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Market segmentation
Module 3
Dr. Mohamed Zamil AL-Akhtaby
Market segmentation
Market segmentation is the process that companies use to divide large heterogeneous markets into small markets that can be reached more effectively and efficiently with products and services that match their unique needs
Market Segmentation
SegmentationDivide the total market into smaller segments
PositioningPosition the market offering in the minds of target customers
TargetingSelect the segment or
segments to enter
Create Value for targeted Customers divide the
total market into smaller segments
DifferentiationDifferentiate the market
offering to create superior customer value
Market Segmentation
Segmenting consumer markets Segmenting business markets Segmenting international markets Requirements for effective segmentation
Market Segmentation
Segmenting Consumer Markets
Geographic segmentation Demographic segmentation Psychographic segmentation Behavioral segmentation
Market Segmentation
Segmenting Consumer Markets
Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities
Segmenting Consumer Markets Demographic segmentation: Dividing the market into groups
based on variables such as: Age Gender Income Occupation Education Religion Race Generation Nationality
Market Segmentation
DemographicDescriptors
DemographicDescriptors
Age
Gender
Education
9.2 How Are Market Segments Best Defined?
Familysize
Occupation
Income
9.2 How Are Market Segments Best Defined?
DemographicDescriptors
DemographicDescriptors
Few financial commitment. Recreation and fashion oriented.
Buys cars, entertainment items, and holidays.
Better off financially. High purchase rate of consumer
desirables.Buy cars, white goods and furniture.
House buying is at peak. Liquid assets are low.
Dissatisfied with level of savings and financial position.
Buy medicine, toys, school tuition, and white goods.
Home ownership is at peak. Financial situation, and savings have
improved. Interest in travel, recreation, and self-
education.Not interested in new products.
Buy holidays, luxuries, and home improvements
Fam
ily
life
cycl
e
9.2 How Are Market Segments Best Defined?
Race
Nationality
Religion
9.2 How Are Market Segments Best Defined?
DemographicDescriptors
DemographicDescriptors
Market Segmentation
Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits
Segmenting Consumer Markets
Segmenting Consumer Markets
Market Segmentation
Behavioral segmentation: Dividing the market into groups based on variables such as:
Occasions Benefits User status Usage rate Loyalty status Readiness stage Attitude toward product
Country
Region
City
Metro size
Density
Climate
Country
Region
City
Metro size
Density
Climate
Social Class
Life style
Personality
Social Class
Life style
Personality
Age
Gender
Family life cycle
Family size
Income
Occupation
Education
ReligionRace
Nationality
Age
Gender
Family life cycle
Family size
Income
Occupation
Education
ReligionRace
Nationality
Occasions
Benefits
User status
User rates
Loyalty status
Readiness stage
Attitude towardThe product
Occasions
Benefits
User status
User rates
Loyalty status
Readiness stage
Attitude towardThe product
Geographic Demographic Psychographic Behavioral
Market Segmentation
Segmenting Business Markets
Intermarket segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries
Market Segmentation
Factors Used to Segment
International Markets
Geographic Location
EconomicFactors
Cultural Factors
Political and Legal Factors
Segmenting International markets
Market Segmentation
• Size, purchasing power, profiles of segments can be measured.
• Segments can be effectively reached and served.
• Segments are large or profitable enough to serve.
Measurable Measurable
AccessibleAccessible
SubstantialSubstantial
DifferentialDifferential
ActionableActionable
• Segments must respond differently to different marketing mix elements & programs.• Effective programs can be designed to attract and serve the segments.
Requirements for Effective Segmentation
market segments must be:
Market Segmentation
SegmentationDivide the total market into smaller segments
PositioningPosition the market offering in the minds of target customers
TargetingSelect the segment or
segments to enter
Create Value for targeted Customers divide the
total market into smaller segments
DifferentiationDifferentiate the market
offering to create superior customer value
Market Targeting
Selecting Target Market Segments
Target market consists of a set of buyers who share common needs or characteristics that the company decides serve
Market Targeting
Target Marketing Strategies
Mass MarketingSame product to all consumers (no segmentation, i.e Coca-Cola)
Undifferentiated marketing targets the whole market with one offer
Mass marketing•Focuses on common needs rather than what’s different
Segment MarketingDifferent products to one or more segments
(some segmentation, i.e. Marriott)
Differentiated marketing targets several different market segments and designs separate offers for each
•Goal is to achieve higher sales and stronger position•More expensive than undifferentiated marketing
Target Marketing Strategies
Market Targeting
Concentrated marketing targets a small share of a large market
•Limited company resources•Knowledge of the market•More effective and efficient
Niche MarketingDifferent products to subgroups within segments
(more segmentation, i.e. Standard or Luxury SUV’s)
Target Marketing Strategies
Market Targeting
Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations
MicromarketingProducts to suit the tastes of individuals and locations
(complete segmentation)
Local Marketing
Tailoring brands/ promotions to local customer groups.
Individual Marketing
Tailoring products and programs to the needs of
individual customers, i.e. Dell
Target Marketing Strategies
Market Targeting
Market Targeting
Choosing a Target Market
Company ResourcesCompany Resources
Product VariabilityProduct Variability
Product’s Stage in the Life CycleProduct’s Stage in the Life Cycle
Market VariabilityMarket Variability
Competitor’s Marketing StrategiesCompetitor’s Marketing Strategies
Market Segmentation
SegmentationDivide the total market into smaller segments
PositioningPosition the market offering in the minds of target customers
TargetingSelect the segment or
segments to enter
Create Value for targeted Customers divide the
total market into smaller segments
DifferentiationDifferentiate the market
offering to create superior customer value
Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy
Identifying a set of possible competitive advantages to build a position
Choosing the right competitive advantages Selecting an overall positioning strategy
Differentiation and Positioning
Product’s Position - the way the product is defined by consumers on important attributes - The place the product occupies in consumers’ minds relative to competing products.
Perceptions
Impressions
Feelings
Differentiation and Positioning
Identifying Possible Value Differences and Competitive Advantages
Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices
Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy
Identifying a set of possible competitive advantages to build a position by providing superior value from:
Product differentiation Service differentiation Channel differentiation People differentiation Image differentiation
ServicesDifferentiationi.e. Delivery, Installation,
Repair Services, Customer
Training Services
Product Differentiationi.e. Features,
Performance, Style & Design, or Attributes
ImageDifferentiationi.e. Symbols, Atmospheres,
Events
Personnel Differentiation
i.e. Hiring, Training Better People Than
Competitors Do
Identifying Possible Competitive Advantages
Differentiation and Positioning
Selecting an Overall Positioning Strategy Value proposition
is the full mix of benefits
upon which a brand
is positioned
Marketing Strategy and the Marketing Mix
Developing an Integrated Marketing Mix
Marketing mix is the set of controllable tactical marketing tools — product, price, place, and promotion—that the firm blends to produce the response it wants in the target market
Marketing Strategy and the Marketing MixDeveloping an Integrated Marketing Mix
Marketing Strategy and the Marketing Mix
Marketing Mix
4P’s& 4C’s Product (Customer Solutions) Price (Cost) Place (Convenience) Promotion IMC (Communication)
Promotion IMC (Communication)7 P’s Extended in case of Services)
People Process Physical Facilities
Thank You