Segmentation New

Identifying Market Segments

and Targets

Chapter Questions

• What are the different levels of market segmentation?

• How can a company divide a market into segments?

• How should a company choose the most attractive target markets?

• What are the requirements for effective segmentation?

Market

Market = People * Purchasing power * Willingness to

buy

FMASS MARKETING

• ONE PRODUCT FOR ALL BUYERS

• HENRY FORD

• Coke

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creaminess

sweetness

Homogeneous Preference -no natural segments -all buyers have same preference

creaminess

sweetness

Diffused Preference -no pattern (…or poor research) -take center position

creaminess

sweetness

Clustered Preference -natural segments -increases as number of competitors increases

Three Phases (S.T.P) of Marketing Strategy

• Phase 1: Market Segmentation

• Phase 2: Target Market and Marketing Mix Selection

• Phase 3: Product/Brand Positioning

Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 8-9

Effective Targeting Requires…

• Identify and profile distinct groups of buyers who differ in their needs and preferences

• Select one or more market segments to enter

• Establish and communicate the distinctive benefits of the market offering

Market Segmentation

The process of dividing a potential market into distinct subsets of consumers and selecting one or more segments as a target market to be reached with a distinct marketing mix.

division of the total market into smaller, relatively homogeneous groups

FOUR LEVELS OF SEGMENTING THE MARKET

Segmentation bases

Local MarketingCustomization/Individualization

Niches

Niche marketing

• Niche is a more narrowly defined customer group seeking a distinctive mix of benefits.

• Niche Marketers presumably understand their customers’ needs so well that customers are willing to pay a premium .

• Local Marketing is leading to marketing programs tailored to the needs and wants of local customer groups.

• Specialized Banks: NRI,Small scale Industries.

• In-city Courier Services

Local marketing

Customerization

• The ultimate level of segmentation

• Segment of one

• One-to-one marketing

• Mass Customization

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SEGMENTING

CONSUMER MARKETS

8-17

SEGMENTING CONSUMER MARKETS


Geographic Geographic SegmentatioSegmentatio

nn

The division of a total potential

market into smaller subgroups on the

basis of geographic variables (e.g., region, state, or

city).

• Division of Rural and Urban areas• Suitable Products and Packaging • Emergence of Rs.5 coke/pepsi- tapping

rural market.• Distribution is the key (HUL Project Sakthi)• Food Preferences • Air-cooler – Northern Parts of India• Air-conditioner- Goa and Kerala



Demographic Segmentation

Age and Life CycleAge and Life Cycle

Life StageLife Stage

GenderGender

IncomeIncome

GenerationGeneration

Social ClassSocial Class


dividing consumer groups according to dividing consumer groups according to characteristics such as sex, age, income, characteristics such as sex, age, income, occupation, education, household size, occupation, education, household size, and stage in the family life cycleand stage in the family life cycle

© PhotoDisc


Generation Y• people born between

1979 and 1994• Also called echo

boomers (to account for the fact that they are often the children of baby boomers)

• Overwhelming majority have mothers who work outside the home

• Highly computer-literate• Practical and cynical

© PhotoDisc


Generation Y

Generation X

• people born between 1965 to the late 1970s

• Were the first large group to experience the effects of widespread parental divorce

• React strongly to peer influences

• Delay marriage and careers, accept cultural diversity, and value the quality of personal life over work life

© PhotoDisc


Generation Y

Generation X

Baby BoomersBaby Boomers

• people born between 1946 and 1965

• materialistic, career-oriented drive

• An affluent market

• Their behavior is often difficult to predict

• Different subgroups within this generation must be recognized and targeted

© PhotoDisc


Generation Y

Generation X

Baby Boomers

• Most major industrialized nations are seeing similar trends

• Seniors are a powerful economic force

• Their discretionary incomes and rate of home ownership are the highest of all age groups

SeniorsSeniors

© PhotoDisc

TARGETING SENIOR CONSUMERS

LIFE STAGE

• LIFE STAGE defnes a person’s major concern such as getting married , deciding to buy a house, sending the child to the school,taking care of parents,childern’s marriage,planning for retirment and so on.

• Oppurtunities for Financial firms (Insurance)


Not for a Baby… For a KidNot for a Baby… For a Kid

GENDER

INCOME - Meaning

• PERSONAL INCOME : is the income from wages, salaries, dividends, rent, interest, businesses and professions

• DISPOSABLE PERSONAL INCOME: is the amount available, after deducting taxes, for personal-consumption expenditures and saving

• DISCRETIONARY INCOME : is the income available for spending after deducting expenditures for necessities or fixed items such as food,clothing,tarnsportation,shelter and utilities.

