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1 Segmenting and Segmenting and Targeting Targeting Markets Markets Made by : Jatin Katna CM9211

segmentation

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Page 1: segmentation

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Segmenting and Segmenting and Targeting MarketsTargeting Markets

Made by :Jatin Katna CM9211

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Market SegmentationMarket Segmentation

Market

MarketSegment

MarketSegmentation

People or organizations with needs or wants and the ability and

willingness to buy

A subgroup of people or organizations sharing one or more characteristics that cause them to

have similar product needs.

The process of dividing a market into meaningful, relatively similar, identifiable segments or groups.

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A Market is...A Market is...(1) people or organizations with

(2) needs or wants, and with

(3) the ability and

(4) the willingness to buy.

A group of people that lacks any one of these characteristics is NOT a market.

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The Importance of The Importance of Market SegmentationMarket Segmentation

Markets have a variety of product needs and preferences

Marketers can better define customer needs

Decision makers can define objectives and allocate resources more accurately

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Criteria for SegmentationCriteria for SegmentationSubstantialitySubstantiality

IdentifiabilityIdentifiabilityMeasurabilityMeasurability

AccessibilityAccessibility

ResponsivenessResponsiveness

Segment must be large enough to warrant a special

marketing mix.

Segments must be identifiable and their size measurable.

Members of targeted segments must be reachable with

marketing mix.Unless segment responds to a marketing mix differently, no separate treatment is needed.

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Segmentation BasesSegmentation Bases

Characteristics of Characteristics of individuals, groups, individuals, groups,

or organizations used or organizations used to divide a total market to divide a total market

into segments.into segments.(variables)(variables)

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Bases for SegmentationBases for Segmentation

Usage Rate

Benefits Sought

Psychographics

Demographics

Geography

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Geographic SegmentationGeographic Segmentation

Segmenting markets bySegmenting markets by region of the country/worldregion of the country/world market sizemarket size market density market density climateclimate

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Benefits of Regional Benefits of Regional SegmentationSegmentation

New ways to generate sales in New ways to generate sales in sluggish and competitive marketssluggish and competitive markets

Scanner/POS data allow assessment Scanner/POS data allow assessment of best selling brands in regionof best selling brands in region

Regional brands appeal to local Regional brands appeal to local preferencespreferences

React more quickly to competitionReact more quickly to competition

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Bases for SegmentationBases for Segmentation

Usage Rate

Benefits Sought

Psychographics

Demographics

Geography

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Demographic SegmentationDemographic Segmentation

Segmenting markets Segmenting markets by age, gender, income, by age, gender, income,

ethnic background, ethnic background, and family life cycleand family life cycle

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Bases for Bases for Demographic Demographic SegmentationSegmentation

AgeAge GenderGender IncomeIncome Ethnic backgroundEthnic background Family Life CycleFamily Life Cycle

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Family Life CycleFamily Life Cycle

AgeAge

MaritalMaritalStatusStatus

ChildrenChildren

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Family Life CycleFamily Life Cycle

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Bases for SegmentationBases for Segmentation

Usage Rate

Benefits Sought

Psychographics

Demographics

Geography

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Psychographic Psychographic SegmentationSegmentation

Market segmentation on Market segmentation on the basis of personality, the basis of personality, motives, lifestyles, and motives, lifestyles, and

geodemographics.geodemographics.

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Bases forBases forPsychographic Psychographic SegmentationSegmentation

PsychographicPsychographicSegmentationSegmentation

Personality

Motives

Lifestyles

Geodemographics

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Lifestyle SegmentationLifestyle Segmentation How time is spentHow time is spent Importance of things Importance of things

around themaround them BeliefsBeliefs Socioeconomic Socioeconomic

characteristicscharacteristics

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Geodemographic Geodemographic SegmentationSegmentation

Segmenting potential Segmenting potential customers into customers into

neighborhood lifestyle neighborhood lifestyle categories. categories.

Combines geographic, Combines geographic, demographic, and lifestyle demographic, and lifestyle

segmentation.segmentation.

