Chapter 3 segmentation


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BBA 1st Semester ....... Kardan Students

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Chapter 3 segmentation

  1. 1. Market segmentation targeting and positioning
  2. 2.  Selecting customer to serve The company must first decide who it will serve, by dividing the market into segments of customers (market segmentation) and selecting which it will go after (target marketing). Selecting customer to serve
  3. 3. Dividing a market into smaller group with similar needs, characteristics, or behaviors who might require separate products or marketing mixes. Market segmentation
  4. 4. 1-4 Market Segmentation Dividing a market into customer categories Target Marketing Selecting a category of customers with similar wants and needs who are likely to respond to the same products
  5. 5. 1-5 Market Segmentation: Divide the market into segments of customers Target Marketing: Select the segment to cultivate #1 #2
  6. 6. 1)Consumer Market Segmentation 2)Business Market Segmentation 3)International Market Segmentation
  7. 7.  There is no single way to segment a market. A marketer has to try different segmentation variables, alone and in combination to find the best way to view the market structure. Consumer market can be segmented through the following variables A. Geographic segmentation B. Demographic segmentation C. Psychographic segmentation D. Behavioral segmentation
  8. 8. Consumer market segmentation
  9. 9. A. Dividing a market into different geographical units- such as nations, states, region, cities or countries. Geographic segmentation
  10. 10.  Dividing a market into groups based on variables such as  Age  Gender  Family life cycle  Income  Occupation  Education  Religion  Nationality Demographic segmentation
  11. 11. 1. Age and Life cycle stage. Dividing a market into different age and life cycle groups.
  12. 12. 2.Gender Segmentation- Dividing a market into different groups based on gender (male/female).  For example- NIKE has recently stepped up its efforts to capture the women sports apparel market. Nike made women’s shoes.
  13. 13. 3.Income segmentation. Dividing a market into different income groups. (high, medium and low income groups)  For example Honda presenting Motor cycle for low income and car for high income groups.
  14. 14. Dividing a market into different groups based on social class, lifestyle and personality characteristics.
  15. 15. 1. Dividing a market into groups based on consumer knowledge, use or response to a product.
  16. 16. 2: Occasion segmentation- when the buyers get the idea to buy. (occasional buyers) Occasional buyers
  17. 17. 3.Benefit segmentation- dividing a market into groups according to the different benefits that consumers seek from the product.  For example- free bag with a laptop. Or discount on software or free delivery. Benefits
  18. 18. 4.Usage rate. Markets can also be segmented into light, medium and heavy usage. 5.Loyalty status. A market can also be segmented by consumer loyalty. Consumer can be loyal to brand (surf excel), stores (Jans Arcade) and companies (Toyota). Use and loyalty
  19. 19. Table 3.1 Market Segmentation Occupation SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLES Geographic Segmentation Climate Density of area City Size Region Kabul; Jalalabad; Ghazni; Khandhar Major metropolitan areas, small cities, towns Urban, suburban, rural Temperate, hot, humid, rainy Demographic Segmentation Income Marital status Gender Age Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+ Male, female Single, married, divorced, widowed Under $25,000, $25,000-$34,999, $35,000-$49,999, $50,000-$74,999, $75,000-$99,999, $100,000 and over Education Some high school, high school graduate, some college, college graduate, postgraduate Professional, white-collar, agricultural, military
  20. 20. Table 3.1, continued SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLES Psychological Segmentation Learning-involvement Perception Personality Needs-motivation Shelter, safety, security, social Socializers, novelty seeker, aggressive, innovators Low-risk, moderate-risk, high-risk Low-involvement, high-involvement Subcultures (Race/ethnic) Religion Cultures American, Italian, Chinese, Mexican, French, Pakistani Islam; Catholic, Protestant, Jewish; other African American, Caucasian, Asian, Hispanic Family life cycle Social class Lower, middle, upper Bachelors, young married, Attitudes Positive attitude, negative attitude Sociocultural Segmentation
  21. 21. SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLES Use-Related Segmentation Brand loyalty Awareness status Usage rate Heavy users, medium users, light users, non users Unaware, aware, interested, enthusiastic None, some, strong Use-Situation Segmentation Location Objective Time Leisure, work, rush, morning, night Personal, gift, snack, fun, achievement Home, work, friend’s home, in-store Person Self, family members, friends, boss, peers Benefit Segmentation Convenience, social acceptance, value-for-the-money Demographic/ Psychographics Combination of demographic and psychographic profiles of consumer segments profiles Hybrid Segmentation Table 3.1, continued
  22. 22.  Business markets can be segmented by Geographically and Demographically.  Customer operating characteristics  Customer purchasing approaches  For example: American Express focuses on convincing new merchants, building relationships with old customers, and offering benefits to corporate such as insurance plan, travel discounts etc.
  23. 23.  Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries.  World market can be segmented by geographic location, grouping countries by region such as Western Europe, Middle East, South Asia etc.  World market can also be segmented on the basis of economic factors. For example-countries might be grouped by population income level or by their overall level of economic development.  World market can also be segmented by political and legal factors, such as the type and stability of the Govt.
  24. 24.  Target market: A set of buyers sharing common needs or characteristics that the company decides to serve.  After successfully segmented the market the firm now must evaluate the various segments and decide how many and which segment it can serve best.
  25. 25.  In evaluating different market segments, a firm must look at three factors:  Segment size and growth (sales, growth rate and expected profitability)  Segment structural attractiveness (a segment is less attractive if it already contain strong and aggressive competitors-substitute products)  Company’s objectives and resources.(even if a segment has the right size and growth and is structurally attractive, the company must consider its own objectives and resources)
  26. 26.  After evaluating different segments, the company must decide which and how many segments it will target.  A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve.  Buyers have unique needs and wants, a seller could potentially view each buyer as a separate target market. Then a seller might design a separate marketing program for each buyer.  Companies can target very broadly , very narrowly or some where in between.
  27. 27.  Targeting broadly targeting narrowly
  28. 28. 1. Undifferentiated Marketing  A firm might decide to ignore market segments and target the whole market with one offer. This mass marketing focuses on what is common in the needs of consumers rather than on what is different. Undifferentiated Marketing
  29. 29. 2.Differentiated Marketing  A firm decides to target several market segments and design separate offers for each. Differentiated Marketing
  30. 30. 3.Concentrated market A third market coverage strategy is specially appealing when company resources are limited. Instead of going after a small share of a large market, the firm goes after a large share of one or few smaller segments. Concentrated Marketing
  31. 31. 4.Micromarketing  The practice of tailoring products and marketing program to the needs and wants of specific individuals. 5.Individual marketing- has also labeled one to one marketing. For example. Dell is doing individual marketing, by taking the order of every individual and prepare the computer accordingly. Micro & Individual Marketing