Session 19

Marketing Management

Learning from the Session

Conversion model in behavioral

segmentation Bases for segmenting business markets Buyer decision process for new products

Conversion model in behavioral segmentation

Helpful in analysis of strength of consumers psychological
commitment and their openness to change . Segmentation of users and non-users of a brand into various groups, based on strength of commitment and openness to change Segmentation of users based on strength of commitment Convertible ---Least commitment to the brand, ready to shift immediately Shallow --- Switching possible in short term, considering alternatives Average --- No strong commitment to the brand, no switching in short term Entrenched --- Strong commitment to the brand , no switching in long term

Conversion model in behavioral segmentation

Segmentation of non-users based on openness to change Strongly unavailable --- No brand switching, strong preference of the current brand Weakly unavailable --- No strong preference of the current brand Ambivalent --- Attracted to other brands as much as to their current brand Available --- Most likely to switch in short term

Bases for segmenting business markets

Various criteria such as demographic, operating variables, purchasing approaches, situational factors I Demographic Industry --- eg. Software industry, mining industry Company size --- Big or small eg. Infosys, Mind tree Location --- eg. State, Zones/regions, Country II Operating variables Technology --- Technologies to be focused on eg. Blue tooth, USB User or nonuser status --- Heavy users, medium or light eg. Tariff plans of Vodafone, Airtel Customer capabilities --- Customers with few or many needs

Bases for segmenting business markets

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III Purchasing approaches Purchasing function organisation ---- Serve companies with highly centralized or decentralized purchasing organization Power structure ---- Serve engineering dominated (IBM), financially dominated companies (ICICI) Nature of existing relationship ---- Serve companies with which it has strong relationship or serve most desirable companies General purchasing policies ---- Serve companies which prefer leasing/ service contract/systems purchases/ sealed bidding Purchasing criteria ---- Serve companies seeking quality/service/ price

Bases for segmenting business markets

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IV Situational factors Urgency --- Serve companies which require quick delivery of products and services Specific application --- Focus on specific product application Size or order --- Focus on large/small orders V Personal characteristics Buyer-seller similarity --- Serve companies with values similar to the seller eg. Eco-friendly company Attitude towards risk --- Serve risk taking/ risk avoiding customers Loyalty --- Serve companies which show high loyalty to suppliers

Essential criteria for effective segmentation Measurable : Size, purchasing power and
characteristics of segments Substantial : Large and profitable for companies to serve Accessible: Easy reach for quick service Differentiable : Segments should respond differently to different elements of marketing mix Actionable : Helps in effective formulation of programs for attracting target customers