MG 220 Marketing Management BBA 09 – Sec C Fall 2010 Muhammad Talha Salam, Asst. Professor [email protected]Access it online: www.slideshare.net/talhasalam Part 3: Connecting with Customers > Levels of Market Segmentation > Segmenting Consumer Markets > Bases for Segmenting Business Markets Class Presentation | Session 12 | 27 Sep 2010
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Mass Production, Mass Distribution and Mass Promotion of one product for all buyers
COKE’s 300 Ml bottle for everyone
BUT…. Mass marketing is becoming difficult as it is not profitable to reach mass audience always
• Micro-Marketing is done at one of four levels:– Segments - Segment Marketing
– Niches – Niche Marketing
– Local Areas – Local Marketing
– Individuals - Customerization
MG 220 Marketing Management 2
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Levels of Market SegmentationSegment Marketing
• Market Segment consists of a group of customers who share a similar set of needs and wants.
• Clarification of segment & sector• In a sector, consumers may have different preferences
• Who creates Segments? Marketers or ….they just exist• They exist and keep evolving
• Marketer’s task is to identify segments and decide which ones to target
• In today’s research, segment is considered to be partly fiction as not everyone would want exactly same thing….even in a segment
• Thus, Concept of Flexible Market Offering:– Naked Solution – product/service elements that all segment members value– Discretionary options – elements that some segment members value
MG 220 Marketing Management 3
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Levels of Market SegmentationSegment Marketing (…contd.)
• Market Segment can be defined in several ways like ‘preference segments’
• Homogenous Preferences– No difference
• Diffused Preferences– No clear pattern
• Clustered Preferences– Clusters of preferences
Example is for preferences in ice cream’s creaminess and sweetnessCOLORED CIRCLE IS TO SHOW WHERE COMPANY SHOULD OPERATE
(A generalization only)
MG 220 Marketing Management 4
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Levels of Market SegmentationNiche Marketing
• Niche is a narrowly defined customer group seeking a distinctive mix of benefits.
• Niches can be identified by dividing segments into sub-segments
• Segments are fairly large and attract several competitors. Niches are small and attract only one or two
• Characteristics of an attractive niche:– Customers have a distinct set of needs– They will pay premium to firm best satisfying their needs– Niche doesn’t attract other competitors– Niche firm/product gains economies through specialization– Niche has size, profit and growth potential
• Internet businesses have helped niches grow a lot
MG 220 Marketing Management 5
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Levels of Market SegmentationLocal Marketing
• Marketing programs tailored to needs and wants of local customer groups
• A growing trend also called ‘grassroots marketing’
• Marketing activities concentrated on getting as close and personally relevant to individual customers as possible
• Those favoring Local Marketing consider national advertising to be wasteful
• Those against Local Marketing consider it to increase manufacturing costs by reducing economies of scale and increased logistical problems
MG 220 Marketing Management 6
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Levels of Market SegmentationCustomerization
• Ultimate level of segmentation: Segments of one
• Customerization combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the products and service offering of their choice.
• Choice to be made between going for Segments (Segment marketing) or Individuals (Customerization)
• Those favoring segmentation: More efficient | Less customer information | More standardization
• Those favoring Customerization: Segments are fiction | Those in a segment differ greatly
MG 220 Marketing Management 7
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Segmenting Consumer MarketsKey Points
• Two broad set of variables used in segmentation:– Descriptive Characteristics
• Geographic
• Demographic
• Psychographic
– Behavioral Characteristics
• Consumers are divided and it needs to be seen whether they have different preferences towards product or not
• Age and Life-Cycle Stage– Wants and abilities change with age– Age segmentation can be refined further– Important to do it carefully by understanding consumers’ preferences as they change– New Swift advertisement
• Life Stage– What events and stages a person goes through in his/her life– They affect buying behavior– Users in age group of 50-60 are about to retire from work life and are
segmented/targeted for pension plans etc.
• Gender– Importance of understanding how they differ in purchasing behavior– How they approach purchase decision is to be observed
• Income– Long-standing and established practice– Again understanding of exact behaviors is important– People from middle class in income may be targeted with premium products