Slide 1
4th ChapterMarket Segmentation & Consumer Behavior Market
segmentationMarket segmentation can be defined as the process
ofdividing a market into different homogeneous groups of
consumers.
Contd.Market consists of buyers and buyers vary from each other
in different ways. Variation depends upon different factors like
wants, resources, buying attitude, locations, and buying practices.
Bysegmentation, large heterogeneous markets are divided into
smaller segments that can be managed more efficiently and
effectively with products and services that match to their unique
needs. So,market segmentation is beneficial for the companies
serving larger markets
Defining Marketing Segmentation. Market Segmentation 'Market
Segmentation is the sub-dividing of customers into homogenous
sub-set of customers where any sub-set may conceivably selected as
market target to be reached with distinct Marketing Mix Philip
Kotler OR. Market Segmentation consists of taking the total
heterogeneous market for a product & dividing into several
sub-market of segments, each of which tends to be homogenous in
full significant aspects William Stanton
Criteria for selecting Market SegmentsMeasurableA segment should
be measurable. It means you should be able to tell how many
potential customers and how many businesses are out there in the
segment.AccessibleA segment should be accessible through channels
of communication and distribution like: sales force,
transportation, distributors, telecom, or internet.
Contd.DurableSegment should not have frequent changes attribute
in it.SubstantialMake sure that size of your segment is large
enough to warrant as a segment and large enough to be
profitable
ContdUnique NeedsSegments should be different in their response
to different marketing efforts (Marketing Mix).Consumer and
business markets cannot be segmented on the bases of same variables
because of their inherent differences.
Benefits of segmentationBenefits:-The Organisation gets to know
its customers better. Provides guidelines and information for
resource allocation. It helps to focus the strategy of the
organisation.
Why Segmentation?To develop marketing activities Increase
marketing effectiveness Generate greater customer satisfaction
Create savingsTo estimate the level of sales in the market To
overcome competition effectively To develop effective marketing
programmes To contribute towards achieving company goals
Bases for Segmentation in Consumer MarketsContdThere are number
of variables involved inConsumer Market Segmentation, alone and in
combination. These variables are:-
Geographic variablesDemographic variablesPsychographic
variablesBehavioural variables
Geographic SegmentationIngeographical segmentation, market is
divided into different geographical unitslike:Regions (by country,
nation, state, neighbourhood)Population Density (Urban, suburban,
rural)City size (Size of area, population size and growth
rate)Climate (Regions having similar climate pattern)
ContdA company, either serving a few or all geographic segments,
needs to put attention on variability of geographic needs and
wants. After segmenting consumer market on geographic bases,
companies localize their marketing efforts (product, advertising,
promotion and sales efforts).
Demographic SegmentationAgeGenderIncomeOccupationEducationSocial
ClassGenerationFamily sizeReligionNationality
Indemographic segmentation, market is divided into small
segments based on demographic variables like:
Indemographic segmentation, market is divided into small
segments based on demographic variables like:Indemographic
segmentation, market is divided into small segments based on
demographic variables like:Contd..Demographic factors are most
important factors for segmenting the customers groups. Consumer
needs, wants, usage rate these all depend upon demographic
variables. So, considering demographic factors, while defining
marketing strategy, is crucial.
Psychographic SegmentationIn Psychographic Segmentation,
segments are defined on the basis of social class, lifestyle and
personality characteristics.Psychographic variables
includeInterests OpinionsPersonalitySelf
ImageActivitiesValuesAttitudes
Contd.A segment having demographically grouped consumers may
have different psychographic characteristics.
Behavioural SegmentationIn this segmentation market is divided
into segments based on consumer knowledge, attitude, use or
response to product.Behavioural variables include:Usage RateProduct
benefitsBrand LoyaltyPrice ConsciousnessOccasions (holidays like
mothers day, New Year and friendship day)User Status (First Time,
Regular or Potential)
Contd.Behavioural segmentationis considered most favourable
segmentation tool as it uses those variables that are closely
related to the product itself.
Consumer BehaviourConsumer Behaviour is the study of how
individuals make decisions to spend their available
resources(time,money,effort) on consumption related items.
By definitioncustomer behaviour is to know about the customers
way to obtain, use and dispose products. It's important for
marketing to know the customer behaviour by using different
strategies.
What is Consumer buying behaviour
Buying behaviour is the decision process and acts of people
involved in buying and using products. Consumer behaviour is study
how individuals make their decisions to spend their available
resources (time, money and effort ) Consumer is the king of the
market and for the business to survive long, it is important to
study consumer buying behaviour.
Stages of the consumer buying process
Problem Recognitionin this stage, a consumer realizes or
recognizes that their desired state is different from their actual
condition. This could be a simple as Im naked, I need clothing, or
Im hungry, I need food.Information Searchin this stage, a consumer
recognizes their need (or want) and sets forth to find a solution.
