Market Segmentation

STP

Market segmentation

1. Identify bases for segmenting the market.

2. Develop segment profiles

Target marketing

3. Develop measure of segment attractiveness

4. Select target segments.

Market positioning

5. Develop positioning (differentiation) for target segments.

6. Develop a marketing mix for each segment.

Dividing a market into smaller groups of buyers distinct needs, characteristics, or behavior who might require separate products or marketing mixes

Buyers differ in◦ Wants◦ Resources◦ Locations◦ Buying attitudes◦ Buying practices

Through market segmentation, companies divide large, heterogeneous (different) markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs

Buyers differ in◦ Wants◦ Resources◦ Locations◦ Buying attitudes◦ Buying practices

Through market segmentation, companies divide large, heterogeneous (different) markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs

1)Facilitates proper choice of tgt market Segmentation helps the marketer to

distinguish one customer group from another within a given market.

2)Adapting the offer to the target Segmentation also enables the marketer to

crystallize the needs of the target buyers.Ex:Ford modifies its models for the Indian target

segment. Higher ground clearance to make the car more

compatible to the rougher road surface in India.

Stiffer rear springs to enable negotiating the potholes on Indian roads.

Changes in cooling requirement with greater airflow to the rear.

Higher resistance to dust Comparability of engine with the quality of

fuel available in India Location of horn buttons on the steering

wheel

3)Makes the marketing effort more efficient & economic

Helps identify less satisfied segments and concentrate them

4)Benefits the customer as well

Dividing a market into different geographical units such as nations, states, regions, Metros, cities or neighborhoods

Dividing the market into groups based on demographic variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race and nationality

Most popular because our needs, wants and usage rates depend on the demographics

Dividing a market into different age and life cycle groups

Kids (corn flakes), adults, magazines (teen stuff)

Gender segmentation Dividing a market into different groups

based on gender Clothing, cosmetics, perfumes

Dividing the market into different income groups

Cars, financial services

Dividing a market into different groups based on social class, lifestyle or personality characteristics

Dividing a market into groups based on consumer knowledge, attitude, use, or response to a product

Occasion segmentation◦Dividing the market into groups according to occasions when buyers get the idea to buy

Benefit sought segmentation◦Dividing the market into groups according to the different benefits that consumers seek from the product (detergent)

Using multiple segmentation bases in an effort to identify smaller, better defined target groups

Measurable Accessible Differentiable (segment is unique) Actionable (can perform marketing mix to

reach this segment)

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Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

DifferentialDifferential

ActionableActionable

• Segments must be large or profitable enough to serve.

• Segments can be effectively reached and served.

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

• Segments must respond differently to different marketing elements & actions.

• Must be able to attract and serve the segments.

Ethical Choice of Market Targets

Segment Interrelationships & Super-segments

Segment-by-Segment Invasion Plans

Inter-segment Cooperation

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Market segmentation

1. Identify bases for segmenting the market.

2. Develop segment profiles

Target marketing

3. Develop measure of segment attractiveness

4. Select target segments.

Market positioning

5. Develop positioning (differentiation) for target segments.

6. Develop a marketing mix for each segment.

The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter

Segment size Growth Segment attractiveness Company objectives and resources Competitors Buying power Supplier power

Target market◦ A set of buyers sharing common needs or

characteristics that the company decides to serve

Selecting the market segments Single segment concentration Selective specialization Product specialization Market specialization Full market coverage

Undifferentiated Strategy

One marketing mix for the whole market

Concentrated (niche) Strategy

One marketing mix and one segment

Differentiation Strategy

Two marketing mix and 2 different segment

TOI BMW

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Single-segmentSingle-segmentconcentrationconcentration

ProductProductspecializationspecialization

M1 M2 M3 P1

P2

P3

SelectiveSelectivespecializationspecialization

M1 M2 M3 P1

P2

P3

M1 M2 M3

Full marketFull marketcoveragecoverage

P1

P2

P3

MarketMarketspecializationspecialization

M1 M2 M3 P1

P2

P3

P1

P2

P3

M1 M2 M3

P = ProductP = ProductM = MarketM = Market

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Company B Company CCompany A

Customer Groups

Pro

du

ct V

arie

ties Large

computers

Personalcomputers

Mid-sizecomputers

TruckersRailroadsAirlines

Selecting the market segments Single segment concentration Selective specialization Product specialization Market specialization Full market coverage

Market segmentation

1. Identify bases for segmenting the market.

2. Develop segment profiles

Target marketing

3. Develop measure of segment attractiveness

4. Select target segments.

Market positioning

5. Develop positioning (differentiation) for target segments.

6. Develop a marketing mix for each segment.

The way that product is defined by consumers on important attributes - the place the product occupies in consumer’s minds relative to competing products

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• •Volvo 850R

Chrysler LHS

Buick Park Avenue

Oldsmobile L35

Honda Accord

Nissan Sentra

Plymouth VoyagerDodge Caravan

Geo Metro

Kia Sephia

Dodge Neon

Saturn SC2

Porsche 914

Mercedes 400SE

Lexus LS400

Jeep Grand CherokeeAcura Integra

Ford Taurus

Honda Civic

Stylish, prestigious, distinctive

Practical, common, economical

Staid, conservative, older

Fun, sporty,

fast

TM3 TM2

TM1

Marketing mix: the set of controllable tactical marketing tools: product, price, place and promotion that the firm blends to produce the response it wants in the target market

Differentiation is the act of designing a set of meaningful differences to distinguish the company’s offering from the competitor's offering

Product Differentiation: Form Feature Performance Durability Reliability Reparability Style Design

Services Ordering ease Delivery Installation Customer training Customer consulting Maintenance & repair Miscellaneous

Personal Competence Courtesy Credibility Reliability Responsiveness Communication

Channel Coverage Expertise Performance Image Symbols Media Atmosphere