A SEMINAR REPORT ON SEGMENTING AND TARGETING THE MARKET Submitted in partial fulfillment of the requirement for the degree of MASTERS OF BUSINESS ADMINISTRATION Session (2009-11) SUBMITTED TO: - SUBMITTED BY:- Ms. POOJA KAURA VINAY BANSAL Lecturer, DIET M.B.A Ist Semester ROLL NO.1439143
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ASEMINAR REPORT
ON
SEGMENTING AND TARGETING THE
MARKET
Submitted in partial fulfillment of the requirement for the degree ofMASTERS OF BUSINESS ADMINISTRATION
Session (2009-11)
SUBMITTED TO: - SUBMITTED BY:-Ms. POOJA KAURA VINAY BANSAL Lecturer, DIET M.B.A Ist Semester ROLL NO.1439143
DOON VALLEY INSTITUTE OF ENGINEERING & TECHNOLOGY, KARNAL
(APPROVED BY AICTE AND AFFILIATED TO KURUKSHETRA UNIVERSITY, KURUKSHETRA)
ACKNOWLEDGEMENT
In the completion of the project work, there is a feeling of satisfaction and in this moment
of happiness, I feel prompted to record my sincere gratitude for those who were a source
of inspiration, encouragement and guidance.
I am highly indebted to my guide Ms. POOJA KAURA, (Lecturer, Diet, Karnal), for her
valuable guidance and constant encouragement throughout the project work.
Finally it is an opportunity of immense pleasure to study under the guidance of highly
qualifies, dedicated and experienced faculty members of Doon Valley Institute of
Engineering & Technology (Karnal), the prestigious institution that has emerged as a
premier centre for excellence in MBA.
With great happiness and gratitude, I would also like to extend my sincere thanks to our
principal Mr. HARISH ABHICHANDANI and my mentor Mrs. MANISHA
TANWAR(H.O.D), for all their support and guidance.
VINAY BANSAL
PREFACE
The purpose of this report is to study different market segmentation skills. Consumers come into the market with their own unique set of preferences and resources. However, from the perspective of both the researcher and marketer there are sufficient similarities between individual consumers to warrant grouping them into “segments." These similarities are not restricted to their demographic characteristics alone, they may include motivations, values, lifestyles, the way in which consumers use products, their spending patterns, purchase behavior, and so on. The definition of a consumer market segment is "a relatively homogenous group of individuals whose motivations, product needs, and purchase behaviors, are similar."
GOAL OF THE REPORTThe goal of the report is to provide a market segmentation framework for a specific product market. The framework must include:
Identifying and naming two market segments within the market that is consumer and industrial market which are studied on different bases separately. Study of different bases helps marketer to choose best strategy according to his suitability and nature of product.Fully analyzing each of these market segments following the targeting strategies.Coming to some conclusions about the market attractiveness (profit potential) of each segment, and market segments not being served in the current market environment which potentially could be profitable.
CONTENTS
Acknowledgement Preface
Table of contents:Sr.No. Topic Page No.1. INTRODUCTION 12. NEED OF SEGMENTATION 43. OBJECTIVES 54. CRITERIA FOR EFFECTIVE SEGMENTATION 6
4.1 SEGMENTING CONSUMERMARKET 8
4.2 SEGMENTING INDUSTRIALMARKET
5. PRODUCT DIFFERENTIATION
AND MARKET SEGMENTATION
6. ADVANTAGES AND IMPORTANCE
OF SEGMENTATION
7. TARGETING
8. FACTORS TO BE CONSIDERED
9. TARGET MARKET STRATEGIES
10. HUL SEGMENTATION POLICY
11. MARKET SEGMENTATION OF TOSHIBA
12. MCDONALDS SEGMENTATION POLICY
SEGMENTATION
INTRODUCTION
SEGMENTATION:-
Market segmentation- is the process in marketing of dividing a market into distinct
subsets (segments) that behave in the same way or have similar needs. Because each
segment is fairly homogeneous in their needs and attitudes, they are likely to respond
similarly to a given marketing strategy. That is, they are likely to have similar feeling and
ideas about a marketing mix comprised of a given product or service, sold at a given
price, distributed in a certain way, and promoted in a certain way. Broadly, markets can
be divided according to a number of general criteria, such as by industry or public versus
private sector. Small segments are often termed niche markets or specialty markets.
However, all segments fall into either consumer or industrial markets. Market
segmentation is needed because the marketing concept calls for understanding customers
and satisfying their needs better than the competition. But different customers have
different needs, and it rarely is possible to satisfy all customers by treating them alike.
Buyers together make up markets. These buyers vary in numerous ways. These ways
include difference in their wants, acquiring ability, geographical sites, purchasing
behavior, and buying practices.
An example for how the market for soap may be segmented-
Types of Soap Characteristics of market segment
Beauty soap
E.g.: Dove, Lux, Camay
People who buy beauty soap will be people who want to keep their skin soft. They will
therefore buy soap which contains moisturizers. Women will mainly buy them.
Baby Soap
E.g.: Johnson’s baby Soap
This is a mild soap which will not harm a baby’s skin. It is bought mainly by mothers for
their babies.
Medicated soap
E.g.: Dettol, Lifebuoy
Sometimes soap is sold to help fight acne. This tends to be bought mainly by teenagers,
both male & female.
Non-branded soap
A Business market segment is a group of people or organizations sharing one or more
characteristics that cause them to have similar product or service needs. A true market
segment meets all of the following criteria: it is distinct from other segments (different
segments have different needs), it is homogeneous within the segment,it responds
similarly to a market stimulus, and it can be reached by a market intervention. The term is
also used when consumers with identical product and/or service needs are divided up into
groups so they can be charged different amounts. These can broadly be viewed as
'positive' and 'negative' applications of the same idea, splitting up the market into smaller
groups. Market segmenting is the process that a company divides the market into distinct
groups who have distinct needs, wants, behavior or who might want different products &
services.
