CONSUMER SEGMENTATION

Segmentation & Targeting

Market Segment
A subgroup within the market who share certain relevant characteristics A group of customers with certain characteristics in common & whose needs can be met with a distinct marketing mix

Segmentation & Targeting

Market segmentation - Definitions

The analytical division of the market into discrete groups of customers that share common attributes. The identification of subsets of buyers within a market who share similarities, needs and who have similar buying processes.

Segmentation & Targeting

Niche Marketing
A niche is more narrowly defined group, typically a small market whose needs are not well served. Marketers divide it into sub-segments Niches are fairly small and attract few competitors Customers are willing to pay more Niche has a size, profit and growth potential.

Segmentation & Targeting

Local & Individual Marketing

Target marketing is leading to marketing programs being tailored to the needs and wants of the local customer groups( Trading areas, neighborhoods, even individual stores).

Individual Marketing. The ultimate level of

segmentation leads to segments of one customized marketing or one to one Marketing.

Segmentation & Targeting

Patterns Of Market Segmentation

Homogenous preferences: Market where all consumers have roughly the same preference. Diffused preferences: Consumers preferences are scattered, they vary a lot in their preferences. First brand to enter the market is likely to position in the center to appeal to most people, a second close to the first, would try to share the market or can locate in the corner to attract a consumer group not satisfied with the existing brand..

Segmentation & Targeting

Patterns Of Market Segmentation

Clustered preferences: The market might reveal distinct preference clusters, called natural market segments. The first firm in this market has three options: Position in the centre and appeal all Position in the largest market segment( concentrated marketing) Several brands for separate segments

Slide 8-6 Table 8.2

Some Bases for Segmenting Consumer Markets

Levis Dockers Demographic

Knorr Soup

Behavior

Geographic Segmentation

Southwest Airlines

Benefit Colgate Toothpaste

Psychological BMW

Segmentation & Targeting

Segmenting by Usage and Commitment

Advertising and promotion targeted to:
Heavy users Nonusers Brand-loyal users Switchers/Variety seekers Emergent Consumers
Point of entry marketing strategy

Segmentation & Targeting

Demographic Segmentation
Age Gender Race Marital Status Income Education Occupation

Segmentation & Targeting

Ad in Context Example
How about this ad? What is the target demographic for this ad campaign?

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Segmentation & Targeting

Geographic Segmentation
Country / State Rural / Urban Region City Neighborhood

Segmentation & Targeting

Psychographics and Lifestyle Segmentation

Lifestyle

Opinions

Activities

Interests

Lifestyle segmentation provides insight into consumers motivations

Segmentation & Targeting

Benefit Segmentation
Prestige? Safety?

Fuel Economy?

Ch # 7-Segmentation, Targeting & Positioning

Ways to segment
Geographic Region Urban/Sub urban Demographic Age Gender Occupation Socio-economic group Behavioral Rate of usage Benefits sought Loyalty status Readiness to purchase

Psychographic Life style Personality Social status

Segmentation & Targeting

Patterns Of Market Segmentation

Homogenous preferences- Market where all consumers have roughly the same preference. Diffused preferences- Consumers preferences are scattered, they vary a lot in their preferences. First brand to enter the market is likely to position in the center to appeal to most people, a second close to the first, would try to share the market.

Segmentation & Targeting

Patterns Of Market Segmentation

Clustered preferences- The market might reveal distinct preference clusters, called natural market segments. The first firm in this market has three options: Position in the centre and appeal all Position in the largest market segment( concentrated marketing) Several brands for separate segments

Segmentation & Targeting

Choice of market segments

Unattractive Average segment segment Absence of Strongly Avoid Competitive avoid advantage Avg. in Avoid terms of Competitive advantage Strong Possible Competitive advantage Possible Attractive segment Possible

Secondary target

Secondary target

Prime target

Segmentation strategies
Undifferentiated: Ignore segments Concentrated or focused: Concentrate on a single segment (Small firms) Differentiated: Different marketing mix for each segment (Large firms)

Segmentation & Targeting

Undifferentiated Strategy
Also known as market aggregation Targets entire market with the same marketing mix segments ignored Used when segments cannot be identified or where aggregation proves more profitable than segmentation Fords Model T car were sold as the universal car any car as long as it is black

Segmentation & Targeting

Concentrated strategy
Marketing effort directed at a single highly defined segment Niche marketing Rolex watches Used when one group is especially attractive for the organization to target A useful strategy for smaller firms avoids a head on collision with major players Provides scope for competitive advantage in a small niche in the market

Segmentation & Targeting

Differentiation Strategy
Multi segment approach Separate mix for each segment Expensive In terms of product & marketing cost Only possible for large firms

Slide 8-10 Figure 8.6

Sample Positioning Map: Automobiles

Luxurious Mercedes Cadillac Lincoln Chrysler Buick BMW Pontiac Chevrolet Nissan Dodge Toyota VW Functional Saturn Sporty Porsche Lexus

Traditional Mercury Ford

Irwin/McGraw-Hill

The McGraw-Hill Companies, Inc., 1998