Market segmentation


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Market segmentation

  1. 2. <ul><li>Tata have started producing a Mercedes Benz car here in India. Many individuals have a need for car but they may not need a luxury car like Mercedes. They are happy with a Santro, Chevy spark or Maruti. Some might be interested in a luxury car, but may not be interested in Mercedes as it may attract the attention of tax authorities. They may prefer luxury cars like Honda city, Ford Fiesta, Octavia and so on. Some may be interested in Mercedes but they are not able to afford a price of Rs. 32 Lakh. Thus, the market for Mercedes is very small portion of luxury car markets, which is small portion of total car markets. </li></ul>
  2. 3. <ul><li>The division of market into different homogeneous group of consumers is known as market segmentation. </li></ul><ul><li>It is the consumer/buyer is who are segmented not product, nor price. </li></ul><ul><li>It identifies a smaller market in a larger market. </li></ul>
  3. 4. Market segmentation Socio-Cultural Psycho-graphics Buying Behavior Demographics Geographic
  4. 5. <ul><li>Ex - Geographic decides the product consumption pattern. People in coastal areas of Konkan and Goa relish rice, a staple grain there but fish abundantly available from sea. Southern are found of coffee and North Indians like Tea. People down south use Talc excessively, and apply it even on face, perhaps aspiring to fairer like their counter part in the north. When we sell our product to International market. Products are made according to their need. Complexion creams like Fair and Lovely sells only in India. </li></ul>
  5. 6. <ul><li>It decides the product consumption pattern. </li></ul><ul><li>Segmentation of consumers based on factors like climate zone, continents/country, region, state, district, and urban/rural area. </li></ul><ul><li>Marketer who operate Globally, often segment the market by continents /country/region in the first instance, and go for segmentation on other bases. </li></ul><ul><li>National markets within a country like India, often segment the market by region, state, district and urban/rural area, in the first instance, and then go for segmentation on other bases. </li></ul>
  6. 7. <ul><li>Segmentation of consumer based on variables such as race, religion, community, language, age, stage in family cycle, gender, marital status, family size, occupation, economic position/income, purchasing capacity level, and social status. </li></ul><ul><li>Ex- Age based segmentation </li></ul><ul><li>Amul has segmented his product in different age group. </li></ul><ul><li>For kids- Amul Kool, Chocolate milk, Nutramul energy Drink. </li></ul><ul><li>For Youth – Amul cool café </li></ul><ul><li>For women’s and older people – Amul calci Plus, Amul shakti energy drink. </li></ul>
  7. 8. <ul><li>Gender based Segmentation </li></ul><ul><li>German shoe maker Adidas develop the Women segment in India. </li></ul><ul><li>Emami segmented its product in gender, Naturally fair for women, Fair and Handsome for men. </li></ul><ul><li>Purchasing Capacity </li></ul><ul><li>Budget car segment- 1.5-3lakh, Maruti Omni and 800 are the dominant player, Launch of Tata Nano. It is also called small car segment. </li></ul>
  8. 9. <ul><li>Compact car segment- It lies between budget car and family car, price range 3-4.5 lakh, Maruti Zen, Tata Indica, Santro are dominant player. </li></ul><ul><li>Family car segment – Purchasing capacity of buyer is higher than that of Budget and compact car segment. Price range from 4.5-6lakh. Maruti esteem, Daewoo cielo and HM contessa. </li></ul><ul><li>Premium car segment- Buyer who requires true world class luxury car. Price range 6-8 lakh, Ford Escort, Honda city, Opel Astra, Mitsubishi lancer. </li></ul>
  9. 10. <ul><li>Super Luxury Saloon Segment – Buyer looks for real super premium segment car, Mercedes Benz, Audi 6, BMW. It is tiny segment in India context. </li></ul>
  10. 11. <ul><li>Culture </li></ul><ul><li>- It includes religious, caste, traditional, language pattern of social behavior. </li></ul><ul><li>- Culture influence consumer behavior deeply. </li></ul><ul><li>- A person usually acquires his cultural attributes right at his childhood. </li></ul><ul><li>- Ex- Zee television deals with variety of channels regional channel, sports channel etc. </li></ul>
  11. 12. <ul><li>Social Factor </li></ul><ul><li>- It include family, peer group. </li></ul><ul><li>- They adopt their common lifestyle. </li></ul><ul><li>- Ex- McDonald has both Veg and Non-Veg Burger. </li></ul>