The process of segmentation is distinct from targeting (choosing which segments to
address) and positioning (designing an appropriate marketing mix for each segment). The
overall motive is to identify groups of similar customers and potential customers; to
prioritize the groups to address; to understand their behaviour ; and to respond with
appropriate marketing strategies that satisfy the different preferences of each chosen
segment. Revenues are thus improved.
Improved segmentation can lead to significantly improved marketing effectiveness.
Distinct segments can have different industry structures and thus have higher or lower
attractiveness. With the right segmentation, the right lists can be purchased, advertising
results can be improved and customer satisfaction can be increased leading to better
The purpose for segmenting a market is to allow marketing/sales program to focus on the
subset of prospects that are "most likely" to purchase manufacturer offering. If done
properly this will help to insure the highest return for marketing/sales expenditures.
Depending on whether manufacturer are selling to individual consumers or a business,
there are definite differences in what marketer will consider when defining market
segments
Segmentation is essentially the identification of subsets of buyers within a market who
share similar needs and who demonstrate similar buyer behavior. The world is made up
from billions of buyers with their own sets of needs and behavior. Segmentation aims to
match groups of purchasers with the same set of needs and buyer behavior. Such a group
is known as a 'segment'. Think of a market as an orange, with a series of connected but
distinctive segments, each with their own profile.
Of course a marketer can segment by all sorts of variables. The diagram above depicts
how segmentation information is often represented as a pie chart diagram - the segments
are often named and/ or numbered in some way.
NEED OF SEGMENTATION
The first thing we can establish is a category of need that our offering satisfies.
For businesses: Strategic -Segmentation is in some way important to the enterprise mission,
objectives and operational oversight. For example, a service that helped evaluate capital investment opportunities would fall into this domain of influence. The purchase decision for this category of offering will be made by the prospect's top level executive management.
Operations - Segmentation affects the general operating policies and procedures. Examples might be an employee insurance plan or a corporate wide communications system. This purchase decision will be made by the prospect's top level operations management.
Functional - Segmentation deals with a specific function within the enterprise such as data processing, counting, human resources, plant maintenance, engineering design, manufacturing, inventory control, etc. This is the most likely domain for a product or service, but we must recognize that the other domains may also get involved if the purchase of the product or service becomes a high profile decision. This purchase decision will be made by the prospect's functional management.
For the individual consumer: Social Esteem or Pleasure - Segmentation satisfies a purely emotional need in the
consumer. Examples are a mink coat or a diamond ring. There are some products that are on the boundary between this category and the Functional category such as a Rolex watch (a Timex would satisfy the functional requirement and probably keep time just as well).
Functional - Segmentation meets a functional requirement of the consumer such as a broom, breakfast.
OBJECTIVES OF SEGMENTATION
1. To make grouping of customers on the basis of their homogeneous characteristics
such as nature, habit, behaviour, income, age, education, profession, religion, etc.
2. To identify the needs ,tastes ,priorities ,buying-motives of the target consumers
3. To determine marketing strategies, targets and goals of the firm.
4. To make the activities of the firm consumer-oriented.
5. To identify the areas where the consumers may be created and market area can be
explained.
DIFFERENCE BETWEEN MARKET SEGMENTATION AND
MARKET SEGMENT
There is a difference between market segmentation and market segment. Market
segmentation is a process by which the market is divided in different segment on the
basis of some common characteristics of the consumers such as: income, sex, age,
education, profession, religion, etc whereas market segmentation is that part of whole
market in which we find uniformity in the buying trend or demand of every consumer.
CRITERIA FOR EFFECTIVE SEGMENTATION
Following are the criteria for effective market segmentation
1. IDENTIFIABLE : The segment or the group of consumer must be clearly
defined. That is, who is in the segment & who is outside the segment. The
marketer must be able to identify the members of the segment on the basis of
some characteristics. There must be clear differences between segments.
2. MEASURABLE: The effectiveness of the segmentation depends on the
measurability of the variable on the basis of which market is segmented. There are
many basis for segmenting the market. But whatsoever the base is taken that must
be measurable & obtainable in terms of data for effective segmentation.
3. ACCESSIBLE : The segment which is identified must be accessible so that a firm
can reach it through suitable means of communication and channels of
distribution.
4. RESPONSIVENESS: The identified market segment should respond favourably
to our marketing efforts. Different segments unless they respond in unique way to
particular marketing efforts hardly justify the use of a separate marketing
programme.
5. SIGNIFICANT: Another criteria for effective sementation is that it must be
worthwhile for cultivating & exploring it. It must have sufficient buying power.
The demand prospect should be sufficiently bright and profitable too.
6. SUBSTANTIABLE: The segment must be large enough to justify a separate
marketing programme. It should be large enough to justify the investment
required to market the product in it. It should be large enough to be profitable.
Substantiality not only depends upon the number of actual and potential buyers
but also on their purchasing power.
CRITERIA OF MARKET SEGMENTATION
According to Philip Kotler, segment marketing offers several benefits over mass
marketing. The company can market more efficiently, targeting its products and
services, channels and communication programmes towards the consumers that it
can serve best and most profitably. The company can also market more
effectively by matching its products, prices and programmes according to the
needs of carefully defined segments.
The step towards developing a segmentation strategy is to locate the base or basis
for segmenting the market. There are different basis which are used to segment
the market. Prof. Cundiff and Still have given a very simple division of product
market.
I. Consumer Market.
II. Industrial Market.
According to Philip Kotler, consumer market can be segmented on the basis of: (i)
Geographical basis; (ii) Demographic basis; (iii) Psychological basis; (iv)