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Market Segmentation

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Hello Friends, this is Sandeep. This presentation is specially for the MBA students. The concept has been explained in a simple and understandable way. If any corrections or suggestions, u can please ...

Hello Friends, this is Sandeep. This presentation is specially for the MBA students. The concept has been explained in a simple and understandable way. If any corrections or suggestions, u can please contact me on divesandeep@gmail.com or +918888887907

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    Market Segmentation Market Segmentation Presentation Transcript

    • Market Segmentation
      Market
      Segmentation
    • Introduction…
      Companies cannot connect with all customers in large, broad or diverse markets.
      Such markets can be divided into groups or segments with distinct need and wants.
      A company needs to identity which segments it can serve effectively.
      To develop best marketing plans, managers need to understand what makes each segment unique and different.
    • Market Segmentation…
      A market segment consists of a group of customers who share a similar set of needs and wants.
    • Concept…
      Segmentation means dividing the market into similar sub-markets by understanding the needs and expectations of customers.
      Companies follow different marketing programs for different segments to maintain better relationship with customers.
      Market segmentation is the first step in applying the marketing strategy.
    • Definitions…
      “Market segmentation is the process of dividing a potential market into distinct sub markets of consumers with common needs and characteristics.”
      “Market segmentation consists of taking the total heterogeneous market for a product and dividing it into several sub-markets or segments each of which tends to be homogeneous in all significant steps. – William J Stanton”
      • For example…
      Kellogg's cereals, Frostiesare marketed to children. Crunchy Nut Cornflakesare marketed to adults.
      Both goods denote two products which are marketed to two distinct groups of persons, both with similar needs, traits, and wants.
    • 2. Titan offer their watches in 4 brands for different customers characteristics.
      Titan, Timex, Sonata & Fast track.
      Timex
      Titan
      Fast Track
      Sonata
    • 3. Future Group operate in 4 different store formats depending on the category of customers.
      Big Bazaar, Pantaloon, Central, Loot.
    • Benefits of Segmentation…
      Understanding the needs of Consumers
      To adopt better positioning strategies.
      Proper allocation of marketing budget.
      Helps in preparing a better competitive strategy.
      Different offerings in different segments enhance the sales.
      Customer gets more customized product.
      Provides opportunities to expand market
      Encourages innovations
    • Bases for Segmentation…
      Consumer Market Segmentation is done on the basis of :
      Geographic :Region
      City
      Rural & Semi-Urban
      • Demographic: Age
      Family Size
      Gender
      Income
      Occupation
      Education
    • Psychographic : - Socioeconomic Classification
      - Lifestyle
      - Personality
      Behavioral :
      • Occasions – Regular, Special
      • Benefits – Quality, Service, Economy, Speed
      • User Rate – Nonuser, ex-user, potential, first
      timer, regular.
      • Usage Rate – Light, medium, heavy
      • Loyalty – None, medium, strong, absolute
      • Attitude – Enthusiastic, positive, negative,
      towards indifferent, hostile
      product
    • Industrial Market Segmentation is done on the basis of :
      Demographic :
      • Industry : Which industry should we serve ?
      • Company size : What size of companies should we serve?
      • Location : What geographical areas should we serve ?
      • Operating Variables:
      • Technology : What customer technology do we focus on?
      • User/nonuser status : Heavy/medium/light users to serve?
      • Customer capabilities : Serve as per customer capability ?
    • Purchasing Approach:
      • Purchasing function : Should we serve the companies with
      centralized /decentralized purchasing?
      • Power Structure : Should we serve companies which are
      engineering dominated or financially
      dominated or so on?
      • Existing Relationship: Should we serve companies with
      whom we have strong rel’n or serve
      he desirable ones ?
      • Purchasing Criteria : Should we serve companies that are
      seeking quality? Service ? Price ?
    • Situational factors:
      • Urgency : Should we serve the companies that need
      quick and sudden delivery or service?
      • Specific application: Should we focus on certain application
      of or product rather than all
      specifications?
      • Size of order: Should we focus on large or small orders?
      • Personal Characteristics:
      • Buyer-Seller similarity :
      Should we serve the companies whose people and
      valued are similar to ours?
      • Attitude towards risk :
      Should we serve risk-taking or risk-avoiding
      customers?
      • Loyalty : Should we serve companies that show high loyalty
      to their suppliers?
    • Service Industry Segmentation is done on the basis of : ?
    • Criteria for Effective Segmentation…
      • Measurable :Size, purchasing power and other
      characteristics should be measured.
      • Substantial:
      -Segment should be large enough to serve
      - Profitable enough to serve
      - For e.g. It is possible and profitable for car
      manufacturer to manufacture cars for people with
      height below 4 feet.
      • Accessible :Effectively reached and served.
      • Differentiable :
      - Segments having different characteristics and
      responds differently to different marketing mix
      elements.
      - E.g. If Unmarried and married women respond similarly
      to a saree sale, then they belong to same segment.
      • Actionable:
      - Effective programs can be formulated for attracting
      customers
      - Regular changes can be possible made in the marketing
      mix.
    • Steps in Segmentation Process…
      1. Need Based Segmentation :
      - Grouping customers depending on needs.
      2. Segment Identification:
      -Determine which demographic, lifestyle and usage
      behaviors make the segment distinct and identifiable.
      3. Segment Attractiveness :
      - Market Potential, market growth, competitive
      advantage of each segment
    • 4.Segment Profitability :
      - Profitability analysis of the segment.
      5.Segment Positioning:
      - Create ‘value positioning’ based on segment’s unique
      needs and characteristics.
      6. Segment ‘Acid Test’:
      - Test attractiveness of each segment’s positioning
      strategy.
      7. Marketing Mix strategy:
      - Design a marketing mix
    • Concepts to be understood…
      1. Target Market:
      After identifying various market segments, the marketer has to decide which segment offers greatest opportunity.
      – This segment is the ‘Target Market’.
      It focus on selling a product or service to a specific market.
      For e.gPepsi could define its target market as everyone who drinks a only cola beverage
      and not others drinks….
    • 2. Market Target:
      Once the firm identifies its target market, it now defines the marketing strategies for this particular market.
      – This process is called ‘MarketTarget’ or
      ‘Market Targeting’.
      -How the product should be?
      -What should be the price?
      -Which is the best way to promote the product?
      -Where should be the product made available?
    • 3. Positioning:
      “Act of fixing the place/position/image of the product offer in the mind of target customer.”
      – Firm decided what parameters of the product has to be placed before the target customer.
      - It is more concerned with the customer’s perception of the product offer, compared to other product.
      The aim of
      - The aim of positioning is to create a perception for the brand in the prospect’s mind so that is stands apart from competing brands