RM Ch 5 Retail Market Segmentation

Chapter # 5 Retail market segmentation

Presented BY:Abdirisak 1411-307029Saeed 1411-307056Hassan 1411-307001Jama 1411-307035Hassan 1411-307055

Learning objectives

To understand the meaning of market segmentation

To understand the be befits of segmenting market

To outline the criteria for market segmentation

Te examine the dimensions on which market can be segmented

To understand how to identify n select target market

To understand how to develop profile of target segment

To examine market segmentation practices followed in India

Introduction

A market is group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods n services that can satisfy the needs.

Market leads to higher sales.Mass marketing saves on costs by the retailersIt is becoming obsolete because of distribution

channels, internet, TV channelsHence retailers need to understand the criteria to

segment markets

Market segmentation

Market segmentation is the process of dividing the

heterogeneous total of market in to small groups of

customer who shares similar set of wants like :-

On the basis of gender

On the basis of culture

On the basis of age

On the basis of religious practices

On the basis of house hold incomes

Benefits of market segmentation

Development of market mix; in terms of product,

service, price, strategy, promotion.

Store location: segmentation helps a retail chain in

deciding a locations for it’s a new store.

Understand customers behavior: The failure or

success in any business is dependable upon the

behavior of the end-user or consumer who finally

uses the product or any services.

Cont…..

Merchandizing decision: merchandising is

essentially the skill that decides which the items

will go on shelves.

Promotional campaigns: a coordinated series

of promotional efforts built around a single theme

and designed to achieve a specific objective.

Positioning: creating an identity in the minds of a

target market

Segmenting, targeting, n positioning.Segmentation: chose variable state profile of segment verify perspective segmentTargeting: decide on targeting which segment be targeted how many segments be there

Positioning: understand target segment decide location evolve market mix

Criteria for effective market segmentation

Homogeneous within; customer should have similar

needs n wants n follow similar buying behavior

Heterogeneous between; customer in different

segments should be as different as possible

Substantial; should be large enough

Atoneable; must be identifiable

Accessible

Measurable ; to understand the size of market

Types of markets

Consumer

Industrial

Re-seller

Consumer

Consumer market individuals and households who

buy goods and services for their own use like:-

Convenience product.

Shopping product.

Specialty product.

Unsought items.

Industrial and Re-seller

A industrial market includes individuals, groups, or

organizations that purchase products or services for

direct use in the producing other products.

Re-seller market includes middle men or

intermediate such as wholesalers and retailers, who

buy finished goods and re-sell them for a profit.

Dimensions for segmentation

Geographic segmentation:

segmentation is based on variables such as: Continent. Country.Region.Urban. Suburban. Rural.

Demography

The market is divided in to groups based on demographic variable such as:-

Age Religion Gender Income level Social classes Occupation Educational level and Marital status

Psychological segmentation

Market based on Psychological characteristics

it divides buyers into different group.

Lifestyle

Personality

Values

Behavior segmentation

This are divided into groups:

Reason/ occasion for buying

Frequency of purchase

Quantity of purchase

Product usage

Loyalty status

Buyer readiness

Source of purchase

Market targeting choosing the segment to focus:

Size of the segment

Purchasing power

Growth rate

Presence of competition

Retailers capacity to serve

Share among customers

Customer profile:

Retailer must develop customer profile in the

identified target segment

Market research may be required to understand

the needs of the customers

Cont…

Customer profile may contain

customer demographics, age, sex, edu,

Family decision making

Psychographics

live style

value

Purchasing behavior of the target population:

Purchase motivation

Purchasing process

Sources of purchase

Time utility

Place utility

Survey of buyers intensions

Frequency of visits to store

Weekday/weekend shopping pattern

Store selection criteria

Spending per visit

Planned v unplanned shopping

Store loyalty

Trail attributes:

Price

Quality

Brand

Variety of merchandise

salesperson

Special offers

Promotional offers

Cont…

Packaging

Location

Guarantee/adjustment

Store deco

Payment terms

Questions1. How retailers create it’s market segmentation?

2. How retailers can benefit for market segmentation ?

3. Do you thing that culture can effect market segmentation ? And how ?

4. Why the marketers need to develop the marketing mix of each segment?

5. Segmentations helps in retailer in merchandising decision , how ?

6. How effective market segmentation influences consumer purchasing decision

making ?

7. why Market researchers may require to understand the needs of the

customers ?

8. Do you think behavioral segmentation is useful for retailers ? And how ?

Cont..

9. Why it’s necessary for the retailers to develop customer profile ?

10. How market segmentation helps the promotional campaigns ?

11. In which way retails can maximize the homogeneity with in segment?

12. How the size of the market influence the segmentation process?

13. How life style ,personality ,and value can participate retailers segmentation ?

14. WHAT RETAIL STORE ATTRIBUTES ARE IMPORTANT TO THE ELDERs ?

15. How can a retailers identify the segments that make up a market?

16. What criteria can a company use to choose the most attractive target market?