Identify Market Segments

Week 3

Lecture Outline

Bases for Segmenting Consumer Markets.

Different Levels of Market Segmentation.

Bases for Segmenting Business Markets

Target Marketing

Differentiation and Positioning of Market Offerings

To be able to understand the different levels of Market Segmentation.

To identify the requirements for Effective Segmentation.

To understand how can a company choose the most attractive target markets

To understand the process of dividing market into segments.

Learning Outcomes

Effective Targeting Requires

Identify and profile distinct groups of buyers who differ in their needs and

preferences

Select one or more market segments to enter

Establish and communicate the distinctive benefits of the market offering

Segmentation is a means to target marketing. Target marketing is the

choice of specific segments to serve. It is up to the firm to evaluate the

segments and decide which one to serve. It should examine two broad issues:

1. Relative attractiveness of the market segments

2. Companys capability to compete in various segments

Four levels of Micromarketing

Segments

Local areas Individuals

Niches

Market Segment?

A market segment consists of a group of customers who share a similar set of

needs and wants. Or

Segmentation is the process of dividing the market of a product or service in

smaller groups of customers.

The customers of one group should:

Buy the product for the same purpose

Use the product in the same way

Buy the product in the same way

But the customers in one segment should be different from customers of

any other segment in one or more of the above parameters

Examples:

Sportspersons use Nike shoes to enhance their performance

whereas the same shoes are used by us as casual shoes

People drive cars in different manners. Some are rough

drivers while others drive it easy on the road

The grocery are bought either from the neighbourhood stores or

at upscale stores at malls

Customer Value Proposition

Segmentation refers to the process of identifying clusters of customers who

desire the same value proposition

Customer Value proposition is a unique mix of product and services attributes,

customer relations, and corporate image that a company offers

Customer value Proposition defines how the organization will differentiate

itself from competitors to attract, retain and deepen relationships with target

customers

An effective process of segmentation should result in a different sets of

internal processes for each segment, because only a unique set of internal

processes will create a unique value proposition for the customer

Flexible Marketing Offerings

Naked solution:

Product and service

elements that all

segment members

value

Discretionary

options: Some

segment members

value options but not

all

Preference Segments

Homogeneous preferences exist when consumers want the

same things

Diffused preferences exist when consumers want very

different things

Clustered preferences reveal natural segments from groups

with shared preferences

The Himalaya Drug

Company serves a

growing niche market

by focusing on

ayurvedic medicines

and health supplements

The Long Tail

Chris Anderson explains the long tail equation:

The lower the cost of distribution, the more you can

economically offer without having to predict demand;

The more you can offer, the greater the chance that you

will be able to tap latent demand for minority tastes;

and

Aggregate enough minority taste, and you may find a

new market.

Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioral

Geographic Segmentation

International Markets

National Markets

Regional Markets

Sub Regional Markets

Local Markets

Demographic Segmentation

Age and Life Cycle

Life Stage

Gender

Income

Generation

Social Class

Bank Al Habib

targets

senior citizens

Dove Targets Women

Psychographic Segmentation

Beliefs & Values

Perception

Attitudes

Lifestyle

Personality

Behavioral Segmentation

Decision Roles

Initiator

Influencer

Decider

Buyer

User

Behavioral Variables

Occasions

Benefits

User Status

Usage Rate

Buyer-Readiness

Loyalty Status

Attitude

The Brand Funnel Illustrates Variations in the

Buyer-Readiness Stage

Aware

Ever tried

Recent trial

Occasional user

Regular user

Most often used

Loyalty Status

Switchers

Shifting loyals

Split loyals

Hard-core

Behavioral Segmentation Breakdown

Segmenting for Business Markets

Demographic

Operating Variable

Purchasing Approaches

Situational Factors

Personal

Characteristics

Steps in Segmentation Process

Needs-based segmentation

Segment identification

Segment attractiveness

Segment profitability

Segment positioning

Segment acid test

Marketing-Mix

Strategy

Patterns of Target Market Selection

Cont

Cont..

Pepsi used Mega Marketing in India

Positioning

Positioning is the perception or the image that customers have of the company

and its products

This Perception is the stimulus of the customers attitude and behaviour towards

companys products.

Customers positive perception will drive the business and negative will sink it

Elements of Positioning

Target Market

Undifferentiated Targeting

Differentiated Targeting or Multi Segment Targeting

Concentrated Targeting

Positioning , Differentiation & Marketing

Mix

Product Differentiation

Promotional Differentiation

Distribution Differentiation

Price Differentiation

Repositioning

It involves changing target markets or the differential advantage or

both.

Four generic Repositioning Strategies

Same Product and Target Market, change in image of product

Product Repositioning

Intangible Repositioning

Tangible Repositioning

What u think Now ?

Is mass marketing dead?

Take a position:

1. Mass marketing is dead.

or

2. Mass marketing is still a viable way to build a profitable brand.