Content of the Lecture • Definition of Market Segmentation • Purpose of segmentation • Types of segmentation • Segmentation process • Levels of segmentation
Mar 24, 2016
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?