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Strategic marketing session 3
This document provides an overview of strategic market segmentation. It discusses why segmentation is important for finding gaps in the market, differentiating offerings, and capturing market share. The document then outlines the segmentation process, including identifying segment variables, selecting segmentation methods, analyzing segments, and selecting target segments. Standard examples of segmentation for B2C and B2B markets are provided for industries like automobiles, food and beverages, technology, and more. The document concludes with discussions on finer segmentation strategies and factors to consider when selecting a segmentation approach.
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Strategic marketing session 3
- 1. Strategic Marketing Session3 Segmentation Strategy & Examples (Indian Context) 2nd & 3rd Oct, 2015 Lecturer: Anik Saha
- 2. Agenda Market & CompetitiveSpace Strategic Market Segmentation Capabilities for Continuous Learning about Markets 2 © copyrights: Anik Saha
- 3. 3 Why to Segment? Finda Gap?Potential Response Diff? Track Competition? New Business Route?Different Positioning? Differentiate and Capture Market? Corporate Goal/Strategy Business Goal/ Strategy for offerings Marketing Strategy/ GTM for offerings Plan ‘fit’ Market (Segmentation) Build Positioning, Pricing, Promotions & Measurable Goals Decide GTM executions and Track Performance Gather Market Insights © copyrights: Anik Saha
- 4. 4 Market Segmentation &Value Opportunities • Finding subgroups within total market • Caused by differences in buyers’ demand • Similar needs, similar use cases, profiles or purchase behaviors etc. • Better customer satisfaction achieved Creating New Marketing Space • New segments of creating value • Build unique space in market Matching Value opportunities & Capabilities • Coherence with capability and buyers’ preferences • Compare org. strength vs. other players in segment Market Targeting and Strategic Positioning • Target Segment decided post in-depth analysis • Analysis helps to find financial and competitive adv. Of particular segment • How to influence buyers in particular segment decides Positioning strategy Select the Market to be Segmented Market Segmentation Activities & Decisions • Define boundaries of segmentation • Generic vs. Product Type or Product Variant wise Segmentation • Identify Variables or Parameters • Decide method of segmentation • Leverage CRMs, purchase information, relevant consumer data etc. • Refine and micro-segmentations, if applies • Strategic analysis on segmentation Segmentation and Market Driven Strategy © copyrights: Anik Saha
- 5. 5 Identifying Market Segments ProductUse Cases Buyer’s Needs & Preferences Purchase Behavior Purpose of Segment Variables Characteristics of People & Organizations • Demographic or Psychographic (lifestyle or Personality) • Use Situations • Buyer’s needs & Preferences, Purchase-behavior, attitudes, brand awareness/preferences B2C: 1. Geographic/demographic/psychographic: Regional, age/income, Behavioral dimensions 2. Attitudes/Perceptions? ( Actualizers/ Achievers/ Fulfillers/ Experiencers/ Believers/ Strivers/ Makers/ Strugglers) B2B: 1. Vertical based market, Turnover/Emp Size, market concentration/degree of customization 2. Stage of Value added system (Producer/Channel partner) • How the product used or applications • Example: automobiles, laptops etc. • Cost or Quality conscious? • Buyer’s needs or satisfaction, basic needs, relationship, safety or etc • How does solution meet the needs? Or what changes are required? • Purchase Frequency, volume (B2B), Size of Purchase (B2C) • Different database, tools, CRM information helps to provide consumer frequency *Use Cluster Analysis or Perceptual Maps to explore Response Difference © copyrights: Anik Saha
- 6. 6 Standard B2C Examplesof Buyer Type and Behavioral patterns • Old People • Middle Aged • Youth • Teen Age • Kids • Babies • Actualizers • Achievers • Fulfillers • Experiencers • Believers • Strivers • Makers • Strugglers • Individuals • Male • Female • Family • Group • Friends • Professionals • Others • Affluent • High • Middle Class • Low Income • Non-working Age IncomeType & Gender Attitudes • Programmed Buyers • Relationship Buyers • Transaction Buyers • Bargain Hunters Purchase behaviors • Strivers • Devouts • Altruists • Intimates • Fun Seekers • Creatives Consumer Profiles © copyrights: Anik Saha
- 7. 7 Standard B2B Examplesof Customer Type • Geographical Location of Focus • Govt/PSUs • BFSI • Hospitality • Healthcare • IT/ITES • Mfg • Automobiles • BPOs etc. • Very Large Enterprise • Enterprise • Mid Sized • SMBs • Distributors/ VARs • SIs • Consultants Location EcosystemTurnover or Employee Size Industry verticals • App based offerings • Specific Gaps creating business needs • Upgrade for old apps Existing App base • Existing Hardware Infra. • Home or Competition account • Specific Gaps creating business needs • Upgrades Existing Infrastructure *Historical Purchase Trends (Frequency and $), Competitive base info, Industry Vertical information, Size of Organization etc. can be used to create Mathematical Models to decide Future Purchase Potential of individual Customer accounts © copyrights: Anik Saha
