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market segmentation & market targeting
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Market Segmentation & Market Targeting
4 step approach to marketing
• Segmentation
• Market Targeting
• Product Differentiation
• Product Positioning
Why do we need to segment?
• Customers are :• too numerous• too dispersed• too varied in terms of their buying habits• have varied requirements
• Market is therefore heterogeneous
• Segmentation attempts to disaggregate the total market into homogenous units
• Characteristics of the groups vary among the various groups but be uniform within individual groups.
• Also referred to as Target Marketing
• It helps the seller to:• Develop the right offer• Adjust prices• Select distribution channels• Direct the right communication for each
SEGMENTATION & TARGET MARKETING
• Segmentation symbolises a movement from mass marketing to more focused marketing….segmenting the market and targeting.
• Market Segmentation…dividing the heterogeneous market into homogenous groups, whose needs/wants could be satisfied by specific products
• Market Targeting…evaluating & deciding from amongst the various alternatives, which segment can be satisfied best by the company.
SEGMENTATION VARIABLES: Consumer markets
• Geographic…Country, City, District, climate
• Demographic…Age, gender, family size, family life cycle, Income, occupation, education level etc.
• Psychographic…Social class, life style, personality, achiever, striver, strugglers, ambitious
• Behavioral…Regular/occasional; quality/economy; convenience/speed; user/non-user/light user; loyalty status; readiness stage of buying
SEGMENTATION VARIABLES: Business markets
• Demographics…Industry types, size of company, location of company
• Operating variables…technology used, type of user (heavy/medium or light)
• Purchase approach…centralized vs decentralized, nature & type of relationship, type of purchase policies (sealed bids vs specific negotiations), service/quality or price seekers
• Situational…urgency of need, type of applications, size of order
• Personal…value systems of buyer, risk appettite, level of loyalty
ESSENTIALS FOR EFFECTIVE SEGMENTATION
• Measurable…size, purchasing power & profiles can be measured.
• Accessible…Segments can be effectively reached & served.
• Substantial…segments are large enough &/or profitable to serve.
• Differentiable…segments should have different characteristics
• Actionable…capable of developing specific programs for the segment
BENEFITS OF SEGMENTATION
• Enables marketer to understand the market characteristics better
• Company can develop a more focused strategy to satisfy customer needs/wants more efficiently
• Leads to better utilization of scarce resources
• Enables company to develop customized products
• Distinguishes between potential & profitable segments
• Assessment of response enables firm to develop suitable marketing mix
“Dividing markets to conquer them”
MARKET TARGETING
• Market segmentation reveals the firms market segment opportunities. The firm now has to decide /evaluate the various segments and decide how many and which ones to target.
• Parameters for evaluation– Segment size & growth potential– Segment structural attractiveness– Company objectives & resources
• The company may enter only segments in which it can offer superior value and gain advantages over competitors
Target Marketing strategies
Undifferentiated(mass marketing)
Differentiated(segmented)
Concentrated(niche)
Micromarketing(individual)
Targeting broadly Targeting narrowly