INCOME


Psychographic Segmentation

• Though Individuals in a specific demographic category share some common characteristics, such as age, sex or income, the psychographics of these group like values, motivations and beliefs are not homogeneous.

• When attitudes, motivations, personality characteristics and belief systems are analysed statistically to determine groups with substantially different attitudes, the result is psychographic segmentation

• psychographic segmentation will help advertisers to target the most receptive audience for their message

• VALS – One of the Most suitable tools

• VALS is a way of viewing people on the basis of their attitudes, needs,wants,beliefs and demographics

• Values is an abstract & complex construct which will have strong influence on consumer behaviour.

• Values & emotions are intertwined in consumption• Lifestyle: people’s decisions about how to live their

daily lives, including family, job, social, and consumer activities

• AIO Statements: statements in a psychographic survey, choices reflect a respondent’s activities, interests, and opinions

STRUGGLERS

FULFILLEDS

BELIEVERS

ACHIEVERS EXPERIENCERS

STRIVERS MAKERS

Low Resources

High Resources

Action OrientedStatus OrientedPrinciple Oriented

ACTUALIZERS

ACTUALISERS (INNOVATORS)

Abundant resourcesImage is important, SophisticatedReceptive to new products & technologiesFrequent Readers, but light TV viewersOpen to social change

THINKERS

• Little interest in Prestige/image

• Like to spend their leisure time at home

• Well educated.

• Like Educational/public affairs programming

• Read widely and often

• Purchase criteria- Durablity,Functionality

BELIEVERS

• Conservative

• High Ethnocentric

• Deeply rooted Moral codes

• Established routine of life

• Slow to change Habits

• Watch TV More

ACHIEVERS

• Status oriented, high Economic and social status

• Target for Premium products

• Seek recognition and self-identity through achievement

STRIVERS

• Self-definition based on approval & opinion of others

• Impulsive, Got easily bored

• Carrying credit balances

EXPERIENCERS

• Follow fashions and fads

• Young, Enthusiastic, rebellious

• Disregard for authority

• Seek variety&Excitement in their life

• Spending heavily on Clothing, Music and fast food

MAKERS

• Like to self-sufficient

• Traditional family values

• Like physical recreation

• Suspicious about the new ideas

• Respect Government

• Not impressed by Possessions

STRUGGLERS

• Brand loyal

• Heavy TV viewers & read Women magazines

• low-skilled, less-educated concerned about declining health

• Trust ad


• Product-related segmentation: dividing a consumer population into homogeneous groups based on characteristics of their relationships to the product

• Can take the form of segmenting based on:• Usage rates for a product• Consumers’ brand loyalty toward a product• Using the Product in Different situations• Benefits that people seek when they buy

BenefitsBenefits Usage RatesUsage Rates Brand LoyaltyBrand Loyalty

Product-Related Segmentation

© PhotoDisc

OccasionsOccasions

Usage-Situation Segmentation

• Segmenting on the basis of special occasions or situations

TOOTH DECAY PREVENTION

FRESHNESS

ECONOMICAL

GUM PROTECTION

HERBAL

Benefit Segmentation

The Brand FUSER STATUS

• Non-users

• Ex-users

• Potential users

• First time users

• Regular users


Loyalty Status

Switchers

Shifting loyals

Split loyals

Hard-core

• Aware

• Ever tried

• Recent trial

• Occasional user

• Regular user

• Most often used

Buyer-Readiness Stage

Figure 8.3 Behavioral Segmentation Breakdown


The Conversion Model

Convertible Shallow Average Entrenched

Strongly

unavailableAmbivalent Available

Weakly

unavailable

Users Nonusers


Segmenting for Business Markets

DemographicDemographic

Operating VariableOperating Variable

Purchasing ApproachesPurchasing Approaches

Situational FactorsSituational Factors

PersonalCharacteristics

PersonalCharacteristics

Steps in Segmentation Process

Needs-based segmentation

Segment identification

Segment attractiveness

Segment profitability

Segment positioning

Segment acid test

Marketing-Mix

Strategy


Effective Segmentation Criteria

MeasurableMeasurable

SubstantialSubstantial

AccessibleAccessible

DifferentiableDifferentiable

ActionableActionable


Figure 8.4 Patterns of Target Market Selection




Figure 8.5 Segment-by-Segment Invasion Plan


Pepsi used Megamarketing in India

Documents

Segmentation New