MARKET SEGMENTATION

Introduction, Definition, Meaning of Market Segmentation Why does an organisation need to segment a market? Steps in Segmentation, Targeting, and Positioning Levels of Market Segmentation Market Segmentation can be done through; Consumer Market Segmentation basis Business Market Segmentation basis International Markets Segmentation basis Requirements for Effective Segmentation Evaluating Market Segments Target Market Selecting Target market segments Choosing a Target Market Strategy Socially Responsible Target Marketing Market positioning Positioning Map Choosing a Positioning Strategy Positioning Errors Competitive advantage Positioning for Competitive Advantage Choosing Right Competitive Advantages

MARKET SEGMENTATION
Introduction
The world is made up from billions of buyers with their own sets of needs / wants and behaviour. Segmentation is essentially the identification of subsets of buyers within a market who share similar needs and who demonstrate similar buyer behaviour / characteristics Segmentation aims to match groups of purchasers with the same set of needs and buyer behaviour. Such a group is known as a 'segment'.

Definition
According to Brassington & Petitt, Market Segmentation is a Dividing markets into relevant, manageable and targetable segments in order to allow better tailored offerings to be developed

Meaning
Market Segmentation: Dividing a market into distinct groups of buyers with distinct needs, characteristics, or behavior who might require separate products or marketing mixes. (4Ps) OR Grouping people according to their similarity related to a particular product category

Why does an organisation need to segment a market?

No single product can satisfy the needs of all customers. Customers differ in their needs for a given product. They will therefore react differently to different product offerings. What would happen if ADIDAS, NIKE, MARUTHI sold only a single product? How well would it compete in the marketplace? What would be the Impact on Profit / sales / market share? Consumers all have different needs and wants Companies must consider - Individual Features & Benefits sought, and the individual characteristics of consumers It follows that a firm can achieve greater profits. Developing products and marketing programs for specific segments rather than for a mass market.

Segmentation can be used to: Guide in the Design of New Products Determine appropriate products and promotional campaigns for different groups Assign Customers and Prospects to Channels Steps in Segmentation, Targeting, and Positioning 1. 2. 3. 4. 5. 6. Identify Basis for Segmenting the Market Develop Profiles of Resulting Segments Develop Measures of Segment Attractiveness Select Target Segment(s) Develop Positioning for Each Target Segment Develop Marketing Mix for Each Target Segment

Target marketing\Market targeting:The process of evaluating each market segments attractiveness and selecting one or more segments to enter. Market positioning:Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

Levels of Market Segmentation Mass Marketing: - Same product to all consumers (no segmentation) Segment Marketing:-Different products to one or more segments (some segmentation) Niche Marketing: - Different products to subgroups within segments (more segmentation) Micromarketing: -Products to suit the tastes of individuals or locations (complete
segmentation)

Market Segmentation can be done through; Consumer Market Segmentation basis Business Market Segmentation basis International Markets Segmentation basis

Basis for Segmenting Consumer Markets

1. Geographic Segmentation:- Dividing an overall market into homogeneous groups on the basis of their locations 2. Demographic Segmentation:- dividing consumer groups according to characteristics such as sex, age, income, occupation, education, household size, and family life cycle 3. Psychographic Segmentation: - dividing a population into groups that have similar psychological characteristics, values, and lifestyles. 4. Socio-cultural Segmentation:-dividing the consumer group according to cultures religious, social classes 5. Behavioral Segmentation:- dividing a consumer population into homogeneous groups based on characteristics such as usage rate, benefits sought, and brand loyalty

Consumer Market Segmentation basis 1. Geographic Segmentation:A) Region or country: North America, India, England, B) City Size: Major metropolitan areas, small cities, towns C) Density of area: Urban, suburban, rural D) Climate: Temperate, hot, humid, and rainy

2. Demographic Segmentation: A) Age: Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+ B) Gender: Male, female C) Marital status: Single, married, divorced, widowed D) Income: under Rs.20,000,20,000-50,000,50,000-1,00,000, and above E) Education: high school graduate, college graduate, postgraduate F) Occupation: Professional, blue-collar, white-collar, agricultural, military

3. Psychological Segmentation:Needs-motivation: Shelter, safety, security, affection, sense of self-worth Personality: Extroverts, novelty seeker, aggressive, Perception: Low-risk, moderate-risk, high-risk Learning involvement: Low-involvement, high-involvement Attitudes: Positive attitude, negative attitude Lifestyle: Economy-minded, outdoors enthusiasts, status seekers Achievers, strivers, survivors.

4. Socio-cultural Segmentation:Cultures: American, Italian, Chinese, Mexican, French, Pakistani Religions: Hindu, Muslim, Catholic, Protestant, other Subcultures: Religious groups, communities, Social class: Lower, middle, upper Family life cycle: Bachelors, young married, full nesters, empty nesters

5. Behavioral Segmentation: Use-Related Segmentation:Usage rate: Heavy users, medium users, light users, non users Awareness status: Unaware, aware, interested, and enthusiastic Brand loyalty: None, some, strong

Use-Situation Segmentation:Time: Leisure, work, rush, morning, night Objective: Personal, gift, snack, fun, achievement Location: Home, work, friends home, in-store Person: Self, family members, friends, boss, peers

Benefit Segmentation:-

Convenience, social acceptance, long lasting, economy, and value-for-the-money

Market Segmentation
Best to use multiple approaches in order to identify smaller, better-defined target groups. Start with a single base and then expand to other basis.

