segmentationwhile providing a relatively largemarket demand
Segmentation Strategies
“Adjacent Segment” Approach: moveinto the next most attractive segment
Use when:
•growth is desired but•resources are limited
•advantage: use profits from primarysegment to move into closelyrelated segment
Segmentation Strategies
“Multisegment” Approach: multiple market-based strategy where several segments aretargeted, each with its own marketing mix
Use when:
•growth is desired butresources are limited
•advantage: tailor our efforts toward mostattractive segments•improve efficiencies•portfolio effect
Segmentation Strategies
“Small Segment” Approach: focus on the smallestsegment
Use when:
•resources are limited, specialized capabilities•small segments are ignored by competitorspursuing mass market or large segment strategies
Segmentation Strategies
“Niche” Approach: focus on a portion of the smallest segment
Use when:•some needs cannot be fully addressed within a single segment
Segmentation Strategies
“Mass Customization” Approach: complete opposite of mass market strategy; each unique group of customer needs is a niche
Use when:•database marketing allows customization within each segment
•combines the advantages of niche segment strategy with the breadth of opportunity available in a multisegment strategy•customers create their own segments
•Disadvantages:•increased price of customized products•delay in receipt of custom-made products•need for customers to invest time in specifying their preferences before the product can be produced
So…
• Each segmentation strategy has its own merits and limitations
• Segmentation is the first step in Customer Relationship Management
• Demographics alone seldom provide much guidance for product development or message strategies – we need to group people on the basis of similar needs