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Bases for SegmentationBases for Segmentation

Usage Rate

Benefits Sought

Psychographics

Demographics

Geography

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Benefit SegmentationBenefit Segmentation

The process of grouping The process of grouping customers into market customers into market segments according to segments according to the the benefits they seekbenefits they seek

from the product.from the product.

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Bases for SegmentationBases for Segmentation

Usage Rate

Benefits Sought

Psychographics

Demographics

Geography

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Usage-Rate SegmentationUsage-Rate Segmentation

Dividing a market by the Dividing a market by the amountamount of product of product

bought or consumed.bought or consumed.

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The 80/20 PrincipleThe 80/20 PrincipleA principle holding that A principle holding that

20 percent of all 20 percent of all customers generate 80 customers generate 80

percent percent of the demand.of the demand.Target Target

customerscustomers20%20%Share ofShare of

customerscustomers

Target Target customerscustomers

80%80%

Share ofShare ofsalessales

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Business Marketing Business Marketing SegmentationSegmentation

Four segments of business markets:Four segments of business markets:

Producers / manufacturersProducers / manufacturers ResellersResellers GovernmentsGovernments InstitutionsInstitutions

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Steps in Segmenting a Steps in Segmenting a MarketMarket

Select a

market for

study

Choose bases

for segme

n-tation

Select descrip-tors

Profile and

analyze segment

s

Select target market

s

Design, imple-ment,

maintain mktging

mix

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Target MarketTarget MarketA group of people or A group of people or

organizations for which an organizations for which an organization designs, organization designs,

implements, and implements, and maintains a marketing maintains a marketing

mix intended to meet the mix intended to meet the needs of that group, needs of that group, resulting in mutually resulting in mutually satisfying exchanges.satisfying exchanges.

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Undifferentiated Undifferentiated Targeting StrategyTargeting Strategy

Marketing approach that Marketing approach that views the market as one views the market as one

big market with no big market with no individual segments and individual segments and

thus requires a single thus requires a single marketing mix.marketing mix.

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Undifferentiated Undifferentiated Targeting StrategyTargeting Strategy

AdvantagesAdvantages: Potential savings on

production and marketing costs

DisadvantagesDisadvantages: Unimaginative product

offerings Company more

susceptible to competition

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Concentrated Targeting Concentrated Targeting StrategyStrategy

A strategy used to select A strategy used to select one segment of a market one segment of a market

(a (a nicheniche) for targeting ) for targeting marketing efforts.marketing efforts.

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Concentrated Targeting Concentrated Targeting StrategyStrategy

AdvantagesAdvantages: Concentration of resources Meets narrowly defined

segment Small firms can compete Strong positioning

DisadvantagesDisadvantages: Segments too small, or

changing Large competitors may

market to niche segment

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CannibalizationCannibalization

Situation that occurs when Situation that occurs when sales of a new product sales of a new product

cut into sales of a cut into sales of a firm’s existing products.firm’s existing products.

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PositionPosition

The place a product, The place a product, brand, or group of brand, or group of

products occupies in products occupies in consumers’ minds relative consumers’ minds relative

to competing offerings.to competing offerings.

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PositioningPositioning

Developing a specific Developing a specific marketing mix to marketing mix to

influence potential influence potential customers’ overall customers’ overall

perception of a brand, perception of a brand, product line, or product line, or

organization in general.organization in general.

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Product DifferentiationProduct DifferentiationA positioning strategy that A positioning strategy that

some firms use to some firms use to distinguish their products distinguish their products from those of competitors.from those of competitors.

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Perceptual MappingPerceptual MappingA means of displaying or A means of displaying or graphing, in two or more graphing, in two or more dimensions, the location dimensions, the location of products, brands, or of products, brands, or groups of products in groups of products in

customers’ minds.customers’ minds.

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Perceptual Map and Positioning Perceptual Map and Positioning Strategy for Levi Strauss Strategy for Levi Strauss

ProductsProducts

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RepositioningRepositioning

Changing consumers’ Changing consumers’ perceptions of a brand perceptions of a brand

in relation to in relation to competing brands.competing brands.