Session 11 MG 220 MBA - 27 Sep 10


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Session 11
MG 220 Marketing Management

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Session 11 MG 220 MBA - 27 Sep 10

  1. 1. Part 3: Connecting with Customers<br />> Levels of Market Segmentation<br />> Segmenting Consumer Markets<br />> Bases for Segmenting Business Markets<br />Class Presentation | Session 11 | 27 Sep 2010<br />
  2. 2. Levels of Market Segmentation<br />Mass Marketing is:<br /> Mass Production, Mass Distribution and Mass Promotion of one product for all buyers<br />COKE’s 300 Ml bottle for everyone<br />BUT…. Mass marketing is becoming difficult as it is not profitable to reach mass audience always<br />Micro-Marketing is done at one of four levels:<br />Segments - Segment Marketing<br />Niches – Niche Marketing<br />Local Areas – Local Marketing<br />Individuals - Customerization<br />MG 220 Marketing Management<br />2<br />
  3. 3. Levels of Market SegmentationSegment Marketing<br />Market Segment consists of a group of customers who share a similar set of needs and wants.<br />Clarification of segment & sector<br />In a sector, consumers may have different preferences<br />Who creates Segments? Marketers or ….they just exist<br />They exist and keep evolving<br />Marketer’s task is to identify segments and decide which ones to target<br />In today’s research, segment is considered to be partly fiction as not everyone would want exactly same thing….even in a segment<br />Thus, Concept of Flexible Market Offering:<br />Naked Solution – product/service elements that all segment members value<br />Discretionary options – elements that some segment members value<br />MG 220 Marketing Management<br />3<br />
  4. 4. Levels of Market SegmentationSegment Marketing (…contd.)<br />Market Segment can be defined in several ways like ‘preference segments’<br />Homogenous Preferences<br />No difference<br />Diffused Preferences<br />No clear pattern<br />Clustered Preferences<br />Clusters of preferences<br />Example is for preferences in ice cream’s creaminess and sweetness<br />COLORED CIRCLE IS TO SHOW WHERE COMPANY SHOULD OPERATE(A generalization only)<br />MG 220 Marketing Management<br />4<br />
  5. 5. Levels of Market SegmentationNiche Marketing<br />Niche is a narrowly defined customer group seeking a distinctive mix of benefits.<br />Niches can be identified by dividing segments into sub-segments<br />Segments are fairly large and attract several competitors. Niches are small and attract only one or two<br />Characteristics of an attractive niche:<br />Customers have a distinct set of needs<br />They will pay premium to firm best satisfying their needs<br />Niche doesn’t attract other competitors<br />Niche firm/product gains economies through specialization<br />Niche has size, profit and growth potential<br />Internet businesses have helped niches grow a lot<br />MG 220 Marketing Management<br />5<br />
  6. 6. Levels of Market SegmentationLocal Marketing<br />Marketing programs tailored to needs and wants of local customer groups<br />A growing trend also called ‘grassroots marketing’<br />Marketing activities concentrated on getting as close and personally relevant to individual customers as possible<br />Those favoring Local Marketing consider national advertising to be wasteful<br />Those against Local Marketing consider it to increase manufacturing costs by reducing economies of scale and increased logistical problems<br />MG 220 Marketing Management<br />6<br />
  7. 7. Levels of Market SegmentationCustomerization<br />Ultimate level of segmentation: Segments of one<br />Customerization combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the products and service offering of their choice.<br />Choice to be made between going for Segments (Segment marketing) or Individuals (Customerization)<br />Those favoring segmentation: More efficient | Less customer information | More standardization<br />Those favoring Customerization: Segments are fiction | Those in a segment differ greatly<br />MG 220 Marketing Management<br />7<br />
  8. 8. Segmenting Consumer MarketsKey Points<br />Two broad set of variables used in segmentation:<br />Descriptive Characteristics<br />Geographic<br />Demographic<br />Psychographic<br />Behavioral Characteristics<br />Consumers are divided and it needs to be seen whether they have different preferences towards product or not<br />MG 220 Marketing Management<br />8<br />
