Segmentation

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  • 1. 1
  • 2.  “Segmentation” is grouping consumers by some criteria, such that those within a group will respond similarly to a marketing action and those in a different group will respond differently.  Consumer are of varying characteristics and buying behavior.  Many differing segments occur within a market. 2 Entire Market “Segment 1" “Segment 2"
  • 3.  Important elements of each marketing strategy:  Market segmentation  Identification of target markets 4
  • 4. 5
  • 5.  Marketers must understand the diversity of consumer needs in the broader market.  What current competition offers?  How to differentiate for a superior marketing mix?  Fine-tuning of the elements of the marketing mix to the unique needs of the target market.  Screening of opportunities available in different target markets using SWOT analysis.  6
  • 6. 7  Basis for developing targeted and effective marketing plans.  Facilitates proper choice of target marketing.  Higher Profits  Facilitates tapping of the market, adapting the offer to the target  Stimulating Innovation
  • 7. 8  Makes the marketing effort more efficient and economic.  Benefits the customer as well  Sustainable customer relationships in all phases of customer life cycle  Targeted communication  Higher market Shares
  • 8. Levels of Segmentation Mass Marketing Micro Marketing
  • 9.  Mass Marketing  Starting point of any segmentation discussion.  Mass production, mass distribution and mass promotion of one product for all buyers.  It creates the largest potential market, lowest costs, lower prices, higher margins.  However, it is difficult to practice “One Size Fits All” marketing. 10
  • 10.  Micro Marketing A marketing plan focused on a defined segment of the marketplace, rather than the entire marketplace. OR Micromarketing` is the practice of tailoring products, brands (micro brands), and promotions to meet the needs and wants of micro segments within a market. 11
  • 11. Micro Marketing Segments Niche Local Areas Individual
  • 12.  Large identifiable group within a market.  Group with similar wants, purchasing power, geographical location, buying attitudes. e.g. an auto company may identify four broad segments based on car buyer’s expectations like :  Basic transportation  High performance  Luxury  Safety  Buyers have similar wants & needs but they are not alike.  Segment wise pricing for target audience, fewer competitors. 13
  • 13.  A more narrowly defined group.  Concentrating all marketing efforts on a small but specific and well defined segment of the population.  Niches do not 'exist' but are 'created' by identifying needs, wants, and requirements that are being addressed poorly or not at all by other firms, and developing and delivering goods or services to satisfy them.  As a strategy, niche marketing is aimed at being a big fish in a small pond instead of being a small fish in a big pond. Jun 21, 2014 14
  • 14.  Local customer groups.  Clients and Customer who will buy a product in the region or area in which it is produced.  Localizing marketing rather than national advertising. For Example : Soft drink with name “JOY” in Hyderabad. The sale is limited only for villages in Hyderabad and city of Hyderabad.  The local market includes customers located within the region the product or service is produced or made available Jun 21, 2014 15
  • 15.  Segments of one.  Customized marketing.  One-to-one marketing. For Example : B2B marketing. Customization of offers, logistics, communications and financial terms for each major account. Jun 21, 2014 16
  • 16. Jun 21, 2014 17  Number of variables which leads to market segmentation.  Segmentation is done for consumer market and industrial market.  Bases for segmentation in consumer market:-  Geographic Segmentation.  Demographic Segmentation.  Psychographic Segmentation.  Behaviouralistic Segmentation.
  • 17. Jun 21, 2014 18  Geographic Segmentation  Region : - Segmentation by continent / country/ state / district / city.  Size : - Segmentation on the basis of size of a metropolitan area as per its population size.  Population density: - urban / sub-urban /rural  Climate: - climatic condition or weather.
