Marketing management

Topic_____________________

Identify market segment _____________________

Overview

• Market segmentation

• Pattern of preference segments

• Criteria for good market segment

• Basis for segmentation

• Need based segmentation process

• Benefits and limits of segmentation

Mass marketing and Micro marketing

• Mass marketingAn attempt to appeal to an entire market with one basic marketing strategy utilizing mass distribution and mass media. Also called undifferentiated marketing.Read more: http://www.businessdictionary.com/definition/mass-marketing.html#ixzz3JgC14ZaY

• Micro marketing

The activity of marketing products or service directly to

particular groups of people based on information that has been collected about them

Read more at Cambridge dictionary online

Level of micro marketing 1. Segment marketing

Group of customers who share similar wants.E.G : a car company decide to target young middle-income buyers

2. Niche marketing Concentrating all marketing efforts on a small but specific and well defined segment of the population i.e.segment is divided into sub segmentE.G: car company decide to target young middle- income buyers who have small family .

3. Local marketingTargets the community around a physical store or restauranti.e. target local customers. It also referred to neighborhood marketing.

E.G hotels target market is near customers or city

4. Individual marketing

Customized marketing or one-to-one marketing refers to target particular customerwith their customized needs and wants.E.G. hair stylist to customer, cobbler to customer.

Market segmentation

“ Market segmentation is sub-dividing a market into distinct and homogeneous subgroups of customers, where any group can conceivably be selected as a target market to be met with distinct marketing mix.” Philip kottler.

“A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action.” Investopedia definition

Three patterns of preference segments

• 1. Homogeneous Preferences: shows a market where all the consumers have roughly the same preferences. The market shows no natural segments. We would predict that existing brands would be similar and cluster around the middle of the scale in both sweetness & saltiness.

• 2. Diffused Preferences: At the other extreme, consumer preferences maybe scattered throughout the space, indicating that customers vary greatly in their preferences. The first brand to enter the market is likely to position in the center to appeal to the most people

• 3. Clustered Preferences: The market might reveal distinct preference clusters, called natural market segments. The first firm in this market has three options. It might position in the center, hoping to appeal to all groups. It might position in the largest market segment (concentrated marketing).It might develop several brands, each positioned in a different segment. If the first firm developed only one brand, competitors would enter and introduce brands in the other segments.

•

5 Criteria of market segmentation

1. Measureable

2. Substantial

3. Accessible

4.Differentiable

5. Actionable

2.SubstnatialSegment should be large enough in term of sale and

profitable to serve there would be no point in wasting marketing budget on a market segment that is

insufficiently large.

1. Measurable

Size ,purchasing power and other characteristics should be measurable with approximate accuracy so that strategists can then decide whether, how, and to what extent they should focus their efforts on marketing to this segment.

3. Accessible• The market segment should be reachable effectively,

particularly in terms of distribution and communication. Different segments might respond better to outdoor advertising, social media campaigns, television infomercials, or any number of other approaches.

4.Differentiable An ideal market segment should be internally homogeneous (i.e. all customers within the segment have similar preferences and characteristics), but externally heterogeneous. Differences between market segments should be clearly defined, so that the campaigns, products and marketing tools applied to them can be implemented without overlap.

5 .Actionable

The firm needs to be able to implement a distinctive marketing mix for each market segment. The market segment must have practical value in term of resources and their utilization .

Basis for Segmentation

1. Demographic segmentation

2. Geographic segmentation

3. Psychographic segmentation

4. Behavioral segmentation

1.Demographic segmentation Age

Children, teen age, young, old ageOccupation

Low level job, middle level, high level

IncomeLow income, middle income , high

income

ReligionMuslim , Christian , Hindus

RaceSyed,Malik,Mughal ,Rajpoot,Sawati

NationalityAmerican, African, Pakistani , britishers

GenderMale, female

GenerationOld generation , new generation

Family sizeSmall family , large family

Family cycleMarital status

EducationUneducated, higher educated

Gender wise segmentation

And Age wise segmentation

Bata

Income segmentation

of Q

mobile

Low income Middle income

2. Geographic segmentation

CountryPakistan, Australia, Iran

State or region South India, Texas , Kashmir

ClimateAccording to weather pattern common to

certain geographic area

DensitySize of population

City or metro sizeIslamabad, Karachi , new York

Geographic Segmentation on basis of climate

(Beauty creams for cold climate)

Islamabad Makah Jeddah medina

Geographic segmentation on basis of city

3.Psychographic segmentation 1. Life style

Activities

•Work •Hobbies •Social events•Entertainment•Shopping•Spots•community

Interest

•Family•Job•Recreation•Food•Media•Achievements•Fashion

Opinions

•Social•Politics•business•Culture•Product•Social•Economics

Life styles on basis of AIO• Succeeder

Strong goal orientation, confidence, work ethic, organization ... support status quo, stability. Brand choice based on reward, prestige - the very best . Also attracted to 'caring' and protective brands ... stress relief. (Top management)

• Aspirer

Materialistic, acquisitive, affiliative, oriented to extrinsic ... image, appearance, charisma, persona and fashion. Attractive packaging more important than quality of contents

• Striver

They are fun loving people who are resources constrained . They favor stylish products that emulate the purchase of those with greater material wealth

• ExplorerEnergy - autonomy, experience, challenge, new frontiers. Brand choice highlights difference, sensation, adventure, indulgence and instant effect - the first to try new brands.

