“Adoration”

Respect Your customer

  
Definition of segmentation
 
Dividing a market into distinct groups of buyer who have different
needs, characteristics or behavior and who might require separate
marketing products or program.it is actually a process of shorting
market into different groups or categories depending different
customers. Segmenting market is the foundation of superior
performance. Before providing value to the customer it is important to
know their need and wants and what identifying exactly what customer
needs.
Level of segmentation
Strategic segmentation:
Strategic segmentation links to the management vision and strategic intent of corporate strategy, and
emphasizes product benefits that different types of buyer.
Managerial segmentation:
Managerial segmentation is concerned with allocating resources around segments targets including
them to the plans and aligning organizational process around them.it actually focuses on setting and
identifying the target markets.
Operational Segmentation:
Operational segmentation is concerned with the marketing program changes needed to reach
segment targets with advertising and distribution systems.it is related with delivering the message
regarding to the product to the target markets.
 
Market driven strategy and Segmentation
Market driven strategy and Segmentation
Market segmentation needs to be considered early in the
development of the market driven Strategy. Segments
are identified, customer value opportunity and new
market spaces are explored in each segments,
organizational capabilities are matched to proposing
segment opportunity, market targets are selected from
the segments of interest and positioning strategy is
developed and implemented for each market segments.
the combination of these activities to indicate the role of
segmentation in the marketing strategy process.
  
Activities and Decisions in Market Segmentation
 Identifying Market segment
Segmentation Variables
One or more variables may be used to divide the product market into segments.
Demographic and psychographic (lifestyle and personality) characteristic of
buyers are of interest. There are few important variables that will be count in
market segmentation; use-situation, need & preference and purchase behavior
 Characteristics of People and Organizations
Consumer Market
The characteristic of people falls into two major categories; 1) geographic & demographic, 2) psychographic
(lifestyle and personality).
 
1) Geographic & demographic
Geographic segmentation involves segmenting consumers on the basis of region, climate, size of city, and density
of population. It may be useful for segmenting product-market Demographic segmentation involves segmenting
consumers on the basis of demographic variables like age, sex, marital status, education, occupation, and
income. Demographic often useful to describe consumer segments after they had been formed. Nonetheless,
these variables are popular because available data often relate demographic to other segmentation.
 
2)Organizational Market
Several characteristic will help in segmenting business markets. Certain industry is related to purchase behavior
for certain type of products such as automobile producer purchase steel, paint and other raw materials. Other
variables for segmenting organizational market include size of the company, the stage of industry development
and the stage of value added system.
 
 Product Use Situation Segmentation
Another segmentation approach often used by marketers is based on product or brand
usage by consumers. Usage segmentation can take a number of directions. For example, the
marketer may want to identify various segments of users for a particular product category or
users of the company’s brand. In other cases, one may want to segment users into those
who buy frequently versus those who only buy occasionally (either product or brand), or
into those users who usually purchase just one brand versus those who switch from brand to
brand. It may also be useful for the marketer to understand how segments arise based on
different product usage situations. Any usage segmentation approach needs to specify the
relevant dimensions of interest.
 
 
 
 
 
 Buyers ‘Needs and Preferences
Consumer Needs
Consumer attempts to math their needs with the product that satisfy their needs. Therefore, knowing and understanding customer needs
is at the center of every successful business, whether it sells directly to individuals or other businesses. Once recognize this knowledge, the
information can be used to persuade potential and existing customers that buying at their best interests.
 
Attitudes
As mentioned in the dictionary, attitude the way a person views something or tends to behave towards it, often in an evaluative way. Other
than that, psychologists define attitudes as a learned tendency to evaluate things in a certain way. This can include evaluations of people,
issues, objects or events. Such evaluations are often positive or negative, but they can also be uncertain at times. For example, you might
have mixed feelings about a particular program or events
 
