Marketing Segmentation PPT

1. Market Segmentation

2. Market Segmentation Market Set of existing and potential customers Market Segment A group of people or organizations sharing one or more characteristics that cause them to have similar product needs/wants.

3. Market Segmentation Market Segmentation – is the process of dividing a total market into groups, or segments, consisting of people or organizations with relatively similar product needs/wants. The purpose is to enable a marketer to design a marketing mix (mm) that more precisely matches the needs of customers in the selected market segments.

4. Consumer Preferences for Ice Cream Homogeneous Pattern Consumers have relatively similar needs and desires for a good or service category. Clustered Pattern Consumer needs and desires can be grouped into two or more identical clusters (segments), each with its own set of purchase criteria. Diffused Pattern Consumer needs and desires are so diverse that no clear clusters (segments) can be identified.

5. Levels of Market Segmentation Segment marketing Niche marketing* Local marketing Customized/one-to-one/micro marketing A Niche is more narrowly defined customer group seeking a distinctive mix of benefits. Niches are fairly small and normally attract only one or two competitors whereas segments are fairly large and normally attract several competitors.

6. Market Segmentation

7. Benefits of Segmentation Effective use of resources Gain a focus Create Value for a target market Positioning

9. Targeting

11. Segmenting Consumer Markets Geographic Region, city, Rural and semi-rural areas Demographic Age, gender, income, occupation, education, family size, Religion, Nationality Psychographic Social class, lifestyle, personality Behavioral Occasions, benefits, user status, usage rate, loyalty status, readiness stage, attitude toward product

12. Segmenting Consumer Markets Geographic Region South India, Western Region, North, East City Class-I Cities, Class-II Cities, Cities with a population of 0.5 million to 1 Million, Cities with a population of over 1 million Rural and Semi-Urban Areas Rural villages with a population of over 10,000, small towns with a population between 20,000 and 50,000

13. Segmenting Consumer Markets Demographic Age Under 6, 6-11, 12-19, 20-34, 35-49, 50-60, 60+ Family Size Young single; young, married, no children; young, married, youngest child under 6; young, married, youngest child under 6 or over; older, married, no children under 18; older, single Gender Male, Female

14. Segmenting Consumer Markets Demographic Income Low (upto Rs. 40,000 p.a.), lower middle (Rs. 40,001-80,000 p.a.), middle (Rs. 80,001-1,20,000 p.a.), upper middle (Rs. Rs. 1,20,001-1,60,000 p.a.) and high (above Rs. 1,60,000 p.a.) Annual Household Income Rupees at 1999-2000 Prices Source: Kotler, Keller, Koshy and Jha, 12/e, Pearson, pp.151-209

15. Segmenting Consumer Markets Demographic Occupation Unskilled worker, skilled worker, petty traders, shop owners, businessman/industrialist, self-employed (professionals), clerical/salespersons, supervisory levels, officers/junior executives, middle/senior executives

16. Segmenting Consumer Markets Demographic Education Illiterate, school upto 4 years, school between 5 and 9 years, SSC/HSC, nongraduate, graduate/postgraduate (general), graduate/postgraduate (professional)

17. Segmenting Consumer Markets Psychographic Lifestyle Culture-oriented, sports-oriented, outdoor-oriented Personality Compulsive, gregarious(sociable/outgoing/extrovert), authoritarian, ambitious

18. Segmenting Consumer Markets Behavioural Occasions Regular, special Benefits Quality, service, economy User status Non-user, ex-user, potential user, first-time user, regular user

19. Segmenting Consumer Markets Behavioural Usage rate Light, medium, heavy Loyalty status None, medium, strong, absolute Readiness stage Unaware, aware, informed, interested, desirous, intending to buy Attitude toward the product Enthusiastic, positive, indifferent, negative, hostile

20. Bases for Segmenting Business Markets

21. Segmenting Business Markets Demographic segmentation Industry, company size, location Operating variables Technology, user or non-user status, customer capabilities Purchasing approaches Purchasing-function organisation, power structure, nature of existing relationships, general purchase policies, purchasing criteria Situational factors Urgency, specific application, size of order Personal characteristics Buyer-seller similarity, attitudes toward risk, loyalty

22. Market Segmentation Procedure

23. Market Segmentation Procedure Survey Stage Analysis Stage Profiling Stage

24. Requirements for Effective Segmentation

27. Steps in the Market Targeting Process Evaluating Market Segments Selecting Target Market Segments

28. Evaluating Market Segments

29. Evaluating Market Segments Segment Size and Growth Analyze current segment sales, growth rates, and expected profitability. Segment Structural Attractiveness Consider effects of: competitors, existence of substitute products, and the power of buyers & suppliers. Company Objectives and Resources Examine company skills & resources needed to succeed in that segment. Offer superior value and gain advantages over competitors.

30. Selecting Target Market Segments

31. Market Coverage Approaches Undifferentiated Marketing(Mass Marketing) The firm tries to reach a wide range of consumers with one basic marketing plan. These consumers are assumed to have a desire for similar goods and service attributes.One product for everybody. Concentrated Marketing The firm concentrates on one group of consumers with a distinct set of needs and uses a tailor-mademarketing plan to attract this single segment. Differentiated Marketing The firm aims at two or more different market segments, each of which has a distinct set of needs, and offers a tailor-made marketing plan for each segment. Two or more products to two or more groups.

32. Target MarketingMarket Coverage Strategies Market Company Marketing Mix Company Marketing Mix 1 Segment 1 Company Marketing Mix 2 Segment 2 A. Undifferentiated Marketing Segment 3 Company Marketing Mix 3 Segment 2 Company Marketing Mix B. Differentiated Marketing C. Concentrated Marketing

33. Positioning The act of designing the company’s offering and image to occupy a distinctive place in the minds of the target market. Result is the creation of a customer-focused value proposition: A cogent reason why the target market should buy the product.

34. Four cornerstones of positioning Who am I? What am I? For whom am I? Why me?

35. Four cornerstones of positioning…contd. Who am I? Positioning by corporate Identity Positioning by brand endorsement What am I? Category related positioning Benefit related positioning Usage occasion and time related positioning Price-Quality positioning For whom am I? Positioning by Target segment Why me? Positioning by unique attributes Positioning by competitors

36. Four elements or components of a positioning statement: Target Audience - the attitudinal and demographic description of the core prospect to whom the brand is intended to appeal; the group of customers that most closely represents the brand’s most fervent users. Frame of Reference - the category in which the brand competes; the context that gives the brand relevance to the customer.

37. Benefit/Point of Difference- the most compelling and motivating benefit that the brand can own in the hearts and minds of its target audience relative to the competition. Reason to Believe - the most convincing proof that the brand delivers what it promises.

38. Thank You!