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TARGET MARKET 1
Target Marketing
TARGET MARKET 2
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
At the end of this module the learning outcomes are.
1. Why there is a need to segment markets?
2. What are the various levels of market segmentation?
3. What are bases for segmenting consumer markets?
4. How the markets are targeted?
TARGET MARKET 3
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
SUGGESTED READINGS
1. Marketing Management by Philip Kotler, chapter 9 &10th edition.
2. Marketing Management by Ramaswami and Namkumari, Chapter 6.
TARGET MARKET 4
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
MARKET SEGMENTATION The need
Cannot serve all customers of this universe.No company has that kind of resources.Customers
Too numerous Diverse in their buying requirement
Need to identify the market segments that it can serve more effectively
TARGET MARKET 5
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
MARKET SEGMENTATION.- The universe is heterogeneous.- Divide the universe into market
segments, where buying or need requirements is same i.e. homogenous.
- Attack one or few market segments.- This is target marketing.
TARGET MARKET 6
Target Marketing
Steps in the Targeting Process:
Market Positioning
Market Targeting
Market Segmentation
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Target MarketingTarget marketing requires marketers to take three major steps:
Identify and profile distinct groups of buyers who differ in their needs and preferences (market segmentation).Select one or more market segments to enter (market targeting).For each target segment, establish and communicate the key distinctive benefit(s) of the company’s market offering (market positioning).
TARGET MARKET 8
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
Mass Marketing
Seller engages in mass production.
Mass distribution.
Mass promotion of one product for all buyers.
Example
Coke in 60 & 70s,
Sold in India
One size 200 ml.
TARGET MARKET 9
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
Arguments for mass market.Creates largest potential market Leads to lower cost Lead to lower prices. Higher margins
Why criticised Market fragmentation Splintering of the market Mass media proliferation.Distribution channel proliferation
Difficult to practice “one size fits all’’ marketing.
TARGET MARKET 10
Using Market Segmentation
Segment MarketingSegment Marketing
Niche MarketingNiche Marketing
Local MarketingLocal Marketing
Individual MarketingIndividual Marketing
Levels of Micromarketing
TARGET MARKET 11
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
MARKET SEGMENTATION LEVELS 1. Segment Marketing
Consists of a large identifiable group within a market with similar wants, purchasing power, attitudes or buying habitsEach segment’s buyers are assumed to be quite similar in needs /wants No two buyers all alikeFlexible market offerings
TARGET MARKET 12
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
Flexible market offering consists of two parts
1. Naked solution - Consists of products and service
elements that all segment members value
2. Options - That some segment members value- Each option carries additional prices.
TARGET MARKET 13
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
Example – Segment Marketing Delta Airlines
Economy Class passenger - Seat - Food - Soft Drink
All of them – naked solution Charges extra
- Alcoholic beverages - Earphones
TARGET MARKET 14
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
Segment marketing – benefits- More fine tuned product- Price it appropriately for the target
audience - Fewer competitors - Easier choice of
• Distribution channels • Communication channels
TARGET MARKET 15
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
Niche marketing - Narrowly defined group- Needs are not well serviced - Seeking a distinctive mix of benefits - Fairly small market size - Normally attract one or two players - Customers willing to pay a premium
price.
TARGET MARKET 16
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
1. High end designer wear like Gucci, Chanel, Tarun Tahiliani etc.
2. Automobiles like Ferrari, Maserati, Lamborghini etc.
WHAT IS A NICHE TODAY MAY BECOME A SEGMENT TOMORROW AND VICE VERSA!!
TARGET MARKET 17
2. Ostrichesonline.com - Selling Ostrich derived products - On line - 2 million $ sales in 1998- Visitors can buy
Ostrich meat Feathers Leather jackets Videos Eggshells Skin care products derived from ostrich Body oil
TARGET MARKET 18
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
3. Local marketing - Needs of local customer groups
Example Kraft Cheese Helps supermarket chains Identify cheese assortment and shelf layout Optimise cheese sales in
- Low- Middle- High income stores - Different ethnic groups
TARGET MARKET 19
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
4. Individual marketing - Ultimate level of segmentation - Segment of one.- One-to-one marketing.- Customised to individuals - Tailor made- Cobbler designed shoes.- Customised industrial products
Use of new technologies - Computers.- Databases
Customised offering.
