7 market segmentation & market targeting


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market segmentation & market targeting

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7 market segmentation & market targeting

  1. 1. Market Segmentation & Market Targeting
  2. 2. 4 step approach to marketing • Segmentation • Market Targeting • Product Differentiation • Product Positioning
  3. 3. Why do we need to segment? • Customers are : • too numerous • too dispersed • too varied in terms of their buying habits • have varied requirements • Market is therefore heterogeneous • Segmentation attempts to disaggregate the total market into homogenous units
  4. 4. • Characteristics of the groups vary among the various groups but be uniform within individual groups. • Also referred to as Target Marketing • It helps the seller to: • Develop the right offer • Adjust prices • Select distribution channels • Direct the right communication for each
  5. 5. SEGMENTATION & TARGET MARKETING • Segmentation symbolises a movement from mass marketing to more focused marketing….segmenting the market and targeting. • Market Segmentation…dividing the heterogeneous market into homogenous groups, whose needs/wants could be satisfied by specific products • Market Targeting…evaluating & deciding from amongst the various alternatives, which segment can be satisfied best by the company.
  6. 6. SEGMENTATION VARIABLES: Consumer markets • Geographic…Country, City, District, climate • Demographic…Age, gender, family size, family life cycle, Income, occupation, education level etc. • Psychographic…Social class, life style, personality, achiever, striver, strugglers, ambitious • Behavioral…Regular/occasional; quality/economy; convenience/speed; user/non-user/light user; loyalty status; readiness stage of buying
  7. 7. SEGMENTATION VARIABLES: Business markets • Demographics…Industry types, size of company, location of company • Operating variables…technology used, type of user (heavy/medium or light) • Purchase approach…centralized vs decentralized, nature & type of relationship, type of purchase policies (sealed bids vs specific negotiations), service/quality or price seekers • Situational…urgency of need, type of applications, size of order • Personal…value systems of buyer, risk appettite, level of loyalty
  8. 8. ESSENTIALS FOR EFFECTIVE SEGMENTATION • Measurable…size, purchasing power & profiles can be measured. • Accessible…Segments can be effectively reached & served. • Substantial…segments are large enough &/or profitable to serve. • Differentiable…segments should have different characteristics • Actionable…capable of developing specific programs for the segment
  9. 9. BENEFITS OF SEGMENTATION • Enables marketer to understand the market characteristics better • Company can develop a more focused strategy to satisfy customer needs/wants more efficiently • Leads to better utilization of scarce resources • Enables company to develop customized products • Distinguishes between potential & profitable segments • Assessment of response enables firm to develop suitable marketing mix “Dividing markets to conquer them”
  10. 10. MARKET TARGETING • Market segmentation reveals the firms market segment opportunities. The firm now has to decide /evaluate the various segments and decide how many and which ones to target. • Parameters for evaluation – Segment size & growth potential – Segment structural attractiveness – Company objectives & resources • The company may enter only segments in which it can offer superior value and gain advantages over competitors
  11. 11. Target Marketing strategies Undifferentiated (mass marketing) Differentiated (segmented) Concentrated (niche) Micromarketing (individual) Targeting broadly Targeting narrowly