- 8. 8 Purchase Behavior –Segmentation based on Consumer’s Involvement Consumer Involvement Characteristics of Purchase Decision Process High Medium Low # of Brands Examined Many Several One # of Sellers considered Many Several Few # of Product attributes evaluated Many Moderate One # of external information sources used Many Few None Time Spent Searching Considerable Little Minimal Examples Television, Digital Camera, Holiday Resorts Soaps, Shampoos, Good Restaurants Staple Food, © copyrights: Anik Saha
- 9. 9 Creating Segments basedon Response Variables or Identifiers of Customer Groups to decide segmentation Customer Response based segmentation Characteristics of people and organizations USE Situations Buyers’ needs and preferences Purchase Behavior and Loyalty Customer Group Identification Experience & Available information Cross Classification Analysis Database Segmentation Segment Illustration • Management’s knowledge/experience • Market analysis by independent source • Standard variables of B2C/B2B used to start • Build Matrix of information with customer descriptive vs. response rates • Focus on buckets where responses are low but important • Leverage Computerized Information Database for different segment slice • Build mathematical models for predictability • Detailed information gathering on purchase behavior and group characteristics • Align business & marketing strategy with specific group © copyrights: Anik Saha
- 10. 10 Example: 3 DimensionalProduct-Market Segmentation for Female Bags Economy Mid-Price Premium Elite/Super Premium Small size Purse/Clutch Purse/Wallet /Sling Vanity/Hand Bag Professional Bags With Product-Market segmentation being identified, promising segments gets decided © copyrights: Anik Saha
- 11. 11 Maruti Segmentation 1– Economy Cars; Price Conscious, Family Segment, Relational Values of Middle Class, Simple Dreams, Small Things make them Happy
- 12. 12 Maruti Segmentation 2 SCross : ‘Above Ordinary’ ; Quality Conscious Ambitious Segment
- 13. 13 Cadbury Segmentation 1 –Use Case 1: Preference of ‘Sweet’ after Family Dinner; Targeting Kids and addressing as ‘Substitute of Sweet’ in daily life
- 14. 14 Cadbury Segmentation 2 –Use Case 2: Let’s get rid of Boring/Tiring of Traffic Jam; Targeting Individual Professionals, Self Dependent and Driving to Office
- 15. 15 Cadbury Segmentation 3 –Use Case 3: Festival Gifts
- 16. 16 Rolex Segmentation – Buyer’sPersona – ‘Achievers’
- 17. 17 Titan Segmentation – Buyer’sPersona – ‘To Gift Someone You Love or Respect’
- 18. 18 Rasna : Clear Segmentationfor ‘Kids’ with Drinks: ‘Rasna’ Advertisement
- 19. 19 Khana Khazana – SpecificActionable Segment for Young Housewives who don’t know Cooking
- 20. 20 Maggi Dal Atta: UnclearSegmentation – Maggi ‘Dal Attal’ Noodles
- 21. 21 IBM Storage Example Midsize and Enterprise business organizations – B2B
- 22. 22 Wipro Technologies Example Enterprisecustomers with high revenue potential and looking for System Integration / consultancy services
- 23. 23 Want Some More? 2Rapid Fires.. © copyrights: Anik Saha
- 24. 24 Maruti Segmentation –Print Examples (Price Conscious to ‘Quality/Status’ Conscious) Source of print ads: Maruti websites and official advertisements
- 25. 25 Rolex Segmentation –Buyer’s Persona ‘Achievers’ Source of print ads: Rolex websites and official advertisements
- 26. 26 Forming Segments Response Difference Identifiable Segment ActionableSegment Cost/Benefit Analysis of Segments Stability over Time Product Differentiation & Market Segmentation Factors of Segments Source of print ads: Rasna, Indian, Prevention, Colgate, Pepsi, AirAsia, Maggi print advertisements
- 27. 27 Finer Segmentations Why needFiner Segment? • Customized Offerings from small/flexible orgs driven by extensive customer info/database, JIT inventory in niche market • Cater Diverse Customer Base, unique preferences • Drive excellent Customer relationship Finer Segmentation Strategies • Micro segmentation – arrived using variables of segmentation • Mass Customization • Standard components but configured differently (paint color shades) • Flexible process of design/supply chain or technology (Dell computers) • Variety Seeking Strategy – offer many alternatives in same price range to increase total purchase (Apparels) Finer Segmentation Challenges • How much variety? Which attributes important? • Where to stop? • Will buyers be confused? • Does it really give Competitive advantage? • Effective feedback process from customers to decide how much variety required? © copyrights: Anik Saha
- 28. 28 Selecting Segmentation Strategy Decidehow to segment? Strategic Analysis • Market maturity, competition dynamics • Organization’s experience in relevant field • Segment plan to include responsiveness, stability, actionable etc. • Finer segmentation needs cost vs benefit analysis o Deeper analysis, better results with response differences, effective market mix or product mix planning • Dynamic process • Niche segments help finding long term competitive advantage • Customer Analysis: Focus on descriptive info, behavioral dimensions etc. • Competitor Analysis: Vision/objectives/Strength/weakness/ positioning/profile of key people/USPs • Positioning : Validate favorable positioning with 4Ps with each segment • Evaluate attractiveness on financial/business metrics; compare risk vs. return for each segment with timeline in focus • Evaluate ‘Fit’ to organization culture (Air India vs. Youth segment, Old SBI culture vs. Youth Segment) • Analyze across segments and focus specific to bet © copyrights: Anik Saha
- 29. © Anik Saha29 Acknowledgements: •Strategic Marketing: Authors: David W. Cravens & Nigel F. Piercy