Steps in MarketSegmentation, Targeting, and Positioning
• Market segmentation is the process of dividing the total market into relatively distinct homogeneous sub- groups of consumers with similar needs or characteristics that lead them to respond in similar ways to a particular marketing programme.• A market segment is a portion of a larger market in which the individuals, groups, or organisations share one or more characteristics that cause them to have relatively similar product needs.
LEVELS OF MARKET SEGMENTATION SEGMENT MARKETING NICHES MARKETING LOCAL MARKETINGINDIVIDUALS MARKETING
SEGMENT MARKETING• Consists of a group of customers who share a similar set of needs and wants.• Identifiable Group with in a Market with Similar• Wants• Purchasing Power• Geographical Location• Buying Attitudes
FLEXIBLE MARKET OFFERING• Even in segments 100 % needs are not same – consists of two parts1.Naked Solution :- products and services that all members of the segment values.2.Discretionary options :- that some segment members value. Each option might carry an additional charge. Example: Automobile industry – basic model is same but for A.C , power steering, power window buyer
NICHE MARKETING Group of customers seeking a distinctive mix of benefits who are ready to pay extra premium. Eg. Washing detergents Surf excel for tough stains ( hard on clothes) & Ezee from Godrej for delicate clothes.--- Astha , Sanskar , Q TV – focus on religion & spiritualism. DISTINCT NEEDS PAY PREMIUM SPECIALIZATION LESS COMPETITION POTENTIAL
LOCAL MARKETING• Marketing programs tailored to the needs & wants of local customer groups in trading areas, neighborhoods , etc.• this trend is called grass roots marketing.• Ex. – Spiderman 3 was released in 5 different language in India including Bhojpuri.
INDIVISUAL MARKETING• Ultimate segmentation – segments of 1 or customized marketing or one to one marketing.• Customerization – empower the consumers to design the product or service offering of their choice.
Requirements for Effective SegmentationFive conditions must exist for segmentation to be meaningful:1. A marketer must determine whether the market is heterogeneous. If the consumers’ product needs are homogeneous, then it is senseless to segment the market.2. There must be some logical basis to identify and divide the population into relatively distinct homogeneous groups, having common needs or characteristics and which will respond to a marketing programme. Differences in one market segment should be small compared to differences across various segments.3. The total market should be divided in such a manner that comparison of estimated sales potential, costs, and profits of each segment can be done.4. One or more segments must have enough profit potential that would justify developing and maintaining a marketing programme.5. It must be possible to reach the target segment effectively. For instance, in some rural areas in India, there are no media that can be used to reach the targeted groups. It is also possible that paucity of funds prohibits the development required for a promotional campaign.
How Segmentation Helps• Segmentation studies are used to uncover needs and wants of specific groups of consumers for whom the marketer develops especially suitable products and services to satisfy their needs.
Bases for Segmentation• A segmentation variable is a characteristic of individuals, groups or organisations that marketers use to divide and create segments of the total market.• Segmentation descriptors fall under four major categories and include geographic variables, demographic variables, psychographic variables, and behaviouristic variables. Geographic variables focus on where the customers are located. Demographic variables identify who the target customers are. Psychographic variables refer to lifestyle and values. Behaviouristic variables identify benefits customers seek, and product usage rates.
GEOGRAPHIC SEGMENTATION Divide the market into different group based on :• Region – South India , North , Western Region, East• City – metro cities, cities with population more than 1 million• World• Density• Climate• StatesEx.- Mcdonalds globally, sell burgers aimed at local markets, for example, burgers are made from lamb in India rather then beef because of religious issues. In Mexico more chilli sauce is added and so on.
DEMOGRAPHIC SEGMENTATION• As people age their needs and wants change, some organisations develop specific products aimed at particular age groups for example nappies for babies, toys for children, clothes for teenagers and so on.• Gender segmentation is commonly used within the cosmetics, clothing and magazine industry.• In the UK we have also seen the introduction of Maxim, (www.maxim-magazine.co.uk) a male lifestyle magazine covering male fashion, films, cars, sports and technology.
Psychographic SegmentationPsychographic segmentation divides a market intodifferent groups based on social class, lifestyle, orpersonality characteristics.
Behavioral Segmentation Occasion Loyalty Status Special promotions & labels for holidays. Nonusers, ex-users, Special products for potential users, special occasions. first-time users, regular users. Benefits Sought Different segments desire different benefits from the same products. Usage Rate Light, medium, heavy.
Targeting is a decision• Market Targeting is a process of allocation of company effort and resources towards a certain market segment.• Targeting is a match between the company’s products and services and the inherent NEEDS AND WANTS characteristics of the target segment• WRONG TARGET…. LOW PROBABILITY OF SUCCESS….
Types of target market• Multiple segments – Especially if the needs are homogenous• Single segment• Primary target market (PTM) – Main focal point of all marketing programs• Secondary target market (STM) – Used only as a consideration for marketing programs
Identify the Appropriate Targeting Strategy• Undifferentiated Strategy Differentiated Concentrated