Perception
The perceptual process allows us to experience the world around us. Take a moment to think of all the things that could be perceived on a
daily basis. At any given moment, there might see familiar objects in the environment, feel the touch of objects and people against skin,
smell the aroma of a home-cooked meal and hear the sound of music playing in your next door neighbor's apartment. All of these things
help make up our conscious experience and allow us to interact with the people and objects around us.
Purchase Behavior
• Consumption variables such as the size and frequency of a purchase
are useful in segmenting consumer and business market. Marketers of
industrial products often classify customer and prospects into
categories on the basis of the volume of the purchase. The
development of CRM system offers fast access to records of actual
customer purchase behavior and characteristic
Forming Market Segments
• Requirement for Segmentation
1.Response Differences
An absolute requirement for segmentation is that each defined segment must have unique market
response characteristics. Potential segmentation strategy is evaluated on how customer responds
towards the product. It is important to know customer ‘s needs and wants. .
2.Identifiable Segments
The segment must be possible to be identified from one another. The differentiating attributes of
the segments must be measurable so that they can be identified. It must also be possible to create
a custom marketing mix for the specific group. The more unique the product design, the more
fulfill the distinguished criteria of the segment compared to segments with many similarities.
3.Actionable Segments
Selection of the products and services you will provide, of the customers to whom you will
provide them, and of the channels through which you will market to them are choices businesses
make every day. The customer segments that are identified will define the success as a business.
When segmenting products, marketing program to promote and attract targeted market segment
and provide services is essential.
Requirement for Segmentation

4.Cost Vs. Benefits of Segmentation

It has been seen in all industries that satisfying the needs of all consumers tend to
be difficult since no two different individuals tend to share the same like and
dislikes. Market segmentation is used to divide customers into groups under similar
needs and wants, purchasing power, buying habits and buying attitudes, trying to
increase their satisfaction.
5.Stability over Time
Segments must be adequately stable over time to ensure the company’s marketing
efforts will have enough time to show results. The segments are able to be
controlled in terms of targets needs and attract the same group to keep maintain.
Usually, repeated buyers are satisfied with the product and services offered from
previous experience.
Approaches to Segment Identification
Customer Group Identification

• Customer group identification refers to the process of dividing customer into groups with
similar characteristics which normally called as segmentation process by group. The
process of segmentation is based on idea that the efficiency of company’s marketing
activities can be greatly increased by ignoring the nonessential differences among
customer within each segment and treating them as a single entity.
• This group identification also as a tool that focuses marketing analysis on the important
aspects of customer needs, enabling managers to group customers into relatively few
large segments and consequently develop strategies for these segment rather than for
each individual customer.
By customer group identification, a company can obtain these two (2) functions:
• 1) To optimizes the effectiveness of a company’s action by identifying the key differences
among customer which can help them to customized offering for each segment.
• 2) To optimizes the cost-efficiency of a company ‘s actions by finding the irrelevant
differences among customers to create a single offering for all customer within each
segment.
Forming Group Based on Response Differences

Cluster Analysis
Clustering is a process of grouping a set of abstract or physical objects into
classes of related objects. A cluster is a group of data objects that are
analogous to one another within the same cluster and dissimilar to the data
object in the other cluster. The process of clustering involves partitioning the
set of data into groups based on data analogy and then assigning label to the
groups.
• Perceptual Map
A perceptual map is of the visual technique designed to show how the
average target market consumer understands the positioning of the
competing products in the marketplace. In other words, it is a tool that
attempts to map the consumer ‘s perceptions and understandings in a
diagram.
3.Finer Segmentation Strategies

• In some situations, an individual buyer may comprise a market

segment. Thus, an important segmentation issue is deciding how
small a segment should be. For example, some hotels now offer a
separate floor for female executives or travelers with particular
attention towards in-room amenities that suited them, as well as
more on safety and security details.
Logic of Finer Segments

• Several factors working together point to benefits of considering very

small segment and in some cases, segments of one. These include:
1) The capabilities of companies to offer cost effective customized
offerings,
2) The desire of buyers for highly customized products, and
3) The organizational advantages of close customer relationships.
 
• Customized Offerings
• Generally, customized offering means to make or change something according to the
buyer ‘s or users ‘needs and requirements. In market segmentation, customized offering
explained as promising opportunities for serving the needs and preferences of very small
market segments with the help of database knowledge, computer-aided product design
and manufacturing, and distribution technology such as Just-in-Time (JIT) inventory.