  • 18. Jun 21, 2014 19  Demographic Segmentation  Age (dominant factor) Titan’s product segmentation on the bases of age:- Titan Fastrack (for theTitan Fastrack (for the younger segment)younger segment) Steel-1077SM01(for elderSteel-1077SM01(for elder person and professional)person and professional)
  • 19. Jun 21, 2014 20  Demographic Segmentation  Income (dominant factor) Titan’s product segmentation on the bases of income:- Titan Nebula (LuxuryTitan Nebula (Luxury segment watch)segment watch) Titan Sonata (for massesTitan Sonata (for masses and budget conscious)and budget conscious)
  • 20. Jun 21, 2014 21  Demographic Segmentation  Purchasing Power (dominant factor) Different car segments based on purchasing power:- Maruti 800Maruti 800 (Budget car segment)(Budget car segment) Mercedes Benz, BMW, AudiMercedes Benz, BMW, Audi (for super luxury segment)(for super luxury segment)
  • 21. Jun 21, 2014 22  Demographic Segmentation  Occupation  Gender  Family size  Family life cycle  Nationality  Religion  Education
  • 22. Jun 21, 2014 23  Psychographic Segmentation Segmentation according to customer’s life-style and psychology.  Activities.  Interests.  Opinions.  Attitudes.  Values
  • 23. Jun 21, 2014 24  Behaviouralistic segmentation Markets can be segmented on the basis of buyer behaviour as well. Variables of buyer behavior are:-  Benefit sought: - Quality / economy / service / look etc of the product.  Usage rate: - Heavy user / moderate user / light user  User status: - Regular / potential / first time user / irregular/ occasional  Brand Loyalty: - Hard core loyal / split loyal / shifting / switches  Occasion: - Holidays and occasion stimulate customer to purchase products.
  • 24. Jun 21, 2014 25  Bases for Segmentation in Industrial Market These characteristics apply to organizations such as manufacturers and service providers, as well as resellers, governments, and institutions. Industrial markets might be segmented on characteristics such as: 1. Location : Shipping cost 2. Company type : Company size (a large scale industry / a small scale industry) Industry (manufacturing / service) (public sector / private sector) 3. Behavioral Characteristics : Usage rate Buying status (first time / potential) Purchase procedure (Sealed bids/ negotiations)
  • 25. Jun 21, 2014 26 1. Substantiality 2. Identifiability 3. Measurability 4. Accessibility 5. Operational 6. Responsiveness
  • 26. Jun 21, 2014 27 1. Select a market or product category. 2. Choose a basis or bases for segmenting the market. 3. Select segmentation descriptors. 4. Profile and evaluate segments.
  • 27. Jun 21, 2014 28  Whether market segmentation is successful or not can be evaluated by the following questions:- 1. Is it sizeable? 2. Is it growing? 3. Is it profitable? 4. Is it accessible? 5. Is it compatible with the firm’s resources and capabilities?
  • 28. Jun 21, 2014 29 TITAN Wristwatches
  • 29. Jun 21, 2014 30  Titan took birth from TATA group in 1984 and today is India’s market leader in wristwatches and the sixth largest watchmaker in the world.  Effective Market segmentation has been a great boon of the company.  Today the company has a model for every price segment and every market.
  • 30. Jun 21, 2014 31  Initially when mechanical technology was the norm, Titan went against the norm and built-up its line with Quartz.  Styling was not the factor initially in Indian watch market but Titan brought the difference.
  • 31. Jun 21, 2014 32  Titan is also capturing rural market very efficiently. Its price range starts from Rs.475-1200 for the basic consumers.  It has also appointed Mahendra Singh Dhoni (who belongs to Ranchi) as Brand Ambassador to reach out to rural population for its sonata collection.
  • 32. Jun 21, 2014 33  on the other hand, Aamir Khan is capturing urban minds.  It brought out “Aqua” a trendy collection for youth.  Raga for sophisticated Indian women.  Dash for kids segment.  Sonata for masses and budget-conscious.  Fastrack for cool and modern young population
  • 33. Jun 21, 2014 34  Its brands like Bandhan were aimed at Couples and EXCTA and SPECTRA were aimed at common class of office wear.  Through its own retails outlet “World of Titan”; variety of Designs and price variations Titan has reached to various classes of customers and cities.
  • 34. Jun 21, 2014 35