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Effective Segmentation Criteria

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Effective Segmentation Criteria

  1. 1. MARKETING MANAGEMENT 13th edition sudiptaa saha, Spring 2015 8 Identifying Market Segments, Market Targeting & Market Positioning
  2. 2. Effective Segmentation CriteriaEffective Segmentation Criteria There are many ways to segment the market, but not all segmentations are effective. - To be useful, market segments must be: • Measurable • Substantial • Accessible • Differentiable • Actionable 8-2
  3. 3. Effective Segmentation CriteriaEffective Segmentation Criteria Measurable Measurable refers to the fact that the market size, purchasing power and profiles of the segments needs to be measured. Certain segmentation variables are sometimes difficult to measure. - If you are taking Demographical factors like age, education, income, etc. as variables of segmentation then it needs to be measurable. 8-3
  4. 4. Effective Segmentation CriteriaEffective Segmentation Criteria Substantial Substantial refers to the fact that the market segments are large or profitable enough to serve. - Some segments have one or few customers but the marketers can sell huge volume of their products to these customers. - For example: Tomato Ketchup goes to different fast food shops such as Pizza Hut, KFC, Helvetia, etc. in huge volume rather than individual customers. 8-4
  5. 5. Effective Segmentation CriteriaEffective Segmentation Criteria Accessible Accessible refers to the fact that the market segments needs to be effectively reached and served. - For example: Like in Cantonment areas, the businessmen needs to take special permission from the defense authority to do business, therefore in order to segment such markets, the marketers must make special arrangement so that the segments can be reached and served. 8-5
  6. 6. Effective Segmentation CriteriaEffective Segmentation Criteria Differentiable Differentiable refers to the fact that the segments are conceptually distinguishable (separable from each other) and respond differently to different marketing mix elements and programs. - For example: Married and Unmarried women can respond differently to different products such as dress materials, cosmetics, household products, etc. Again Consumption of Students and Executives is quiet different. 8-6
  7. 7. Effective Segmentation CriteriaEffective Segmentation Criteria Actionable Actionable refer to the fact that effective programs can be designed and implemented for attracting and serving the segments. - For example: Cigarette manufacturers cannot promote their product directly through the different medias (Television Commercials, Newspaper Advertisements etc), therefore they have to take different action to promote their product. 8-7
  8. 8. Market Targeting (Market Coverage Alternatives)Market Coverage Alternatives) Target marketing is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. - Characteristics for targeting effective segment: Segment size and growth Segment structural attractiveness Company objectives and resources 8-8
  9. 9. Market Targeting (Market Coverage Alternatives)Market Coverage Alternatives) Target Marketing Strategies 8-9
  10. 10. Market Targeting (Market Coverage Alternatives)Market Coverage Alternatives) Undifferentiated marketing targets the whole market with one standard offer. - And it’s characteristics are; • Mass marketing • Focuses on common needs (basic buyer need) rather than what’s different • Relying on mass production, distribution and communication 8-10
  11. 11. Market Targeting (Market Coverage Alternatives)Market Coverage Alternatives) Differentiated marketing targets several different market segments and designs separate offers for each segment. - And it’s characteristics are; • Goal is to achieve higher sales and stronger position in the market within the segments • Developing separate marketing mix (product, price, place & promotion) strategies for each segment • More expensive than undifferentiated marketing 8-11
  12. 12. Market Targeting (Market Coverage Alternatives)Market Coverage Alternatives) Concentrated marketing targets a small share (niche: narrowly defined market) of a large market those who deals with specific needs and problems. • Expertise about the product or services • Have proper knowledge of the market • Use more effective and efficient marketing tools to attract the customers 8-12
  13. 13. Market Targeting (Market Coverage Alternatives)Market Coverage Alternatives) Micromarketing is the practice of tailoring (customizing) products and marketing programs to suit the tastes of specific individuals and locations. - And the types are: • Local marketing (HSBC, Amanah bank account) for Bangladesh market • Individual marketing (Tailor’s shop) 8-13
  14. 14. Market Targeting (Market Coverage Alternatives)Market Coverage Alternatives) A UNDIFFERENTIATED MARKETING Company Marketing Mix 1 Market B DIFFERENTIATED MARKETING Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3 Segment 1 Segment 2 Segment 3 C CONCENTRATED MARKETING Company Marketing Mix 1 Segment 1 Segment 2 Segment 3 8-14
  15. 15. END of CHAPTER - 8

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