Segmentation - Lecture 5 b

8/3/2019 Segmentation - Lecture 5 b

1/23

CONSUMER

SEGMENTATION


2/23

Market Segment

A subgroup within the market who sharecertain relevant characteristics

A group of customers with certaincharacteristics in common & whose needscan be met with a distinct marketing mix

Segmentation & Targeting


3/23

Market segmentation - Definitions

The analytical division of the market intodiscrete groups of customers that sharecommon attributes.

The identification of subsets of buyerswithin a market who share similarities,needs and who have similar buying

processes.



4/23

Niche Marketing

A niche is more narrowly defined group,typically a small market whose needs arenot well served.

Marketers divide it into sub-segments Niches are fairly small and attract few

competitors

Customers are willing to pay more Niche has a size, profit and growth

potential.



5/23

Local & Individual Marketing

Target marketing is leading to marketingprograms being tailored to the needs andwants of the local customer groups( Trading

areas, neighborhoods, even individualstores).

Individual Marketing.The ultimate level of

segmentation leads to segments of onecustomized marketing or one to one

Marketing.



6/23

Patterns Of Market Segmentation

Homogenous preferences:Market where allconsumers have roughly the same preference.

Diffused preferences:Consumers preferences

are scattered, they vary a lot in theirpreferences. First brand to enter the market islikely to position in the center to appeal to mostpeople, a second close to the first, would try to

share the market or can locate in the corner toattract a consumer group not satisfied with theexisting brand..



7/23


Clustered preferences: The market mightreveal distinct preference clusters, callednatural market segments. The first firm in

this market has three options:-

Position in the centre and appeal all

Position in the largest market segment(

concentrated marketing) Several brands for separate segments



8/23

Some Bases for SegmentingConsumer Markets

Slide8-6

Demographic

Segmentation

Geographic

PsychologicalBenefit

Behavior SouthwestAirlines

BMWColgateToothpaste

KnorrSoup

LevisDockers

Table8.2


9/23

Segmenting by Usage andCommitment

Advertising and promotion targeted to:

Heavy users

Nonusers Brand-loyal users

Switchers/Variety seekers

Emergent Consumers

Point of entry marketing strategy



10/23

Demographic Segmentation

Age Gender

Race

Marital Status

Income

Education

Occupation



11/23

11

How about this ad?What is the target

demographic forthis ad campaign?

Ad in Context Example



12/23

Geographic Segmentation

Country / State

Rural / Urban Region

City

Neighborhood



13/23

Psychographics and Lifestyle

Segmentation

Activities

I

nterests

Opinions Lifestyle

Lifestyle segmentationprovides insight intoconsumers

motivations


S i & i


14/23

Benefit Segmentation

Safety?Prestige?

Fuel Economy?

http://rds.yahoo.com/_ylt=A0WTefR8U55JPssAfR6JzbkF;_ylu=X3oDMTBpZm5udGl1BHBvcwM1BHNlYwNzcgR2dGlkAw--/SIG=1kut1jd16/EXP=1235199228/**http%3A//images.search.yahoo.com/images/view%3Fback=http%253A%252F%252Fimages.search.yahoo.com%252Fsearch%252Fimages%253Fp%253DJeep%252Bprint%252Bad%2526fr%253Dyfp-t-501%2526ei%253Dutf-8%2526x%253Dwrt%26w=500%26h=375%26imgurl=static.flickr.com%252F215%252F485288381_a87db1412a.jpg%26rurl=http%253A%252F%252Fwww.flickr.com%252Fphotos%252Fjeepin%252F485288381%252F%26size=148.2kB%26name=missingperson1024%26p=Jeep%2Bprint%2Bad%26type=JPG%26oid=0c7290e2f9ed6250%26fusr=jeepinjason%26tit=missingperson1024%26hurl=http%253A%252F%252Fwww.flickr.com%252Fphotos%252Fjeepin%252F%26no=5%26tt=92%26sigr=11efrkqsi%26sigi=11ek7ue4o%26sigb=12ojcfjos%26sigh=1143lbu83


15/23

Ways to segment

Geographic

Region

Urban/Sub urban

Demographic

Age

Gender

Occupation

Socio-economic group

Psychographic

Life style

Personality

Social status

Behavioral

Rate of usage

Benefits sought

Loyalty status

Readiness to purchase

Ch # 7-Segmentation, Targeting & Positioning

S t ti & T ti


16/23


Homogenous preferences- Market whereall consumers have roughly the samepreference.

Diffused preferences- Consumerspreferences are scattered, they vary a lotin their preferences. First brand to enterthe market is likely to position in the centerto appeal to most people, a second closeto the first, would try to share the market.


S t ti & T ti


17/23


Clustered preferences- The market mightreveal distinct preference clusters, callednatural market segments. The first firm in

this market has three options:- Position in the centre and appeal all

Position in the largest market segment(

concentrated marketing) Several brands for separate segments


S t ti & T ti


18/23

Choice of market segments

Unattractivesegment

Averagesegment

Attractivesegment

Absence ofCompetitive

advantage

Stronglyavoid

Avoid Possible

Avg. interms ofCompetitive

advantage

Avoid Possible Secondarytarget

StrongCompetitiveadvantage

Possible Secondarytarget

Prime target



19/23

Segmentation strategies

Undifferentiated: Ignoresegments

Concentrated or focused:

Concentrate on a singlesegment (Small firms)

Differentiated: Differentmarketing mix for eachsegment (Large firms)



20/23

Undifferentiated Strategy

Also known as market aggregation

Targets entire market with the samemarketing mix segments ignored

Used when segments cannot be identifiedor where aggregation proves moreprofitable than segmentation

Fords Model T car were sold as theuniversal carany car as long as it isblack




21/23

Concentrated strategy

Marketing effort directed at a single highlydefined segment

Niche marketing Rolex watches

Used when one group is especiallyattractive for the organization to target

A useful strategy for smaller firms avoids

a head on collision with major players Provides scope for competitive advantage

in a small niche in the market




22/23

Differentiation Strategy

Multi segment approach

Separate mix for each segment

Expensive In terms of product & marketingcost

Only possible for large firms



23/23

Irwin/McGraw-Hill The McGraw-Hill Companies, Inc., 1998

Sample Positioning Map:Automobiles

Slide8-10

Figure8.6

Traditional Sporty

Functional

Luxurious

Lexus

BMW

Pontiac

Mercedes

Cadillac

Lincoln

ChryslerBuick

Porsche

Chevrolet

Nissan

Toyota

SaturnVW

Ford

Dodge

Mercury

Segmentation - Lecture 5 b

Documents