Segmentation

What is a market segment?

Subgroup of people or organizations sharing one or more characteristics that cau

se them to have similar product needs
Market Segmentation

Process of dividing a market into meaningful groups that are relatively similar
and identifiable.
Market Segmentation
Market Market
People or organizations with People or organizations with needs or wants and the
ability and needs or wants and the ability and willingness to buy willingness t
o buy A subgroup of people or A subgroup of people or organizations sharing one
or more organizations sharing one or more characteristics that cause them to cha
racteristics that cause them to have similar product needs. have similar product
needs.
Market Market Segment Segment
The process of dividing a market The process of dividing a market Market Market
into meaningful, relatively similar, Segmentation into meaningful, relatively si
milar, Segmentation identifiable segments or groups. identifiable segments or gr
oups.
The Concept of Market Segmentation
The Importance of Market Segmentation
● Markets have a variety of product needs and preferences ● Marketers can better
define customer needs ● Decision makers can define objectives and allocate reso
urces more accurately
LEVELS OF MARKET SEGMENTATION

MASS MARKETING SEGMENT MARKETING NICHE MARKETING LOCAL MARKETING INDIVIDUAL MARK
ETING
NICHE MARKETING

What is an attractive niche ? A distinct set of needs A premium can be charged N

ot likely to attract competition Gains certain economies through specialization
Sufficient size, profit and growth potential
Local Marketing

When the marketing mix is altered to suit the local conditions eg. Giving a high
er/ lower discount than what’s prevailing in the rest of the markets or implemen
ting a different promotion scheme
Individualized Marketing

When the firm deals with each customer on a one – to – one basis When products a
re customized for the customer
Market Segmentation Purposes

To enable the marketer to

tailor marketing mixes to meet the needs of one or more specific segments. devel
op a competitive advantage more accurately define marketing objectives and bette
r allocate resources
MARKET –SEGMENTATION PROCEDURE

STEP ONE-Survey Stage STEP TWO-Analysis Stage STEP THREE-Profiling Stage

Criteria for Successful Segmentation

Substantial Measurable Differentiable Actionable Accessibility

Bases for Segmenting Consumer Markets

Geographic

Climate Region City Size Density

DEMOGRAPHIC

AGE FAMILY SIZE FAMILY LIFE CYCLE GENDER INCOME OCCUPATION

EDUCATION RELIGION NATIONALITY SOCIAL CLASS

Bases for Segmenting Consumer Markets . . .

Psychographics

Personality lifestyles
Bases for Segmenting Consumer Markets…….

Behavioral Occasions Benefit

“features tell, benefits sell” “80/20”principle

Usage rate
Benefit Segmentation of the Snack-Food Market
Bases for Segmenting Consumer Markets . . .

Loyalty status Usage status Readiness stage Attitude toward product

Target Market
A group of people or organizations for which an organization designs, implements
, and maintains a marketing mix intended to meet the needs of that group, result
ing in mutually satisfying exchanges.
MARKET TARGETING

Evaluating the market segments

Segments overall attractiveness Company’s objectives and resources

Selecting the market segment

Single-segment concentration Selective specialization Product specialization
SELECTING MARKET SEGMENT
Market specialization Full market coverage

Undifferentiated marketing Differentiated marketing

Company Company Marketing Marketing Mix Mix
Market Market
A. Undifferentiated Marketing
Company Company Marketing Mix 1 Marketing Mix 1 Company Company Marketing Mix 2
Marketing Mix 2 Company Company Marketing Mix 3 Marketing Mix 3
Segment 1 Segment 1 Segment 2 Segment 2 Segment 3 Segment 3
B. Differentiated Marketing
Company Company Marketing Marketing Mix Mix
C. Concentrated Marketing
Segment 1 Segment 1 Segment 2 Segment 2 Segment 3 Segment 3
Segmentation, Targeting, and Positioning
Undifferentiated (mass) marketing Ignores segmentation opportunities
Such products rarely succeed

Differentiated (segmented) marketing Targets several segments and designs separa

te offers for each.
Coca-Cola, Procter & Gamble (soaps and detergents) are few examples.
POSITIONING

IT IS THE ACT OF DESIGNING THE COMPANY’S OFFERING AND IMAGE TO OCCUPY A DISTINCT
IVE PLACE IN TARGET MARKET’S MIND.
HOW MANY DIFFERENCES TO PROMOTE

ONE CENTRAL BENEFIT NUMBER ONE POSITIONING INCLUDE “BEST QUALITY”,”BEST VALUE”,”
SAFEST”, “FASTEST” USP
DOUBLE BENEFIT POSITIONING TRIPLE BENEFIT POSITIONING
MAJOR POSITIONING ERRORS

UNDERPOSITIONING Some companies discover that buyers have only vague idea of the
brand.The brand is seen as just another entry in marketplace.
OVERPOSITIONING Buyer may have too narrow an image of brand
CONFUSED POSITIONING Buyers might have a confused image of the brand resulting f
rom the company’s making too many claims or changing the brand positioning too f
requently.
DOUBTFUL POSITIONING Buyers may find it hard to believe the brand claims in the
view of the product’s features ,price .
POSITIONING STRATEGIES

Attribute Positioning Benefit Positioning Use or Application Positioning User Po

sitioning Competitor Positioning Product Category Positioning Quality or Price P
ositioning
Choosing a Positioning Strategy

Identify a set of possible competitive advantages on which to build a position.

Choose the right competitive advantages. Select an overall positioning strategy.
Identifying Possible Competitive Advantages

Key to winning target customers is to understand their needs better than competi
tors do and to deliver more value. Competitive advantage – extent to which a com
pany can position itself as providing superior value.

Achieved via differentiation.

DIFFERENTIATION

Differentiation is the act of designing a set of meaningful differences to disti

nguish the company’s offering from competitor’s offerings.
Differentiation Variables
Product Form Features Performance Conformance Durability Services Personnel Chan
nel Coverage Expertise Performance Image Symbols Media Atmosphere Events
Ordering ease Competence Delivery Installation Customer training Customer consul
ting Courtesy Credibility Reliability Responsivene ss
DIFFERENTIATION TOOLS

Performance Quality – low, average, high, superior Conformance Quality – identic

al units, meet specs. Durability – expected operating life Reliability – probabi
lity of it not malfunctioning within a specified time period Reparability – ease
of fixing a product Style – look and feel to the buyer Design: The Integrating
Force for all above features Ordering Ease

Services Differentiation
Differentiation Tools

Installation Customer Training Delivery – speed, accuracy, care

Quick response system

Customer Consulting Maintenance and Repair

Differentiation Tools

Channel Differentiation Image Differentiation

Identity – way company sees itself/products Image – way customers see company/pr
oducts

Symbols, Colors Physical site/store – artifacts, lights, entrances Events and Sp

onsorship
Choosing the Right Competitive Advantages

Not all brand differences are meaningful and worthwhile, nor do all differences
make a good differentiator. Each difference has the potential to create company
COSTS as well as consumer value.

The best competitive advantages are those that meet seven key criteria. Import
ant Distinctive Superior Communicable Preemptive Affordable Profitab
le
PRODUCT LIFE CYCLE
1.
Products have limited life. Product sales pass through distinct stages. Profits
rise and fall at different stages. Products require different approaches in each
life-cycle stage.
2.
3.
4.
Product Life-Cycle Alternate Patterns