IDENTIFYING MARKET SEGMENTS AND TARGETS

Presented to:- Prof. T. S. Shibin

Prepared by :- Ashish Jaint

MARKET SEGMENT

A market segment consists of a group of

Customers who share a similar set of needs

And wants.

MAJOR SEGMENTATION VARIABLES

These are divided in four parts-

- Geographic segmentation

- Demographic segmentation

- Psychographic segmentation

- Behavioral segmentation

GEOGRAPHIC SEGMENTATION

Geographic segmentation divides the market into

Geographical units such as nations, states, regions,

Counties, cities, or neighborhoods.

Exam.- Region

City

Rural and semi- urban areas

DEMOGRAPHIC SEGMENTATION

Demographics are statistical measures of significant facts about a population, starting with its size and including such other characteristics as age, gender, housing, mobility, income, occupation, education etc.

Demographic variables are often associated with consumer needs and wants.

AGE- Consumer wants and abilities change with age.

E.g.- Hungama channel for children's and Astha channel for older people

LIFE STAGE – People in the same part of life cycle may differ in their life stage. It defines a person’s major concern such as getting married, deciding to buy a home, sending a child to school, taking care of older parent etc.

E.g.- Insurance companies offer various schemes like child education and products for retired people.

Cont…

GENDER- Men and women have different attitudes and they vary in their shopping behavior as well.

E.g.- Mahindra Rodeo uses Kareena kapoor as its brand ambassador, Emami launced a fairness cream for men.

INCOME- It determines the ability of consumers to participate in the market exchange.

E.g.- TAG Heuer and rolex watches for rich people, and titan or maxima For medium income peoples.

SOCIO-ECONOMIC CLASSIFICATION- Based on the combination of two factors- Income and education level.

PSYCHOGRAPHIC SEGMENTATION

Psychographics is the science that uses psychology and demographics to understand consumers.

In psychographic segmentation, buyers are divided into different groups on the basis psychological/personality traits, lifestyle, or values.

Values, lifestyles and religions affect product/brand choice of consumer.

Cont….

• One of the most popular commercially available classification systems based on psychographic measurements is strategic business insight’s (SBI) VALS ( Value and Lifestyle) frame work.

• The main dimensions of VALS segmentation framework are consumer motivation (Horizontal dimension) and consumer resources ( vertical dimension ).

• Consumers are motivated by three primary motivations:

- Ideals

- Achievement

- Self-expression

THE VALS SEGMENTATION SYSTEM:AN EIGHT-PART TYPOLOGY

BEHAVIORAL SEGMENTATION

• Marketers divide buyers into groups on the basis of their knowledge of, attitude towards, use of, or response to a product.

NEEDS & BENEFITS- The needs and wants of a product varies from person to person.

DECISION ROLES- People play 5 roles in buying decision.

Initiator, influencer, decider, buyer and user.

USER AND USAGE- REAL USER AND UASAGE-RELATED VARIABLES- Marketers believe variables related to various aspects of users or their usage- occasions, user status, usage rate, buyer-readiness stage, and loyalty status- are good starting points for constructing market segments.

Cont…

• Occasions- Occasion’s mark a time of day, week, month, year, or other well-defined temporal aspects of a consumer’s life.

E.g.., Cards on Christmas and new year & Friendship bands on Friendship day.

• User status- Every product has its nonusers, ex-users, potential users, first-time users and regular users.

E.g., Donors in blood banks and Johnson Baby products.

• Usage Rate- We can segment market into light, medium and heavy product users.

Cont…

• buyer readiness:- some people are unaware of the product

Some are aware, some are informed , some are interested,

Some are desire the product, some intend to buy.

- Marketers can employ a marketing funnel to break down the market into different buyer readiness.

- Marketers need to educate, inform, and persuade consumers so that they start accepting the new offer.

• Loyalty Status- Company can divide market on the basis of degree of brand loyalty.

