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Segmentation & Targeting
SEGMENTATION
WHY ?
•ORGANISATIONS CANNOT SERVE ALL CUSTOMERS
•CUSTOMERS ALSO VARY/ DISPERESED / DIFFER
•OVER A PERIOD MARKETS DIVIDE INTO “NUMEROUS MICRO MARKETS”
Building the Right Relationships with the Right CustomersBuilding the Right Relationships with the Right Customers
A market segment consists of a group of customers who share a similar set of needs and wants.
Geographic
Demographic
Psychographic
Behavioral
12000 < x < 50000
< 12,000> = 50,000
Age < = 30 yrs
30 < x < 40
By income By Age
Income
Race
Occupation Education
Nationality
Age
Religion Family size
Gender
DemographicSegmentation
Social class
Male/femaleLower class
Middle classUpper class
1-2; 3-4; 10+
6yrs; 18-25
Indians, Americans
Post graduateSchool Dropouts
FarmersHomemakersSales people
Asian; White; Parsis
GEOGRAPHIC SEGMENTATION
• REGION (Mountain, Coastal, Urban/Rural)• DENSITY (high density)• CLIMATE (climatic conditions)
PSYCHOGRAPHIC SEGMENTATION
• LIFE STYLE (culture/profession oriented etc.,)• PERSONALITY (ambitious, aggressive, Gregarious)
Psychographic Segmentation and The VALS Framework
Consumer’s Individual resources
Consumer motivation
• Innovators – Successful, Sophisticated, active, “take charge” – relatively upscale
• Thinkers – Mature, Satisfied – seek durability, functionality & value
• Achievers – Successful, goal oriented• Experiencers – young, enthusiastic, impulsive – seek
variety and excitement
• Believers - Conservative, conventional• Strivers – Trendy and success oriented – constrained by
resources• Makers – Practical• Survivors – Passive people
BEHAVIOURALSEGMENTATION
Loyalty Status (strong, low)
Occasions (Regular, special)
R Readiness Stage(Buyer readiness-
only aware?)
User-status (first time users, potential users)
Usage Rate (High usage; Low usage)
Benefits (quality, service, economy, comfort)
Attitude towards pdt (enthusiastic, positive)
• Loyalty status – • Hard-core – who buy one brand all the time• Split loyals: loyal to two or three brands• Shifting loyals: who shift from one brand to other and stay with that for
a while• Switchers: No loyalty to any brand; they switch
• Measurable– Size, purchasing power, and profile of segment
• Accessible– Can be reached and served
• Substantial– Large and profitable enough to serve
• Differentiable– Respond differently from other markets
• Actionable– Effective programs can be developed
Requirements of effective segmentation
>100000 & Metros Niche
Segment on Income, Urban
Market
Niche Marketing—a narrowly defined smaller group whose needs not currently met effectively
NICHE: Special combination of benefits; Consumers have a complex set of needs; leader is not easily attacked by competitor
…..any 3 segmentsIndicate Profile of the segment?
• PERSONAL CARE• Automobiles• RESTAURANTS• GARMENTS• Insurance or Financial products• Retail outlets
1. Identify Bases for Segmenting the market
2. Develop profiles of resulting segments
3. Develop measures to evaluate Segment Attractiveness
4. Select Target Segments
5. Develop positioning for each Target segment
6. Develop Marketing Mix for eachTarget segment
Market segmentation
Market Targeting
positioning
Steps in STP
Steps in STP• Identify segmentation variables & segment the
market. • Develop profiles of Resulting Segments
• Evaluate attractiveness of each segment • Select the target segment(s)
• Identify possible positioning concepts.
• Evaluating Market Segments– Segment size and growth– Segment structural attractiveness
• Level of competition• Substitute products• Power of buyers• Powerful suppliers
– Company objectives and resources
Target Marketing
Competitors(segment rivalry)
Substitutes(Threat)
Suppliers Buyers
Potential EntrantsPorters’ five force model
Selecting the Market Segments• Single segment concentration (concentrated mktg)
• Volkswagen-small car segment & Porsche on sports car segment
• Through concentrated mktg firm gains strong knowledge of segment’s needs. Specialises in production, distribution and promotion.
• Risks – segment may turn sour
P1
P2
P3
M3M1M1
• Selective specialization —select number of segments
• There can exist no synergy among segments but each promises to be a money maker
—multi-segment coverage
• Risks – is diversified & so less risk
• Ex: ITC – classic menthol; Gold flake• Maruti – Ertiga, Celerio, Alto, Swift
P1
P2
P3
M3M1M1
• Market specialization• Serving many needs of a particular consumer group • Firm that sells assortment of products to only Institution
customers
• Ex: Identifying property, Home loan, Legal & architect consulting, Facilities Management for NRIs
• Risks – If that customer group gets affected • Johnson & Johnson baby care
P1
P2
P3
M3M1M1
Selecting the Market Segments
Product specialization—
LPG fuel-Super gas—projects, commercial, households• Risk – substitute pdts
P1
P2
P3
M3M1M1
Selecting the Market Segments
Full coverage—
Firm attempts to serve all customer groups with all the products they might need.
Ex: coca-cola (beverage mkt) Spencer's Hyper (house hold )
Organisations can cover full markets by 2 ways – differentiated Mktg and Undifferntiated mktg
P1
P2
P3
M3M1M1
Company Mktg mix 1Company Mktg mix 2Company Mktg mix 3
Segment 1
Segment 2
Segment 3
Differentiated Marketing
Differentiated marketing – operates in several mkts and designs different products or use different marketing mix to different segments
GM says it produces car for every
“purse, purpose and personality”
Company Marketing Mix
MarketUndifferentiated
Marketing(ignores mkt segment
differences)
Ignores segment differences & goes with one type of offer for the whole market
Designs product & mktg program that appeal broadest number of buyers
Mass distribution & mass advertising
Additional considerations….
• Ethical choice of market targets—liquor publicly available, cigarettes, etc.,
• Segment interrelationships (cost, performance, technology sharing) & Super segments (segment which wants more benefits in one—ex: Aqua fresh tooth paste-white teeth, fresh breath, cavity protection)
--economies of scale; to have synergy