If it is clothing they need to solve their problem, the look for
clothing, if it is food, they look for foodEvaluation of
Alternativesin this stage, a consumer has a good idea of what they
want, now they are looking at the options that exists. They are
evaluating the features of products and brands. Purchase Decisionn
in this stage, a consumer is processing the information from the
information search and deciding on the products, store, payment
options. More importantly, they are making the decision to move
forward with the purchase or notPurchasethis is the stage that the
transaction is completed. The actual problem that was recognized is
solved! Post-Purchase Evaluationin this stage, the consumer
determines if they are satisfied or dissatisfied with the
purchasing outcome. Here is where cognitive dissonance occurs, Did
I make the right decision.Factors effecting the consumer buying
decision processPsychological Personal Social culture Cultural
FactorsConsumer behavior is deeply influenced by cultural factors
such as: buyer culture, subculture, and social class.Culture
Basically, culture is the part of every society and is the
important cause of person wants and behavior. The influence of
culture on buying behavior varies from country to country therefore
marketers have to be very careful in analyzing the culture of
different groups, regions or even countries.
SubcultureEach culture contains different subcultures such as
religions, nationalities, geographic regions, racial groups etc..
For example marketers can design products according to the needs of
a particular geographic group.
Social ClassEvery society possesses some form of social class
which is important to the marketers because the buying behavior of
people in a given social class is similar
2. Social FactorsSocial factors also impact the buying behavior
of consumers. The important social factors are: reference groups,
family, role and status.Reference GroupsReference groups have
potential in forming a person attitude or behavior. The impact of
reference groups varies across products and brands. For example if
the product is visible such as dress, shoes, car etc then the
influence of reference groups will be high. Reference groups also
include opinion leader (a person who influences other because of
his special skill, knowledge or other characteristics).
Family
Buyer behavior is strongly influenced by the member of a family.
Therefore marketers are trying to find the roles and influence of
the husband, wife and children. If the buying decision of a
particular product is influenced by wife then the marketers will
try to target the women in their advertisement. Here we should note
that buying roles change with change in consumer lifestyles.
Roles and Status
Each person possesses different roles and status in the society
depending upon the groups, clubs, family, organization etc. to
which he belongs. For example a woman is working in an organization
as finance manager. Now she is playing two roles, one of finance
manager and other of mother. Therefore her buying decisions will be
influenced by her role and status.
3. Personal FactorsPersonal factors can also affect the consumer
behavior. Some of the important personal factors that influence the
buying behavior are: lifestyle, economic situation, occupation,
age, personality and self concept.Age
Age and life-cycle have potential impact on the consumer buying
behavior. It is obvious that the consumers change the purchase of
goods and services with the passage of time. Family life-cycle
consists of different stages such young singles, married couples,
unmarried couples etc which help marketers to develop appropriate
products for each stage.
Occupation
The occupation of a person has significant impact on his buying
behavior. For example a marketing manager of an organization will
try to purchase business suits, whereas a low level worker in the
same organization will purchase rugged work clothes.
Economic Situation
Consumer economic situation has great influence on his buying
behavior. If the income and savings of a customer is high then he
will purchase more expensive products. On the other hand, a person
with low income and savings will purchase inexpensive products.
Lifestyle
Lifestyle of customers is another import factor affecting the
consumer buying behavior. Lifestyle refers to the way a person
lives in a society and is expressed by the things in his/her
surroundings. It is determined by customer interests, opinions,
activities etc and shapes his whole pattern of acting and
interacting in the world.
Personality
Personality changes from person to person, time to time and
place to place. Therefore it can greatly influence the buying
behavior of customers. Actually, Personality is not what one wears;
rather it is the totality of behavior of a man in different
circumstances. It has different characteristics such as: dominance,
aggressiveness, self-confidence etc which can be useful to
determine the consumer behavior for particular product or
service.
4. Psychological Factors
There are four important psychological factors affecting the
consumer buying behavior. These are: perception, motivation,
learning, beliefs and attitudes.Motivation
The level of motivation also affects the buying behavior of
customers. Every person has different needs such as physiological
needs, biological needs, social needs etc. The nature of the needs
is that, some of them are most pressing while others are least
pressing. Therefore a need becomes a motive when it is more
pressing to direct the person to seek satisfaction.
Perception
Selecting, organizing and interpreting information in a way to
produce a meaningful experience of the world is called perception.
There are three different perceptual processes which are selective
attention, selective distortion and selective retention. In case of
selective attention, marketers try to attract the customer
attention. Whereas, in case of selective distortion, customers try
to interpret the information in a way that will support what the
customers already believe. Similarly, in case of selective
retention, marketers try to retain information that supports their
beliefs.
Beliefs and Attitudes
Customer possesses specific belief and attitude towards various
products. Since such beliefs and attitudes make up brand image and
affect consumer buying behavior therefore marketers are interested
in them. Marketers can change the beliefs and attitudes of
customers by launching special campaigns in this regard.
influence customers like new products, promotions,
advertisement, good quality and price etc
