Unit 6- Market Segmentation

7/31/2019 Unit 6- Market Segmentation

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Meaning

Market Segmentation is the process of dividing aheterogeneous market into homogeneous sub-units

A market segment consists of group of customerswho share a similar set of needs and wants


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Bases for market segmentation

Demographic segmentation Consumer wants, usage rates, product and brand

preference is always associated with demographic variables.

Age and life cycle stage

( sops for children, magazines, television channels, FMCG

products)

Life stage

( Insurance companies)


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Gender ( male and female)

Shopping behavior

Male- Goal directed, more practical, invited to touch a product,

read more information about product, no negotiation.Female- more emotional, ready to pick the

product, always attracted by packaging, negotiations.

Women buy the product for family, men for personal use.


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Income

Ability to purchase

Lifestyles, attitudes and values Product in small packs to serve poor.

Generation ( music, moves, clothes, news papers etc)

Social class ( Cars,clothing,home furnishing,hoteling etc.)


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Bases for market segmentationEducation Illiterate, school level, undergraduate, SSC/HSC, graduate,

postgraduate etc. Buying habits change as per the qualifications

Occupation Unskilled,skilled,businessman, industrialist, officer,

supervisors, executives, directors etc.


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Bases for market segmentationPsychographic segmentation Market segment based on the psychology, personality,

lifestyles and values. Religion

Food habits ( McDonald )

Dress codes

Life style ( wrist watches,clothes,shoes


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Behavioral segmentation

Decision role-

( initiator, influencer, decider, buyer and user) Pharmaceutical company-doctors, women- kitchen appliance

Behavioral variables:

- need recognition as per the occasions. ( Greeting cards,gifts for festivals)

Benefits- ( shampoo, soaps )


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Loyalty Status

Hard-core loyal- buy only one brand

Split Loyal- buy two or three brands Shifting loyal- shift from one brand to another

Switchers- no loyalty to any brand

1. study of products strength

2 brand competitiveness

3. study of marketing weaknesses

4. policy of price cutting


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Attitude 1.Enthusiastuc

2. positive

3.indifferent

4.negative

5. hostile


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Bases for market segmentation (industrial goods)

Demographic segmentation

Industry- which industry should we serve (

telecom, automobile, textile) Company Size- what size company should we target

Location what geographic markets should we cover

Operating variables

Technologywhat customer technology to be focused(customer technology, our technology should be match with it)

User or nonuser status- heavy, medium or nonuser

Customer capabilities- need of few or all services


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Purchasing approaches

Purchasing function organizations( centralized or

decentralized structure)

Power structure (Engineering, financially or marketingdominated)

Nature of existing relationships ( strong or weakrelationship)

General purchase policies ( leasing, service contracts, systempurchase, or sealed bidding)

Purchasing criteria ( quality, service or price)


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Situational factors

Urgency ( quick and sudden delivery or service)

Specific application (focus on certain application of

product instead of all)

Size of order- ( large or small orders)

Personal characteristics

Buyer Seller similarity- (people and values are similar)

Attitude towards risk ( risk taking or risk avoidingcustomer )

Loyalty ( high loyalty to their supplier )


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Criteria for market segmentation

Identity ( difference between segments, identified by common

characteristic, should display similar behavior)

Accessibility- (awareness of products and services, product mustreach them in reasonable cost )

Responsiveness- ( the segment must react to change inmarketing mix)

Size ( substantiality)- ( large size to make it profitable, luxurygoods


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Criteria for effective market segmentation

Nature of demand ( different demand patterns in differentsegments, demand quantities)

Measurability - ( should be able to measure the changingbehavioral pattern of customer, car market- economy, status, quality,

safety comforts)


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Patterns of target market selection

Single-Segment Concentration

Strong knowledge of segment needs

Strong market presence Economy in production, distribution and promotion

Leadership

High return on investment

Ex. Mahindra & Mahindra Agricultural tractors

Zodiac formal shirts for executives

Britannia- Biscuits segments


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Selective specialization

Different products different segments

Diversifying firms risk

Ex.= LG, Videocon

Product specialization Single product for different segment

Ex. Electronic firm, builders


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Market specialization

Different products single segment

Serving many needs of the customer segment

Full market coverageAll type of products to all segments

Full market coverage strategy

HUL, Honda, Maruti Suzuki


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Market positioning

Positioning is the act of developing the companys offeringsand image to occupy a distinct place in the minds of the

target market

Brand positioning involves implanting the brands uniquebenefits and the difference in the customers mind.

To occupy a unique place in the mind of customer

Maggi noodles- connivance food for children

Dove soap- high moisturizer content Vicks Veporub - cold and cough relief.


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Qualities of a successful positionRelevance Product difference should be relevant to segment.

Relevance about the benefits. ( fair and lovely) Character of the product should be focused.

Distinctiveness There should be some difference from other products

Unique quality ( Boss, golden eye technology. Airteldigital TV pause, record technology)


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Qualities of a successful positionCoherence: Intergeneration of all forms of communication

Similarity in all forms of communication ( premium brands available in discount stores)

Commitment Commit only what you can provide.

Stay with commitment


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Qualities of a successful positionDurability It takes time to take position in the mind of customer

Overnight success is not possible

Clarity Clarity in communication to the customer

Clear information to the customer

Thank you

Documents

Unit 6- Market Segmentation