Content of the Lecture

Content of the Lecture

• Definition of Market Segmentation• Purpose of segmentation• Types of segmentation• Segmentation process• Levels of segmentation

What really is a market?

A place where forces of demand and supply operate

Essentials of Segmentation / Targeting• What is the size of the market?• What unique need does your GENRE of product/ services meet? • How much are customers willing to pay for this product/ service (top/

bottom/average)?• Is this a price sensitive/ commodity product or premium product?• Who are the other key players?• What is the gap un-serviced by current players?• What is the REAL available market for you?• How is your product different from competition?• What is your playing field? (premium/ general/ price warrior) • What share of this can you reasonably expect to get?

Definition• A market segment is a subgroup of people or

organizations sharing one or more characteristics that cause them to have similar product needs. it is distinct from other segments (heterogeneity across

segments) it is homogeneous within the segment (exhibits common

attributes) it responds similarly to a market stimuli it can be reached by a Communication Channel

• Size, purchasing power, profiles of segments can be measured

• Can be reached and served

• Large and profitable enough to serve

Measurable

Accessible

Substantial

Differential

Actionable

• Respond differently

• Effective programs can be developed

Criteria for Segmentation

Purpose

• Increase marketing efficiency by focusing marketing efforts to a particular group

• Maximize scarce marketing resources

• Find a market with limited competition

• Select the most profitable segment

Product Segementation by Industry

Segmentation Criteria

• Geographic variables – region of the world or country: East, West, South,

North, Central, coastal, hilly, etc. – size: Metropolitan Cities, small cities, towns. – density of area: Urban, Semi-urban, Rural. – climate: Hot, Cold, Humid, Rainy.

Geographic

DemographicAge, gender,

family size and life cycle, or income

PsychographicSocial class, lifestyle, or personality

BehavioralOccasions, benefits, uses, or responses

Nations, states, regions or cities

Segmentation Criteria

Demographic Criteria

• Demographic variables – age– gender– sexual orientation– family size – family life cycle – education– income– occupation– socioeconomic status – religion– nationality/race– language

Psychographic Criteria

• Psychographic variables – personality– life style– value– attitude

Behavioral Criteria

• Behavioral variables – benefit sought – product usage rate– brand loyalty– product end use– readiness-to-buy stage – decision making unit– profitability– income status– Heavy Users / Light Users

Segmenting Business Markets

• Demographic segmentation– Industry, company size, location

• Operating variables– Technology, usage status, customer capabilities

• Purchasing approaches• Situational factors

– Urgency, specific application, size of order• Personal characteristics

– Buyer-seller similarity, attitudes toward risk, loyalty

Segmenting International Markets

• Geographic segmentation– Location or region

• Economic factors– Population income or level of economic development– Emerging Countries

• Political and legal factors– Type / stability of government, monetary regulations, bureaucracy,

etc.• Cultural factors

– Language, religion, values, attitudes, customs, behavioral patterns

Market Segmentation Process

1. Determine the characteristics of segments in the target market & separate these segments in the market based on these characteristics.

2. Verify the market segments size if adequate enough to support the organization's product.

3. Develop a marketing strategy to target this market.

Market Segmentation Process

Example minor Entrepreneurship

Desktop Computers:- Home Use- Office Use- Gaming

1. Identify Basesfor Segmenting the Market

2. Develop Profilesof Resulting Segments

3. Develop Measuresof Segment Attractiveness

4. Select TargetSegment(s)

5. Develop Positioningfor Each Target Segment

6. Develop MarketingMix for Each Target Segment Market

Positioning

MarketTargeting

Market Segmentation

Market Segmentation Process

Mass MarketingSame product to all consumers

(no segmentation)

Segment MarketingDifferent products to one or more segments

(some segmentation)

MicromarketingProducts to suit the tastes of individuals or locations

(complete segmentation)

Niche MarketingDifferent products to subgroups within segments

( more segmentation)

Levels of Segmentation

Target Marketing

Consists of a set of buyers who share common needs or characteristics that the company decides to serve

Target Marketing

• Evaluating Market Segments– Segment size and growth– Segment structural attractiveness

• Level of competition• Substitute products• Power of buyers• Powerful suppliers

– Company objectives and resources

Target Marketing

• Selecting Target Market Segments– Undifferentiated (mass) marketing– Differentiated (segmented) marketing– Concentrated (niche) marketing– Micromarketing (local or individual)

• Shampoo• Shampoo for dry hair, long hair etc• Shampoo with natural ingredients• Shampoo for Hair salons

Company

Company

Company

Choosing a Target Marketing Strategy

• Considerations include:– Company resources– The degree of product variability– Product’s life-cycle stage– Market variability– Competitors’ marketing strategies– References, experience with the market

Positioning

– The term 'positioning' refers to the consumer's perception of a product or service in relation to its competitors.

– Positioning is all about 'perception'. – Perception differs from person to person, market

to market e.g what you perceive as quality, value for money,

etc, is different to my perception

Essentials of Segmentation / Targeting• What is the size of your market?• What unique need does your product/ services meet? • How much are customers willing to pay for your product/ service (top/

bottom/average)?• Is this a price sensitive/ commodity product or premium product?• Who are the other key players?• What is the gap un-serviced by current players?• What is the REAL available market for you?• How is your product different from competition?• What is your playing field? (premium/ general/ price warrior) • What share of this can you reasonably expect to get?