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8/4/2019 - Market Segment
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MARKET SEGMENTATION
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What is a market??
Mass marketing approach:Approaching the entire set of customers with a uniform marketing
approach thereby creating the largest potential market (sale of staple
food items like rice and bread)
Differentiated approach:
Strategy of market segmentationMarketer selects one or more of the segments as the target market
and positions his outlet as per the profile of the targeted segment (Diet
Coke sold to market segment of health conscious adults)
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Re-seller Market
Market of the middlemen like wholesalersand retailers who buy goods for resale
Main focus of retailing is on consumer
productsConvenience products:Shopping products:Specialty items:
Unsought items:
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Market segmentation
Major characteristics
Is an aggregating process:clustering people with similar or homogenous needs and
respond to the marketing mix in the same way. Different kindof promotional activities are developed for serving differentmarket segments
Identifying niche segments
Customized products and services are provided to customergroups (Whirlpool automatic washing machines in urbanMumbai with large groups of working women can besegmented)
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Benefits of segmentation
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Benefits of segmentation
Development of marketing mix
-helps to identify target audience
customize marketing strategies in terms ofproduct, price and promotion for
customers
Store location decision
to concentrate stores where targetpopulation are found
Understanding customer behavior
-how and why the target group behavesand acts
determining the buying behavior aftersegmenting the market
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Merchandising decisions
-deciding on which items will occupy the store shelves fordisplay
understanding the preference of target groups
Promotional campaigns
effective and accurate promotional campaigns
Positioning
-major feature of segmentation . Sarvana stores arepositioned for lower middle class consumers where as theclientele of Lifestyle and Shoppers Stop are for the upperincome class and the elite
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Criteria for effective market
segmentation
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Homogeneous within:
similar needs, wants and buying behavioran effective marketing programmer can be developed
(Gillette Mach 3 for young male adults)
Heterogeneous within:customers between segments stay different for better
focus from retailers
Substantial :
should have sufficient discretionary income
(Ebony must ensure high income groups exist in their tradearea)
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Actionable
useful for identifying target groups and deciding on
marketing mix variables (Caf Coffee Day attracts collegegoers and young working executives to enjoy coffee in afashionable outlet)
Accessible
reachable target market and accessible to target consumer
groups (Crossroads is readily accessible with parking
facilities) Measurable
size, purchasing power and characteristics ofmarket segment should be measurable
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Bases for Segmentation in Consumer Markets
Consumer markets can be segmented on the following customercharacteristics.
Geographic
Demographic
Psychographic
Behavioralistic
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Geographic SegmentationThe following are some examples of geographic variables often used in
segmentation.
Region:
Size of metropolitan area:
Population density:
Climate:(Subhiksha Stores in Chennai)
Demographic SegmentationSome demographic segmentation variables include:
Age
Gender
Family size
Family lifecycle
Generation: baby-boomers, Generation X, etc.
Income
Occupation
Education
Ethnicity
Nationality
Religion
Social class
(Life Style may segment the market by income class)
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Many of these variables have standard categories for theirvalues. For example, family lifecycle often is expressed as
bachelor, married with no children (DINKS: Double Income,No Kids), full-nest, empty-nest, or solitary survivor. Some ofthese categories have several stages, for example, full-nest I,II, or III depending on :
-the age of the children.
-educational background, and professional background-Family decision-making
(a CTV or a 2-wheeler purchase)
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Psychographic Segmentation
Psychographic segmentation groups customers according to their lifestyle.Activities, interests, and opinions (AIO) surveys are one tool for measuring
lifestyle. Some psychographic variables include: Activities
Interests
Opinions
Attitudes
Values
Behavioralistic Segmentation
Behavioral segmentation is based on actual customer behavior toward products.Some behavioralistic variables include:
Benefits sought
Usage rate
Brand loyalty
User status
Readiness to buy
Occasions
Behavioral segmentation has the advantage of using variables that are closely
related to the product itself. It is a fairly direct starting point for marketsegmentation
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Bases for Segmentation in Industrial Markets
Fewer in number and purchase larger quantities.
Evaluate offerings in more detail, and the decisionprocess usually involves more than one person.
Apply to organizations such as manufacturers andservice providers, as well as resellers, governments,
and institutions.
Many of the consumer market segmentation variablescan be applied to industrial markets.
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Locationcustomer location may be important in some cases.
Shipping costs may be a purchase factor for vendor selectionfor products having a high bulk to value ratio, so distance fromthe vendor may be critical.
In some industries firms tend to cluster togethergeographically and therefore may have similar needs within a
region.
Company TypeBusiness customers can be classified according to type as
follows:
Company size
Industry
Decision making unit
Purchase Criteria
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Behavioral CharacteristicsIn industrial markets, patterns of purchase behavior can be
a basis for segmentation. Such behavioral characteristics mayinclude:
Usage rate
Buying status: potential, first-time, regular, etc.
Purchase procedure: sealed bids, negotiations, etc.
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Choice of segments to target the market
measure the attractiveness andcapacity of the segment
estimate its size, purchasingpower, growth rate, presence ofcompetition, etc.
opt for an untapped segment
choose to operate in a segmentwhere there are already existing
players
e.g. CROSSROADS
targets clientele from uppermiddle-class customers
devoted to each of the fourshopping categorieswomen,kids, men, and home furnishings
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Why does an organisation need to segment a
market?
No single product can satisfy the needs of all customers.
What would happen ifAdidas sold only a single product? Howwell would it compete in the marketplace? What would be the- Impact on - Profit / sales / market share?
Consumers all have different needs and wants
Companies must consider - Individual Features & Benefitssought, and the individual characteristics of consumers
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Market segmentation in India
Marketer uses segmentation models based ondemographics, geo-demographics, SEC data,and benefits and usage
Prominent examples are McDonalds Nescafe
Caf Coffee Day Benetton
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-Chrysolyte.S
IMBA-3rdyr
1234108129