STRIVERS

SUCCEDOR

2. Social class

• Different consumers fall in different social classes. This depends mainly on their buying power. The buying power is affected by the background of the customer, his income as well as his spending habits. The customer will always buy to maintain his social class. Thus premium brands like gucci, longiness or others always target the Sec A segments because they know that these would be the classes capable of buying their products. These brands have to keep in mind both –Lifestyle as well as social class.

Gucci brand

for high

social class

3. Personality

• Personality in psychographic segmentation is dependent on both – lifestyle as well as social class. A person will have a rich personality only if he has high buying power as well as the taste in clothes to maintain such a lifestyle. Thus the term “Brand personality” came into effect. The reason for that is that different brands target different personalities. A simple example would be if i ask you what comes in mind if i talk about a “Harley davidson biker” more commonly known as Hogs. They would be people unshaven, tall, manly who like to live a rough lifestyle. That’s the personality built for harleyover time. Thus brands target their customers even based on their personality.

4. Behavioral segmentation• Occasions

Groups individuals according to the occasions when they purchase, use or think of buying a product.

• BenefitsGroups individuals according to the benefits they seek from the product.

• Loyalty status• Groups individuals according to their level of loyalty to the

product. 'Hard core loyals' always purchase the product / brand in question. Whilst 'Soft core loyals' will sometimes purchase another brand, and 'Switchers' will not specifically seek out a particular brand, but rather purchase the brand available to them at time of need, or that which was on sale.

User statusEvery product has its nonusers, ex-users, potential users, first time user ad regular users. A company has not to rely only on regular users, it has to attract the other type as well.

• UsageCustomers can be segmented on the basis of usage status-heavy users, light users, and on users of a product category. The profiling of heavy users allows this group to receive most marketing attention (particularly promotion efforts) on assumption that brand loyalty among these people ill pay heavy divides.

• Buyer readinessGroups individuals according to their readiness to purchase the product. This segmentation model is particularly useful in formulating and monitoring the marketing communication strategies employed to move consumers towards purchase of a product or brand.

Happy dewali (Occasion )

Pepsi marketing campaign relating it to occasion of

cricket

Target segment of u fone is youth on basis of their usage rate (segmentation) ,marketing campaign

target youth

Benefit segmentation

Benefit sought that is comfort by Chevrolet(comfortable seats makes drive smooth)

Need Based segmentation process

• Needs-based segmentation

• Segment identification

• Segment attractiveness

• Segment profitability

• Segment positioning

• Segment “acid test”

Need based segmentationGroup customers on basis of similar needs and wants

Segment identificationDetermine characteristics and demographic of each segment.

Segment attractivenessUse criteria such as growth and access to determine segment attractiveness.

Segment profitability Determine if segment is acceptably profitable

Segment positioning Create a value- proposition and product and price positioning strategy

Segment acid testStory board to test segment attractiveness with positioning strategy

Marketing mix strategyExpand positioning strategy for complete marketing mix.

Benefits of segmentation

• With the help of knowledge about different segments, the marketer can better allocate the total marketing budget. Differences in customer response to different marketing tools serve as the basis for deciding on the allocation of market funds to different customer groups.

• Facilitate proper choice of target market

• Management can identify new profitable segments which deserve special attention.

• It is possible to deal with competition more effectively by using resources more effectively.

• Appropriate service packages can be developed for each market segment.

• Improve communication with customer .

• Allow marketing campaigns to be more cost and time efficient.

Limitations of segmentation• Segmentation increases costs. When a firm attempts to

serve several market segments, there is a proliferation of products. Cost of production rises due to shorter production runs and product variations.

• Promotion and distribution expenditures increase when separate programme are used for different market segments.

• When characteristics of a market segment change, investment made already might become useless.

• Along with segmentation, you also need to check out the competition offered in the same segment from other products. Getting into a segment already saturated will mean higher costs and lesser profit margins

• Read more: http://www.businessdictionary.com/definition/mass-marketing.html#ixzz3JgC14ZaY

• Cambridge dictionary online

• www.investopedia.com

• http://www.slideshare.net/allanray/chapter-8-make-your-mark-know-your-customer

• http://www.slideshare.net/aabhas19871/market-segmentation-ppt

• Marketing management Philip Kotler