Hard-core loyals, Split loyals, Shifting loyals, Switchers

Cont…

Attitude:- five consumer attitudes about products are

Enthusiastic, positive, indifferent, negative, and hostile.

e.g.- in political campaign workers use attitude to determine:

- How much time to spend with each voter.

- They thank to enthusiastic voters and remind to vote them.

- reinforce those are positively disposed.

- Try to win the votes of indifferent voters.

- Spend no time trying to change the attitudes of negative and hostile voters.

Cont…

Multiple bases:- combining different behavioral bases

Can provide a more comprehensive and cohesive view

Of a market and its segments.

BASES FOR SEGMENTING BUSINESS MARKETS

Demographic1. Industry: which industries should we serve?

2. Company size: what size companies should we serve?

3. Location: what geographical areas should we serve?

Operating Variables1. Technology: what customer technologies should we focus on?

2. User or nonuser status: should we serve heavy users, medium users, light users, or nonusers?

3. Customer capabilities : should we serve customers needing many of few services?

Cont…

PURCHASING APPROACHES

1. Purchasing-function organization: should we serve companies with highly centralized or decentralized purchasing organization?

2. Power structure : should we serve companies that are engineering dominated, financially dominated and so on?

3. Nature of existing relationships; Should we serve companies with which we have strong relationship or simply go after the most desirable companies?

4. General purchasing policies: should we serve companies that prefer leasing? Service contract? Systems purchases? Sealed bidding?

5. Purchasing criteria : Should we serve companies that are seeking Quality? Service? Price?

Cont…

SITUATIONAL FACTORS1. Urgency: Should we serve companies that need quick and sudden

delivery or service?

2. Specific application: Should we focus on application of our product rather than all applications?

3. Size or order : Should we focus on large or small orders?

PERSONAL CHARACTERISTICS1. Buyer-seller similarity: Should we serve companies whose

people and value are similar to ours?

2. Attitude should risk: Should we serve risk-avoiding customers?

3. Loyalty; Should we serve companies that show high loyalty to their suppliers?

MARKET TARGETING

Effective segmentation criteriaMarket segments must rate favorably on five key criteria: Measurable- Size, purchasing power, and characteristics of the

segments can be measured. Substantial- Segments are large and profitable enough to serve. Accessible- Segments can be effectively reached and served. Differentiable- Segments are conceptually distinguishable and

respond differently to different marketing –mix programs. Actionable- Effective programs can be formulated for attracting

and serving the segments.

PORTER’S FIVE FORCE MODEL

Michael Porter has identified five forces that determine the intrinsic long-run attractiveness of a market or market segment

1. Threat of intense segment rivalry

2. Threat of new Entrants

3. Threat of substitute products

4. Threat of buyer’s growing bargaining power

5. Threat of supplier’s growing bargaining power

EVALUATING AND SELECTING THE MARKET SEGMENTS

1. FULL MARKET COVERAGE- With full market coverage, a firm attempts to serve all customer groups with all the products they might need. E.g. coca-cola (non alcoholic beverage market) undertake a full market coverage strategy.

Large firms can cover a whole market in two broad ways:

Undifferentiated marketing-The firm ignores segment differences and goes after the whole market with one offer.

Differentiated marketing – The firm sells different products to all the different segments of the market.

Cont….

2. MULTIPLE SEGMENT SPECIALIZATION- With selective specialization, a firm selects a subset of all the possible segments, each objectively attractive and appropriate.

A firm attempt to achieve some synergy with product or market specialization

Product specialization- Firm sells a certain product to several different market segments.

Market specialization- Firm concentrates on serving many needs of a particular customer group.

Cont…

3. SINGLE-SEGMENT CONCENTRATION- The firm markets to only one particular segment.

E.g., Porsche concentrates on the sports car market.

4. INDIVIDUAL MARKETING- Segments of one, Customized market or one-to-one marketing.

E.g., Flipkart.