• Diverse Customer Base

• Customer base is the group of customers who repeatedly purchase the goods or services
of a business, these customers are a main source of revenue for a company. Diverse
customer base means a group of customers with different needs and preferences, as well
as expectation towards the products or services that they consumed or purchased.
Finer segmentation Strategy
• Micro segmentation
Micro segmentation is about the practice of breaking large target audiences into smaller groups
based on lifestyle, demographic, geographic and behavioral differences in order to maximize the
effectiveness of contact with each customer. In other words, this form of segmentation seeks to
identify narrowly defined segment using one or more segmentation variables which differs from
more aggregate segment formation in that resulting in a large number of very small segments.
• Mass Customization
Mass customization, in marketing, manufacturing, call centers and management, can be defined as
production of personalized or custom-tailored goods or services to meet consumers‘ diverse and
changing needs at near mass production prices.
• Variety-Seeking Strategy
Variety-seeking strategy emerge to counter back the consumers ‘variety-seeking purchase behavior
which can be described as a customer ‘s desire to switch to alternative products out of curiosity;
and even if the customer is very satisfied with the current products he/she uses, the customer has
the desire to try other competitors ‘products and therefore switches to other brands.
Deciding How to Entry
• The choice of a segmentation method depends on such factors as the maturity
of market, the competitive structure, and the organization’s experience in the
market. The more comprehensive the segmentation process, the higher the
costs of segment identification will be, reaching the highest level when field
research studies are involved and finer segmentation strategies are considered.
It is important to maximize the available knowledge about the product-market.
An essential first step in segmentation is analyzing the existing customer base
to identify groups of buyers with different response behavior. Developing a
view of how to segment the market by managers may be helpful. In some
instances, this information will provide a sufficient basis for segment
formation. If not, experience and existing information are often helpful in
guiding the design of customer research studies.
Strategic Analysis of Market Segments
• Customer Analysis:
• When forming segments, it is useful to find out as much as possible about the
customers in each segment. Variables such as those used in dividing product-markets
into segments are also useful in describing the people in the same segments. The
objective is to find descriptive characteristics that are highly correlated to the
variables use to form the segments. Standardized information services are available
for some product-markets including foods, health and beauty aids and
pharmaceuticals. An essential part of customer analysis is determining how well the
buyers in the segments are satisfied. Customer’s satisfaction depends on the
perceived performance of a product and supporting services and the standards that
the customers use to evaluate the performance. The customers standardized
complicate the relationship between organization product specification and
satisfaction.
• Competitor Analysis:
Market segment analysis consider the set of key competitors currently
active in the market in which the segment is located plus any potential
segments entrants. In complex market structures, mapping the competitive
area requires detailed analysis. The competing firms are described and
evaluated to highlight their strength and weakness. Information useful in
the competitor analysis includes business scope and objectives; market
position; market target and customer base; positioning strategy; financial,
technical and operating strength etc. A complete assessment of the nature
and intensity of competition in the segment is important in determining
whether to enter the segment and how to complete the segment.
• Positioning Strategies:
Segment analysis involves some preliminary choices about positioning
strategy. One object of segment analysis is to obtain guidelines for
developing a positioning strategy. Flexibility exists in selecting how to
position the firm with its customers against its competitors in a
segment. Positioning analysis shows how to combine product,
distribution, pricing and promotion strategies to favorably position the
brand with buyers in the segments
Estimating segment attractiveness
• The financial and market attractiveness of each segment needs to be
evaluated. Included are specific estimates of revenue, cost and segment profit
contribution over the planning horizon. Market attractiveness can be
measured by market growth rate projection and attractiveness assessments
made by management. Financial analysis obtains sales, cost and profit
contribution estimates for each segment of interest. Since accurate forecasting
is difficult if the projections are too far into the future, detailed projections
typically extend 2 to 5 years ahead. Both the segments competitive position
evaluation and the financial forecasts are used in comparing segments. In all
instances the risks and returns associated with serving a particular segment
need to be considered. Flows of revenues and costs can be weighted to take
into account risks and the time value of revenues and expenditures.
Segment” fit” and Implementation
One important aspect of evaluating segment attractiveness is how well
the segments match company capabilities and the ability to implement
marketing strategies around those segments. There are many
organizational barriers to the effective use of segmentation strategies.
It is important to realistic in balancing the attractiveness of segments
against the ability of the organization to implement appropriate
marketing strategies to take advantage of the opportunities identified.
Building effective marketing strategy around the market segmentation
mandates an emphasis on action ability as well as technique and
analysis. The existence of these capabilities, or the ability to develop
them should be considered in making segmentation decisions.
Thanks To All