  9. 9. Segmenting Consumer MarketsDemographic Segmentation<br />Age and Life-Cycle Stage<br />Wants and abilities change with age<br />Age segmentation can be refined further<br />Important to do it carefully by understanding consumers’ preferences as they change<br />New Swift advertisement<br />Life Stage<br />What events and stages a person goes through in his/her life<br />They affect buying behavior<br />Users in age group of 50-60 are about to retire from work life and are segmented/targeted for pension plans etc.<br />Gender<br />Importance of understanding how they differ in purchasing behavior<br />How they approach purchase decision is to be observed<br />Income<br />Long-standing and established practice<br />Again understanding of exact behaviors is important<br />People from middle class in income may be targeted with premium products<br />MG 220 Marketing Management<br />9<br />
  10. 10. Segmenting Consumer MarketsDemographic Segmentation (…contd.)<br />Generation<br />A generation is impacted by lifestyle of times it grows in<br />Cohorts are formed whose members share same political, cultural and economic experiences<br />Profiling of American generation is done famously as:<br />Baby boomers (born: 1946-64)<br />Generation X (born: 1965-77)<br />Generation Y (born: 1978-94)<br />Millennials (born: 1995-2002)<br />Behaviors are highly coherent<br />Social Class<br />Has strong impact on lifestyle, product preferences etc.<br />MG 220 Marketing Management<br />10<br />
  11. 11. Segmenting Consumer MarketsPsychographic Segmentation<br />Psychographic Segmentation is dividing buyers into groups/segments based on:<br />Psychological / personality traits<br />Lifestyle<br />Values<br />Culture may also play role in Psychographics<br />A good example is VALS™ model used in USA<br />MG 220 Marketing Management<br />11<br />
  12. 12. Segmenting Consumer MarketsBehavioral Segmentation<br />In Behavioral segmentation, buyers are divided into groups based on:<br />Their knowledge of product<br />Attitude towards product<br />Use of product<br />Response to a product<br />Decision Roles<br />Who buys what? What influence they have<br />Consumers may have following roles in buying process:<br />Initiator<br />Influencer<br />Decider<br />Buyer<br />User<br />Consider different household products purchased in daily life: Class discussion<br />MG 220 Marketing Management<br />12<br />
  13. 13. Segmenting Consumer MarketsBehavioral Segmentation (…contd.)<br />Behavioral Variables<br />Occasions:<br />Activities in different occasions help define needs and purchasing behavior<br />When consumers consumer a product? Traveling in holidays, Grocery at start of month etc.<br />Benefits: Based on benefits sought by consumers<br />User Status: Non-users | Ex-users | Potential Users | First-time users | Regular Users<br />Usage Rate:<br />Light, medium and heavy users<br />Heavy users are less in number but contribute major part of sales<br />How to target these segments is to part of strategy because they have different attitudes towards product<br />Buyer-Readiness Stage:<br />Unaware | Aware | Informed | Interested | Desire the product | Intend to buy<br />Building awareness and informing is a key part of marketing effort<br />Loyalty Status<br />Hard core loyals | Split loyals | Shifting loyals | Switchers<br />Study product’s strengths (hardcore loyals) | Identify competitors (split loyals) etc.<br />Attitude: enthusiastic | Positive | Indifferent | Negative | Hostile<br />MG 220 Marketing Management<br />13<br />
  14. 14. Segmenting Consumer MarketsBehavioral Segmentation (…contd.)<br />Behavioral Variables (breakdown)<br />MG 220 Marketing Management<br />14<br />
  15. 15. Segmenting Consumer MarketsConversion Model<br />Groups in Users (based on strength of commitment) and Nonusers (based on balance of disposition with current brand)<br />MG 220 Marketing Management<br />15<br />Convertible<br />Shallow<br />Average<br />Entrenched<br />Nonusers<br />Users<br />Strongly<br />unavailable<br />Ambivalent<br />Available<br />Weakly<br />unavailable<br />
  16. 16. Bases for Segmenting Business MarketsSequential Segmentation<br />Based on their stage in purchase decision<br />First-time prospects<br />Novices<br />Sophisticates<br />Based on type of selling<br />Price-oriented customers <br />Solution-oriented customers<br />Strategic-value customers<br />MG 220 Marketing Management<br />16<br />
  17. 17. Part 3: Connecting with Customers<br />> Market Targeting<br />Part 4:Creating Brand Equity<br />> What is Brand Equity?<br />> Building Brand Equity<br />> Measuring Brand Equity<br />> Discussion on Term Project<br />Class Presentation | Session 12 | 30 Sep 2010<br />