TARGET MARKET 20
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
Example
1. Dilip Chhabria -Designer cars - Customised cars - Small market - About 500 a year - Each car is unique, high prices
TARGET MARKET 21
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
Turning to Mass customisationIt is the ability to prepare on a mass basis
individually designed products and communication to meet each customer’s requirements.
Example.Levi’s Jeans
- Customer measurements.- Jeans ready in 8 hrs.
Mattel Barbie com Design your own Barbie doll.
TARGET MARKET 22
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
- Choose Doll’s • Skin tone • Eye colour • Haircolor.• Clothes • Accessories • Her likes and dislikes.
- When Barbie delivered.• Doll’s name on the package• Computer generated paragraph about her
personality
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Using Market Segmentation
Basic Market-Preference Patterns
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Using Market Segmentation
Needs-based segmentationSegment identificationSegment attractiveness
Segment profitability
Segment positioning
Marketing-mix strategy
Needs-based Segmentation Process
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Segmentation
Measurable Actionable
Substantial Accessible
Differentiable
Characteristics of Effective Segments
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Segmenting Consumer Markets
Bases for Segmentation
GeographicDemographicPsychographicBehavioral
Nation or countryState or regionCity or metro sizeDensityClimate
TARGET MARKET 27
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
Example Geographic
Ford Ikon in India 1. World car 2. Changes for India
1. Higher suspension 2. Larger size air conditioner, higher ambient
temperature 3. Lower average speeds 4. Handle adulterated fuel5. Petrol / diesel adulterated with kerosene
TARGET MARKET 28
Segmenting Consumer Markets
Bases for Segmentation
GeographicDemographicPsychographicBehavioral
Age, race, gender
Income, education
Family size
Family life cycle
Occupation
Religion, nationality
Generation
Social class
TARGET MARKET 29
Segmenting Consumer Markets
Bases for Segmentation
GeographicDemographicPsychographicBehavioral
LifestyleActivities
Interests
Opinions
Personality
Core values
TARGET MARKET 30
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
a. Lifestyle Nestle Classic
- Pleasure of making coffee Adding milk, sugar, coffee in hot milk
Nestle “3 in 1 - Office goers- Paucity of time - Espresso feeling - Milk sugar coffee premixed
TARGET MARKET 31
b. Personality
- Targeting consumer personality - Customer of Ford
Independent Impulsive Masculine Alert to changeSelf confident
- Customers of ChevroletConservative. Thrifty Prestige.Conscious.Avoid extremes
TARGET MARKET 32
MARKET SEGMENTATION AND SELECTING TARGET MARKETS
C. VALUES
Tourists to Disneyland • Fun seekers • Families visit
Tourists to Udayan child welfare unit at Kolkatta • Stay and meet poor children • Share thoughts• Donate
TARGET MARKET 33
Segmenting Consumer Markets
Bases for Segmentation
GeographicDemographicPsychographicBehavioral
Occasions
Benefits
User status
Usage rate
Loyalty status
Buyer-readiness
Attitude
TARGET MARKET 34
Segmenting Consumer Markets
Multi-attribute segmentation via geoclustering combines multiple variables to identify smaller, better-defined target groups
TARGET MARKET 35
Market Targeting Strategies
Evaluating and selecting market segments requires assessing the segment’s overall attractiveness in light of company’s objectives and resources.
Five patterns of target market selection can then be considered.
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Market Targeting Strategies
Five Patterns of Target Market Selection
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Market Targeting Strategies
Targeting multiple segments may result in cost economies
Higher costs using differentiated marketing include:
Product modification cost
Manufacturing cost
Administrative cost
Inventory cost
Promotion cost