Segmenting Business(Industrial) Markets

Consumer and business markets use many of the same variables for segmentation. Business marketers can also use: 1. Personal Characteristics : Buyer-seller similarity Attitude towards risk Loyalty

2. Operating Characteristics : Technology User and non user status 3. Purchasing Approaches : Centralized/decentralized Purchase policies : Urgency Size of order

4. Situational Factors

Segmenting International Markets

Factors used: Geographic location Economic factors Political and legal factors Cultural factors Intermarket segmentation: Segments of consumers who have similar needs and buying behavior even though they are located in different countries.

Requirements for Effective Segmentation

Measurable: Size, purchasing power, profiles of segments can be measured. Accessible: Segments must be effectively reached and served. Substantial: Segments must be large or profitable enough to serve. Differential: Segments must respond differently to different marketing mix elements & actions. Actionable: Must be able to attract and serve to segments.

Evaluating Market Segments

Segment Size and Growth Analyze sales, growth rates and expected profitability.

Segment Structural Attractiveness

Consider effects of: Competitors, Availability of Substitute Products and, the Power of Buyers & Suppliers.

Company Objectives and Resources

Company skills & resources relative to the segment(s). Look for Competitive Advantages.

Target Market A set of buyers sharing common needs or characteristics that the company decides to serve. Selecting Target market segments: Undifferentiated marketing: A market coverage strategy in which a firm decides to ignore market segment difference and go after the whole market with one offer. Differentiated marketing: A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each. Concentrated marketing: A market-coverage strategy in which a firm goes after a large share of one or a few sub markets. Micromarketing: Tailoring products and marketing programs to suit the tastes of specific individuals and locations. Local Marketing: Tailoring brands and promotions to the needs and wants of local customer groupscities, neighborhoods, specific stores. Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers.

Choosing a Target Market Strategy Factors to Consider: Company Resources: When the firms resources are limited, concentrated marketing makes the most sense. Product Variability: Undifferentiated marketing is suited for uniform products such as fruits and steel. Products that can vary in design, such as cameras and automobiles are more suited to differentiation or concentration. Products Life-Cycle Stage: When a firm introduces a new product, it may be practical to launch only one version, and undifferentiated marketing or concentrated marketing may be suitable. In mature stage differentiated marketing make more sense. Market Variability: If most buyers have the same tastes, buy the same amounts, and react the same way to marketing efforts, undifferentiated marketing is appropriate.
Competitors Marketing Strategies: When competitors use undifferentiated marketing, a firm can gain an advantage by using differentiated or concentrated marketing

Socially Responsible Target Marketing Smart targeting helps both companies and consumers to be more efficient and effectively focusing on the segments that can satisfy best and most profitable. Target marketing sometimes generates controversy and concern. Vulnerable and disadvantaged consumer with controversial or potentially harmful products can be targeted. Examples are Cereal, cigarette, beer, and fast-food marketers have received criticism. Internet has raised fresh concerns about potential targeting abuses.

Market positioning:Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. so organization has to concentrate on the competitive advantage through differentiation

Positioning Map In planning their positioning strategies, a marketer often prepares perceptual positioning maps, which show consumers perceptions of their brands versus competing products on important buying dimensions. Choosing a Positioning Strategy 1 Identify a set of possible competitive advantages on which to build a position 2 Choose the right competitive advantages 3 Select an overall positioning strategy Positioning Errors Under positioning: Failing to really position the company at all. Over positioning: Giving buyers too narrow a picture of the company. Confused Positioning: Leaving buyers with a confused image of a company. Competitive advantage extent to which a company can position itself as providing superior value. Product Differentiation:(e.g., consistency, durability, reliability, reparability) Services Differentiation: (e.g., speed, convenience, careful delivery) Image Differentiation (e.g., convey benefits and positioning) People Differentiation (e.g., hiring, training better people than competitors) Channel Differentiation.

Positioning for Competitive Advantage Beyond deciding which segments of the market it will target, the company must decide what positions it wants to occupy in those segments. Products position is the way the product is defined by consumers on important attributes. The place the product occupies in consumers minds relative to competing products.

Ex: - Tide as a powerful--- all-purpose family detergent.

Rolls Royce ---- Luxury car TATA nano ---- suitable for middle class

Identifying Possible Competitive Advantages Key to winning target customers is to understand their needs better than competitors do and to deliver more value. Choosing Right Competitive Advantages A difference is worth establishing to the extent that it satisfies the following criteria: Important: the difference delivers a highly valued benefit to target buyers. Distinctive: competitors do not offer the similar, or the company can offer it in a more distinctive way. Superior: the difference is superior to other ways that customers might obtain the same benefits. Communicable: the difference is communicable and visible to buyers. Preemptive: competitors cannot easily copy the difference. Affordable: Buyers can afford to pay for the difference. Profitable: the company can introduce the difference profitably. Developing a Positioning Statement: - Developing a Positioning Statement is
important for an organization with the support of organization environment

Communicating and delivering the chosen position: - communicating and delivering the position through various communication mix