  12. 13. <ul><li>Groups customer according to their lifestyle and buying psychology. </li></ul><ul><li>Elements like lifestyle, attitude, self concept and value system form the base. </li></ul><ul><li>Ex- Lifestyle- CCD, targeting students and trying to establish a space in their lives. Students between the age 15-24 yrs. </li></ul><ul><li>It helps in positioning/repositioning, launch of new products and brand extension. </li></ul>
  13. 14. <ul><li>The primary idea in buying behavior segmentation is that different customer group expect different benefits from the same product and accordingly, they will be different in their motives in owing it and their behavior in buying it. </li></ul><ul><li>Different variables are- </li></ul><ul><li>Benefit Sought- Quality, Economy, service, look etc of the product. Ex- Nestle has found separate segment atta noodles as distinct from the maida noodles. </li></ul>
  14. 15. <ul><li>Usage Rate- Heavy user, moderate user, light user of a product. </li></ul><ul><li>User Status – Regular, potential, first time user, irregular, occasional. </li></ul><ul><li>Loyalty to brand – hard core loyal, split loyal, shifting switches. </li></ul><ul><li>Occasion – Holidays and occasion stimulate customer to purchase products. </li></ul><ul><li>Attitude towards offering – Enthusiastic, positive attitude, negative attitude. </li></ul>
  15. 16. <ul><li>PROCESS OF MARKET SEGMENTATION </li></ul>
  16. 18. <ul><li>IDENTIFY MARKET SEGMENTATION BASE </li></ul><ul><li>The process starts when a company looks at the potential customers and identifies those customers as having particular characteristics- this characteristics will allow the marketing company to classify them into market segments. </li></ul><ul><li>The segments should be selected so that you can group together customers who have similar needs. </li></ul>
  17. 19. <ul><li>Once the segments have been identified, develop a profile of the relevant customer needs and behaviors in each segment. </li></ul><ul><li>What does your customer look like!!! (profile) </li></ul><ul><li>What do they like!!!! </li></ul><ul><li>What do they do!!! </li></ul><ul><li>you need this description to be precise in order to make your marketing “match” the needs of the customer. </li></ul>
  18. 20. <ul><li>You create a “Forecast” of the market potential within each segment. </li></ul><ul><li>This is the “go, no-go” stage. When you are at this stage you gather the information on sales potential to determine whether you can go further ahead and justify further analysis. </li></ul><ul><li>Forecast- “what if” – an expectation of future action. </li></ul>
  19. 21. <ul><li>Once the market potential has been estimated, you have to determine how much of the market you can obtain (what “market share” can you capture). </li></ul><ul><li>Then you develop specific marketing strategy for the segments you are trying to develop </li></ul>
  20. 22. <ul><li>Finally, take all this information, and identify specific target markets. </li></ul>
  21. 25. <ul><li>Identify your most and least profitable customer. </li></ul><ul><li>Focus your marketing on the customers most likely to buy your products or services. </li></ul><ul><li>Avoid unprofitable markets. </li></ul><ul><li>Build loyal relationship customers by developing and offering them the products and services they want. </li></ul><ul><li>Improve customer service </li></ul><ul><li>Use your resource wisely. </li></ul>
  22. 26. <ul><li>Get ahead of competition in specific parts of the market. </li></ul><ul><li>Identify new products. </li></ul><ul><li>Improve products to meet customer needs. </li></ul><ul><li>Increase profit potential by keeping costs down, and in some areas enabling you to charge a higher price for your products/services. </li></ul>
  23. 27. <ul><li>It can be expensive. </li></ul><ul><li>Mass production offers economies of scale. </li></ul><ul><li>Standardization of service offers: increased delivery speed and efficiency. </li></ul><ul><li>Increase in promotion, administrative and inventory costs. </li></ul>
  24. 28. Measurable Substantial Accessible Differential Actionable <ul><li>Size, purchasing power, profiles of segments can be measured. </li></ul><ul><li>Segments must be large or profitable enough to serve. </li></ul><ul><li>Segments can be effectively reached and served. </li></ul><ul><li>Segments must respond differently to different marketing mix elements & actions. </li></ul><ul><li>Must be able to attract and serve the segments. </li></ul>